Israeli Tax Authority Demands 4.35 Million Shekels from Billionaire Beny Steinmetz Over Arsuf Villa Sale

The Israeli Tax Authority is demanding 4.35 million shekels in capital gains tax from a foreign trust benefiting billionaire Beny Steinmetz and his wife Agnes, following the sale of a villa in Arsuf for 27 million shekels. The transaction took place in November 2024, when the property at 8 HaAlmog Street was sold to businessman Tamir Polag, who operates in real estate and high-tech sectors. The villa, situated on a 2-dunam plot, was originally purchased in 1995 by a foreign company held by a foreign trust equally benefiting the Steinmetz couple for 8.1 million shekels, with purchase tax of approximately 980,000 shekels.

The Steinmetz couple argued in an independent tax assessment that their capital gains tax liability on the approximately 19 million shekel profit should be only 222,000 shekels after deducting expenses. However, the Tax Authority rejected this claim and insists on the higher 4.3 million shekel tax. According to appeal documents, the property was acquired while the Steinmetzes were foreign residents intending to immigrate to Israel, with Agnes’s father, Leon Bouaziz, acting as trustee who handled the purchase and sale.

The couple claims to have invested 2.8 million shekels in renovations, with Agnes living in the villa until 2014, after which it was never rented out but occasionally used by their children without charge. They requested the Tax Authority to apply a "better linear calculation" method, splitting the tax liability between the pre-2013 period (tax-exempt) and post-2014 period (taxed at 25% minus expenses). The Tax Authority denied this, ruling that the original 1995 purchase by the foreign company should be attributed to the Steinmetzes, meaning the 2024 sale is also linked to the company, thus disqualifying them from the preferred linear tax calculation and subjecting them to corporate tax rates instead.