Israeli Tax Authority Demands 4.35 Million Shekels from Billionaire Steinmetz for 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 on 2 dunams at 8 HaAlmog Street was sold to businessman Tamir Polag, active in real estate and high-tech sectors. The villa 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 a purchase tax of approximately 980,000 shekels.

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

The couple stated they invested 2.8 million shekels in renovations and that Agnes lived in the villa until 2014, after which it was never rented out but occasionally used by their children without payment. 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% after expenses. The Tax Authority denied this, ruling that the original 1995 purchase by the foreign company should be attributed directly to the Steinmetzes, and thus the 2024 sale must also be attributed to the company benefiting them. Consequently, they are not eligible for the preferred linear calculation and must pay corporate tax rates instead.