Philip, a new Oleh from the U.S., recently purchased a new car taking advantage of his “Oleh benefits”. However, after purchasing the car, he felt “lost”, as he did not know what he should do and how things work in Israel.

For the benefit of Philip and others in his shoes, we summed up the important points to know regarding Oleh tax benefits, routine car maintenance and car insurance issues.
In our next article, we will discuss driving license and the essential issues to be aware of when buying or selling a car in Israel.

TAX BENEFITS WHEN PURCHASING A VEHICLE:
New Olim enjoy certain financial benefits including favorable terms when buying a new vehicle: cars, motorcycles or small truck weighing up to 4,500 K.G. These rights may be exercised up to 3 years after the “Aliya” date.

An Oleh importing a car from abroad or purchasing a new car from an authorized dealer in Israel, is exempt from paying the purchase tax but must pay customs and VAT, provided he can show the following:

1) A Valid driver’s license from the country of origin (must be valid prior to the Aliya date).
2) An Israeli driver’s license.

The right extends to one vehicle per one single person or per one married couple.

A vehicle purchased when exercising such rights may be driven only by the new Oleh, hence the car license specifically restricts in writing, the identity of the persons permitted to drive it. That is, no one else is permitted to drive the vehicle (boyfriends / girlfriends / friends etc.).

In case of siblings wanting to use “the family car”, a specific application to the Ministry of Transportation (“MOT”) must be made to include them as authorized drivers in the car’s license.
Police doing regular license check stops, are likely to check the identity of the driver and ensure she/he is authorized to drive the car. If not, this may result in a high fine.

Also, there is no insurance coverage if an unauthorized driver makes use of the car in contradiction to the car license specifications.
In order to avoid paying the full taxes, an Oleh cannot sell the new car for 4 years. If he does so, he will be liable to pay the remaining balance of the taxes that were due and waived when the car was purchased and, in any event, he must own the car for a minimum of 1 year. However, if he sells to another new Oleh who can enjoy the tax reduction benefit, he is exempt from this requirement.

VEHICLE MAINTAINANCE IN ISRAEL
In Israel, you are obligated to do a mechanical MOT test (the “Test”) annually. The “test” is performed in authorized car inspection stations, where your car is mechanically checked. This inspection can take up to 30 min. (no need to leave your car there for the day).
Shortly before the date of your Test you will receive by mail the new car license with the licensing fee you need to pay. Payment of the fee can be paid in the bank or in the post office bank (the licensing fee is determined by the Ministry of Transportation based on the car’s age and price list of a new car of that type).

Once you paid the license fee, you can perform the Test in the car inspection station where you will be required to pay an additional NIS 62 for the mechanical test + NIS 24 air pollution test (mandatory).

The prices for the Test to private cars are “fixed” by the Ministry of transportation and can be viewed on the Ministry’s website.
A new car bought from the importer is exempt from the “test” for the first 2 years on the road, but after the first year you are obligated to pay the licensing fee in order to renew your car license.
When doing Test, you should provide the following at the car inspection station:

1) A valid car license stating the license fee was paid.
2) An I.D. card evidencing you as the owner of the car.

If you are not the owner (as stated in the car license), you should present a signed power of attorney, signed by the owner, stating you are permitted to do the Test on the owner’s behalf (there is a written power of attorney on the backside of the car license, the owner only needs to fill in the details and sign) AND an I.D. /driver’s license or passport of the car’s owner.

3) An insurance certificate evidencing you have a valid mandatory insurance policy.

After successful completion of the MOT annual test, your car license will be “stamped” and you will receive a sticker you are to place on the inside of your front windshield in your car, in a visible angle (usually upper left or right side of the front windshield).

VEHICLE INSURANCE IN ISRAEL
Mandatory insurance (Bituach Hova) – this insurance is required by law and is a way for the State to ensure the rights for potential car accident victims. This type of insurance covers bodily harm to victims that were hurt by your vehicle. The “trigger” is the fact your car was involved in an accident, therefore it will cover the victims even if your car was stolen and the accident occurred while the car was in the thieves’ possession and due to their negligence. If your vehicle hit and hurt someone, the mandatory insurance will cover the costs, including rehabilitation or compensation due to death of the victims.

Consequently, if you do not have a mandatory insurance, your car is prohibited from being driven. Moreover, if you get caught driving without this insurance, you will be liable to pay a high monetary fine.

The prices for the mandatory insurance vary between insurance companies, and depend on various factors such as your age, “driving record”, car model and year.


About the author

Yael Harari is an attorney both in Israel and in New York. She is a co-founder of TransHomation, a small boutique style company that provides personal, customized aliyah, relocation, settling-in and ongoing-support services to newcomers in Israel (www.transhomation.com).