Sammy Ofer’s estate faces NIS 940m tax bill

The Haifa District Court is considering whether Ofer was an Israeli resident in 2006-2010.

The Israel Tax Authority is demanding payment of NIS 940 million from the estate of billionaire Sammy Ofer, who passed away on June 3, 2011 at the age of 89, according to an order issued by the Tax Authority in 2013 to the estate executors. The order concerned Ofer’s income in 2006-2010. The estate executors appealed the order to the Haifa District Court.

In the dispute, the court is being asked to rule on the issue in principle of Ofer’s residence – whether he was an Israeli resident during the years in question, as asserted by the Haifa tax assessor, or a foreign resident, as claimed by the estate executors. The decision will have a major effect on the amount of tax owed to the Tax Authority. The Tax Authority demanded almost NIS 1 billion in the 2013 order, but the real amount in dispute is still unknown and greatly dependent on the court’s decision.

If the court rules that Ofer was an Israeli resident during the years in question, it will have lateral ramifications for taxation of his estate. The amount cannot be estimated yet, other than the determination that tens of billions of shekels are involved. Such a ruling is also liable to expose all of Ofer’s assets to the Tax Authority, including assets and money that have never been declared in Israel. Some of these assets are managed by overseas trusteeships.

The handling of the estate of Ofer, considered one of the world’s wealthiest Jews before his death with a personal value of $10.3 billion, is under the jurisdiction of the Family Court, and its particulars are therefore confidential. As reported in “Globes,” after Ofer’s death, the Family Court appointed temporary executors for his estate at Ofer’s explicit request in his will.

Ofer lived in Monaco until 2009, when he returned to Israel. Prior to his death, he divided the management of most of his business affairs between his two sons, Eyal (the elder) and Ido (the younger). Ido Ofer, who also lives in Israel, is handling most of the business in Israel, while Eyal Ofer, who lives in London, is handling most of the overseas business. The main Israeli activity of Sammy Ofer’s family is the Israel Corporation (TASE: ILCO), a holding company that controls fertilizer manufacturer Israel Chemicals (TASE: ICL: NYSE: ICL), Oil Refineries Ltd. (TASE:ORL), shipping company Zim Integrated Shipping Services Ltd., and chip manufacturer Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM), among other things.

Eyal Ofer is responsible for the family’s private real estate business, which is believed to amount to billions of dollars. He is also handling a substantial part of the family’s marine business, headed by pleasure cruises company Royal Caribbean Cruises Ltd. (NYSE: RCL), considered one of the world’s largest companies in its field.

The Tax Authority state, “As a result of our confidentiality duty, we are unable to discuss this tax case.”