Businessman and former Bank Hapoalim (TASE: POLI) chairman Shlomo Nehama is a very wealthy man. In 2006, Nehama sold his shares in Arison Holdings Ltd. for $150 million, and it was reported in February 2015 that he had $104 million in an account at Swiss bank HSBC.
It appears, however, that people with a lot of money do not enjoy letting any of it go, even to pay taxes to the state. It is hard otherwise to explain the tax evasion affair in which Nehama has become entangled.
It was learned today that Nehamia is expected to stand trial for tax evasion amounting to NIS 2.5 million. He is suspected of not paying tax to the state on the NIS 45 million sale of his apartment in a Rothschild Blvd. high-rise in February 2014. The suspicions against Nehama were reported exclusively in "Globes" in November 2014.
At the end of an 18-month investigation, and after the investigation results were examined by a team of lawyers at the Tel Aviv State Prosecutor's Office (taxation and economics), the State Prosecutor today notified Nehama and Advocates Geva Haviv and Orit Koch that their indictment for using fraud and deception to obtain an exemption from land betterment tax on the sale of a property worth tens of millions of shekels was under consideration, subject to a hearing.
Haviv is a real estate partner in the Caspi & Co. law firm. Koch is a lawyer in the Ziv Sharon & Co. law firm and the head of its land taxation department. Koch previously served for years in a senior position in the Tel Aviv land taxation office as a complaints and appeals team coordinator. Haviv and Koch are suspected of aiding Nehama in allegedly illegal tax planning concerning the sale of his apartment.
In November 2014, "Globes" revealed for the first time that the Israel Tax Authority suspected that Nehamia had requested and received a tax benefit on the sale of his Rothschild Blvd. apartment in the form of an exemption from betterment tax, as if the apartment were finished (suitable for residence), although it was actually unfinished, considered a property for tax purposes, and therefore was not eligible for an exemption from betterment tax. Two months ago, "Globes" reported that the Tax Authority had sent the results of its investigation to the State Prosecutor for a decision on the case.
The State Prosecutor's announcement today said that in 2013, Nehama, together with his wife, had owned an apartment in shell condition in a prestigious Tel Aviv high-rise. "Legally, an apartment in shell condition that is not suitable for residence does not entitle the owner to an exemption from land tax. After negotiations with a potential buyer, Nehama concluded a sale agreement for the apartment in shell condition for NIS 45 million."
The State Prosecutor added, "Following the sale, Nehama, Haviv, and Koch took action to temporarily renovate the property, while being aware that the buyer of the property would demolish the renovation upon receiving possession of the property, without the renovation affecting the price of the property, which was set solely for the sale of the shell.
"Furthermore, in a report submitted to the Land Taxation Administration on the sale, the suspects omitted material particulars in order to conceal the deception they had committed. It is suspected that the temporary renovation and partial and misleading report to the Land Taxation Administration constitute fraud and deception for the purpose of evading payment of tax on the sale of the property."
Nehama, Haviv, and Koch were summoned to make their pleas in the hearing, to take place at the State Prosecutor's Office (Taxation and Economics).
Concurrently with the progress in the investigation of the case, Nehama is appealing a decision by the Greater Tel Aviv tax assessor on the amount of tax he will be charged on the sale of the apartment.
Nehama's representatives today said, "The apartment in question was sold at a time when it met all the criteria entitling Nehamia to an exemption from tax on the sale of an eligible residence. Furthermore, he acted in the matter on the advice of top level legal advisors.
"In the framework of the civil appeal of the assessment for the sale of the apartment, he presented through his lawyer the array of criteria entitling him to the exemption, including evidence and precedents proving this."
Published by Globes [online], Israel business news - www.globes-online.com - on January 31, 2016
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