Developer Loses Bid for NIS 1 Million Tax Refund Over Delayed Permit

A Tel Aviv District Court judge has ruled that the Briga real estate company will not receive a NIS 1 million refund on purchase taxes paid for a project in Ra'anana. Briga had argued it was entitled to the refund, which represents one-sixth of the NIS 6.3 million purchase tax it paid on a NIS 106 million land acquisition in June 2020. The company planned to build 150 apartments on the land.

Briga claimed eligibility for the refund based on regulations that grant it if a building permit for a single apartment is obtained within 24 months of purchase. While Briga eventually received its building permits in December 2022, more than 30 months after the acquisition, the company contended that the Ra'anana Municipality had initially refused to grant it an earlier excavation and shoring permit, which Briga considered a form of building permit. The Israel Tax Authority had previously indicated in 2020 that such a permit could be considered a building permit under certain conditions, but only published a formal professional opinion on the matter in October 2024.

Judge Avi Gurman acknowledged that the Tax Authority's handling of the case was problematic, noting the significant delay in issuing a professional opinion. However, he ruled that the regulation's strict 24-month deadline for obtaining a building permit could not be extended by the Tax Authority. Gurman also pointed out that Briga did not meet other conditions outlined in the Tax Authority's later opinion, and that the conditional permit it received from the municipality in March 2022 did not qualify as a building permit. The court ordered Briga to pay NIS 10,000 in expenses, despite the procedural flaws identified in the Tax Authority's conduct.