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Last update - 02:30 23/11/2007
Rights of return
By Barr Hayoun
Once upon a time, Israelis seeking their personal fortune abroad were
considered traitors. But time passes, circumstances change and today, if
anything, they are widely admired for their grit and drive. However, one of
the things they've left behind is fear of a brain drain.
When we look at the figures, concern is justified. It turns out that 700,000
Israelis are living outside the country. It transpires that 25,000 hi-tech
personnel have abandoned the Holy Land for electronics and software companies
in the U.S.
in the past seven years. Every year, some 18,000 Israelis emigrate and 2,000
to 5,000 Israelis return. (Immigration to Israel is about 21,000 a year these
days.)
Those who return are not always that pleased with the outcome, either. The
Ministry of Immigrant Absorption conducted a broad survey in 2006 and found
that most Israelis returning from a long stay abroad report a serious slump
in their satisfaction. A whopping 73 percent said they had been satisfied
with life abroad and only 52 percent liked the outcome of their return.
Almost 60 percent said they will stay, but 28 percent said they had not made
up their minds and 13 percent said they were actively considering decamping
again.
"Ironically, it's harder for expatriates to adjust back to Israel upon
return than it was for them to adjust after leaving," says Israel Fruman, managing director of ORI, which supplies human
resources and global relocation services. He sees a side-effect, too, namely
that when Israeli expats come back home, they tend
to leave their employer within two years.
The Immigrant Absorption Ministry found that among the elements most
dismaying to returning expats are the high levels
of tax in Israel,
the heavy outlay on health insurance and difficulty finding work. But as Israel turns
60, the ministry has some ideas of how to change all that. The government
wants the boys and girls back home, and if pure patriotism to the tune of an
accordion playing "Hava Nagila"
won't work any more, the keyword is - incentives.
The state's special offer is in force from November 1, 2007 to August 31,
2009, and it applies to "returning residents" - Israelis aged 17 or
over who have been abroad for at least two years and have not spent more than
four months a year total in Israel
during that time. The government has earmarked NIS 150 million to lure expats
back home by, essentially, subsidizing their taxes for a while and helping
them find jobs. Scientists and doctors are being offered research grants. The
Immigrant Absorption Ministry is willing to bend over backwards to bring the
brains back home.
Ministry Director General Erez Halfon
thinks that about 15,000 expats in the U.S. and Europe
will take advantage of the campaign.
Israel Halberstein runs a Web site, toshav-hozer.co.il, which is devoted to things that
returning Israelis need to know. Many are surprised to learn that it takes
months for eligibility for National Insurance Institute and medical insurance
to kick in. An Israeli who spent more than two years abroad and did not maintain
monthly payments to the NII has to wait two months for each year spent abroad
in order to receive eligibility, Halberstein
explains.
The minimum wait is four months and the maximum is 18 months. However,
returning residents can truncate the wait to six months by paying NIS 8,730 to the NII up
front. That restores their eligibility for social security stipends to six
months rather than 18 months.
It is a good idea to be both eligible for NII and full health care services
upon one's return - by preparing the groundwork at least six months in
advance.
Aware of this unhappy situation, the ministry is offering to cover that
payment for returning Israelis during the period of the campaign. Well and
good, but to assure eligibility, once again it's best to begin the process at
least six months before your return.
(By the way, returning residents are spared the wait faced by non-returning
Israelis before they are eligible for the full range of health services after
switching from one kupat holim
provider to another.)
Until now, Israelis returning after less than six years abroad could get tax
exemptions on household goods and work tools, but not on electric appliances.
By the end of December the list of tax-exempt items is expected to increase.
At present, Israelis who do not have returning resident status must pay 29.4
percent tax (customs and VAT), on appliances such as dishwashers,
refrigerators, freezers, microwave ovens, washing machine or stoves unless
they were purchased in a state that has a tax treaty with Israel (the U.S.,
Canada or European Union members). In that case the tax rate drops to 15.5
percent, the present level of VAT.
The ministry is also considering introducing income tax incentives. Until
now, returning residents were entitled to a five-year exemption, but only on
passive income from assets acquired abroad, such as interest, stock
dividends, royalties or rental income from property overseas. But many
Israelis who come home continue to run a business abroad, and wind up paying
double taxes, in Israel
and abroad too. So the tax break is being expanded to include all types of
income, as long as the company in which the returning resident is a partner
is not an Israeli one.
A 2005 Immigrant Absorption Mnistry study found
that 46 percent of Israelis living abroad cite job security as a barrier to
returning, superseding schooling for the kids and housing as the main
concern. The ministry therefore began working with employers to help locate
jobs for Israelis abroad before their return.
In exchange for the employers' cooperation, the state finances up to 70
percent of the minimum wage for the returning Israelis that they hire, for a
period of one year. The companies undertake to retain the new hire for at
least two years. About 20,000 jobs have been earmarked for returning Israelis
under this scheme, and the ministry expects more firms to sign on. The
companies in question include Unilever, Teva, the
five big banks, all the Health Maintenance Organizations and some manpower
companies. Participating employers keep the ministry informed about job
openings and begin the hiring process even before the candidate arrives in Israel.
The ministry has also launched a program to pay half the salaries of
physicians and biotechnology researchers who return from abroad and are hired
by hospitals or companies located in the Galilee or the Negev.
For now, there are openings for only 10 scientists and four doctors, but if
the program is successful it may be expanded. The salaries will be NIS 210,000
a year for the scientists and NIS 180,000 for the physicians. There are
also plans for hiring doctors and researchers in the public service,
universities and colleges, hospitals and more, again with ministry support
for their salaries.
Other ministry assistance for returning residents includes reimbursement of
test fees for professional licenses and assured income of NIS 1,200 a month for three months. It also
provides vouchers worth up to NIS
10,000 for professional training courses.
While on the subject, returning Israelis can get discounts of up to 30
percent for their return flight on El Al Airlines as well as more generous
luggage allowances, through the local Israeli consulate. The Israel Defense
Forces gives returning Israelis who have been abroad for between two and five
years a six-month exemption from reserve duty. After a five-year absence, the
returnee can apply for a one-year exemption. Returning Israelis who are
unemployed can get a 90-percent discount for children aged 3-4 at municipal
and registered private kindergartens.
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