One of the central areas dealt with by the administrative department of our firm is property tax. In this framework, the firm accompanies many local authorities in their day-to-day operations, as well as businesses that seek to examine their obligation to pay municipal tax bills in which they have been charged or to act in various ways in order to reduce the burden of municipal taxes.
"Arnona" is a tax imposed by the local authority under the law, which is imposed on the holder of the property whether it is an individual or a corporation. It should be emphasized that the obligation to pay municipal taxes arises even when a business is conducted in a building without a license or when the business is without a business license (two other areas in which the administrative department of our firm specializes).
However, the law stipulates that certain types of assets will be exempt from the payment of general property tax. Thus, for example, it was determined that the assets of an institution that volunteered for public service would be exempt from the payment of general municipal taxes, subject to obtaining a permit from the Ministry of the Interior, which authorized the district commissioner to examine the requests for exemption. The procedures of the Ministry of the Interior determine various criteria and parameters for the purpose of examining the entitlement to receive an exemption relating to the nature of the institution, its budget, economic conduct, and more. Thus, among other parameters, it will be examined whether the services provided by the institution serve mainly the residents of the authority in which the asset that is the subject of the request for granting the exemption is located; Does the remuneration collected by the Authority be significantly lower than market prices in a manner that reflects the voluntary aspect of the institution; The scope of the institution's business activity and whether it is marginal in relation to the general activity of the institution; Whether the institution's operators and patrons derive personal economic benefit other than a reasonable wage which is a function of their direct contribution, as well as whether the volunteer institution engages in political activity or is supported by a political body.
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In a recent Supreme Court ruling, the court held that the institution's activity in social or public activity does not automatically turn the institution into a volunteer institution, and that the institution must meet all the criteria in a cumulative manner, in accordance with the procedures of the Ministry of the Interior. For example, the Court held that an association that deals with the treatment and rehabilitation of people with special needs and for this purpose operates therapeutic institutions does not meet the criteria as required, since it provides its services for a fee that is not less than 50% of the consideration paid for services similar to other bodies in the private market This fact alone in order to deny her right to an exemption. It should be noted that the court rejected the Mossad's claim that the transfer transferred from the Ministry of Social Affairs should be viewed as government support, since the main consideration transferred from the Ministry of Social Affairs is not direct funding, rather it is the state's purchase from the institution for services that the state must provide by law . In practice, this is an institution that operates for profit.
It should be noted that even if there is a practice according to which an institution has been exempted for many years, this does not exempt the obligation to examine and reconsider the justification of the existence of exemptions that were granted in the past and as the circumstances change.
When it comes to a business that uses a large area and property taxes are calculated for it at a high business rate, the financial significance may be very high. In this case, it is recommended to consult a lawyer who specializes in the field as soon as the problem arises for the first time, since the initial conduct with the authority may sometimes affect the outcome of the procedure.