Chapter 8:Financing Your Purchase as a Foreigner
A foreign citizen has the right to open an account in any Israeli bank, and subject to specific procedures, there are no substantial restrictions on opening such accounts currently. However, holdups may arise in the next stage, that of transferring funds to the local Israeli account from abroad. The account holder will have to explain their relation to the account abroad from which the transfer is made.
Sometimes, the owner of the account from which a transfer is made is a company, whereas the account holder in Israel is an individual. There are a number of possible explanations for the money transfer from a company account to an individual’s personal bank account in Israel:
• If the physical person in Israel is one of the founders of the company abroad, then the person will need to provide the bank the certified constituent documents of the company.
• In the case the physical person in Israel is an employee or adviser of the foreign company and the amounts that are transferred are their salary or consultation fees, the bank may require a contract or other appropriate documents proving the authenticity of this relationship.
• If the physical person has received credit from the foreign company, the bank will require a loan agreement.
Another option for a foreign resident who wishes to purchase property in Israel is to open a trust account in Israel. This is relatively similar to opening a personal bank account (described above) with the distinction that the trustee will manage the account on behalf of the beneficiary, pay the seller directly, and the trustee will have to explain to the Israeli bank the nature of the relationship with the source of transferred funds.
An even more convenient way to transfer the funds for the purchase of real estate in Israel is to arrange the money from abroad to be transferred directly to the seller`s Israeli account. Such a bank transfer is useful in order to avoid the need for declaration and explanation of the relationship between the source of the funds and your Israeli account (in the case of opening an Israeli bank account as described above). In such a case, the seller’s bank will usually be satisfied by the very existence of a purchase contract and will not require any additional explanations concerning the nature of the relationship between you and the person transferring the money.