How much tax will the billionaire pay? The battle over the luxury villa in Arsuf reaches the court
Beny Steinmetz and his family are waging a legal battle against the Netanya Real Estate Taxation Director's decision to impose a capital gains tax of over 4 million shekels on the sale of an Arsuf villa. The main argument: the corporate tax assessment stems from a misinterpretation.
Billionaire Beny Steinmetz and his family are waging a battle in the Lod District Court against a decision by the Netanya Real Estate Taxation Director, who set a capital gains tax liability of approximately 4.35 million shekels regarding the sale of a villa in the prestigious community of Arsuf for 27 million shekels. This comes after a sum of about 1 million shekels had already been paid to the Tax Authority, and the amount now in dispute stands at over 4.1 million shekels. The property was purchased in the nineties for 2.7 million dollars, which was equivalent to about 8.1 million shekels at the time.
The appeal was filed by Leon Bouaziz, the father of Agnes Bouaziz, Steinmetz's partner, through the law firm Amit, Pollak, Matalon & Co. Bouaziz held the property as a trustee for Trivodis, a trust asset holding company owned by Beny Steinmetz. As part of the transaction, Bouaziz sold the villa directly to private buyers. However, while Bouaziz requested to pay the tax applicable to an individual seller of a residential apartment, the Tax Authority representative determined that the foreign company should be viewed as the beneficiary of the sale, and therefore should be subject to full corporate tax.
The appeal claims that the Tax Authority's starting point is fundamentally flawed. Among other things, it is argued that the Tax Authority clung rigidly to the formal registration of the company, while completely ignoring the fact that the Steinmetz couple provided all the purchase funds, held the full economic interest, and lived in the house over the years.
Another central argument concerns the depreciation that the Tax Authority attributed to the property, a move that significantly increased the tax payable. The Real Estate Taxation Director deducted from the purchase value of the house an accumulated depreciation of about 4.76 million shekels, claiming that a property owned by a company is considered business-related. Conversely, the appeal clarifies that the house was used solely for private residence and hosting the family, was never rented out, and did not generate income. Therefore, the appeal argues, the company had no business activity and did not actually deduct depreciation, so deducting this amount creates a tax debt that does not reflect reality.
"In conclusion, it is requested that the Appeals Committee intervene in the Tax Director's decision, cancel the corporate tax liability, cancel the notional depreciation deduction, and recognize the brokerage and renovation expenses. The correct path is to tax the sale as a sale by an individual seller, with a capital gains tax payment much lower than that set by the Tax Director."
