Israeli Court Allows Company to Sue for Overpaid Property Tax After Voided Order
Translated & summarized from Bizportal by baba
A company claiming overpayment of property taxes will have its case heard after an Israeli court overturned a dismissal. Shugon alleges it paid 290,000 shekels too much to the Mateh Binyamin Regional Council due to a voided 2014 tax order. The District Court ruled that the company can pursue a civil claim for the refund, even though it missed administrative deadlines. The case will now proceed to determine if the company is entitled to the money back.
The story in 5 lines · by baba
- Shugon company claims 290,000 shekel overpayment in property taxes to Mateh Binyamin Regional Council.
- A Jerusalem District Court allowed the company's civil suit for a refund of taxes paid under a voided 2014 order.
- The 2014 tax order was voided by the Supreme Court for lacking required ministerial approval.
- The court rejected the council's arguments about administrative appeal deadlines and prior rulings.
- The case will now determine if the warehouse was indeed reclassified to a higher tax bracket in 2014.
A company that claims it overpaid property taxes for seven years will have its case heard, after a Jerusalem District Court judge overturned a lower court's dismissal. Shugon, a manufacturer of bags and leather goods, alleges it paid approximately 290,000 shekels too much to the Mateh Binyamin Regional Council between 2017 and 2023 for a warehouse. The company did not file timely objections to the tax assessments for those years and instead pursued a civil lawsuit for the refund.
The dispute stems from a 2014 property tax order that reclassified certain warehouses and logistics centers, moving them from an industrial classification to a higher-taxed office, services, and commerce category. This change was challenged by several businesses, and in 2023, the Supreme Court ruled that the reclassification constituted an unusual tax increase requiring approval from the Interior and Finance Ministry directors, which was not obtained. Consequently, the 2014 order was voided and replaced by the previous 2013 version.
The regional council argued that the company should have used the administrative appeal process and that a 2013 tax appeal committee had already classified the warehouse as commercial. However, the District Court rejected these arguments, stating that appeal committees lack the authority to cancel tax orders and that each tax year constitutes a separate obligation, meaning a prior ruling does not bind future years.
The court also dismissed the council's claim that taxes were collected under the old order during the disputed period, ruling that the 2014 order was the basis for charges until its cancellation. This ruling has significant implications for businesses, as property tax is a major revenue source for local authorities, and reclassifications can lead to substantial back payments.
The case will now return to the local court in Ma'ale Adumim, where Shugon must prove the 2014 order negatively impacted its tax burden and that the warehouse was not classified as commercial under the previous order. The council was ordered to pay 8,500 shekels in legal costs.
Mentioned
