Supreme Court Advises Haggag Group to Drop Tax Appeal Worth NIS 50 Million
Translated & summarized from Mako by baba
The Supreme Court has advised the Haggag real estate group to drop an appeal seeking to use NIS 233 million in accumulated losses for a NIS 50 million tax reduction. A district court had previously ruled the 2011 acquisition of Regency Hotel Jerusalem was an artificial transaction for improper tax purposes. The group must respond to the court's recommendation by Thursday, October 29, 2026.
The story in 4 lines · by baba
- Supreme Court advises Haggag Group to drop appeal on NIS 50 million tax savings.
- District court ruled Haggag's 2011 hotel acquisition was an artificial tax avoidance scheme.
- Haggag sought to use NIS 233 million in accumulated losses from Regency Hotel Jerusalem.
- The group must respond to the court's recommendation by Thursday, October 29, 2026.
The Supreme Court has recommended that the Haggag real estate group abandon its appeal concerning the acquisition of Regency Hotel Jerusalem, a case involving a potential NIS 50 million tax saving.
Four years ago, Jerusalem District Court Judge Avigdor Dorot ruled that the 2011 purchase of Regency Hotel Jerusalem by the Haggag Group was an artificial transaction designed for improper tax reduction. The group had sought to utilize NIS 233 million in accumulated losses from the acquired company to reduce its tax liability.
The Haggag Group is expected to respond by this Thursday, October 29, 2026, to the recommendation from Supreme Court Justices Ofer Groskopf, Gila Kenfy-Steinitz, and Ruth Ronen. Regency Hotel Jerusalem, previously owner of the Hyatt Hotel on Mount Scopus which it sold in 2010 for $45 million, became a shell company. It was sold for NIS 8 million, and a year later acquired by Haggag for NIS 18.6 million.
Jerusalem Tax Assessor 1 had initially refused to allow Haggag to use the accumulated losses, a decision upheld by Judge Dorot. Dorot rejected the group's appeal, agreeing with the tax assessor that Regency could not claim the accumulated losses amounted to NIS 233 million. This contradicted the company's earlier stance during a class-action lawsuit regarding its share purchase offer, where it claimed the losses were only NIS 18 million.
Beyond the procedural issue, Dorot also addressed the merits, concluding that the primary motive for Haggag's acquisition of Regency was to use its accumulated losses, with no significant commercial rationale. He noted the company had no assets and that Haggag had not pursued other shell companies available for purchase. Furthermore, Haggag's stated intentions to introduce hotel operations and raise capital were not realized, as the company was not integrated into Haggag's operations and was delisted from trading.
Dorot affirmed the imposition of a deficit penalty on the company, the amount of which was not specified in the ruling. Attorneys Shlomi Moalem and Amit Glick represented the Haggag Group, while Attorney Roi Cohen represented the tax assessor.
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