The Tel Aviv District Attorney's Office (Taxation and Economics) will shortly decide whether to indict former Bank Hapoalim (TASE: POLI) chairman Shlomo Nehama. Nehama is suspected of evading tax on the NIS 43 million sale of an apartment he owned in the Rothschild 1 tower in Tel Aviv in 2014. Nehama had bought the apartment a few years before from the developers, the Habas Group, for NIS 25-30 million. Sources inform "Globes" that the file was recently transferred from the Israel Tax Authority to the District Attorney.
Another possibility, other than an indictment, is that Nehama will pay an agreed penalty, but sources familiar with the case inform "Globes" that, in the light of the sums of money involved, this appears unlikely at this stage.
"Globes" has also learned that at the same time as the investigation has been proceeding, Nehama has filed an appeal against the decision of the Dan area tax assessor on the amount of tax to be collected from him on the sale of the apartment.
The allegation, reported by "Globes" in November 2014, is that Nehama sought and received a tax benefit of some NIS 2.5 million on the sale of his 780 square meter apartment in Rothschild 1 in the form of an exemption from capital gains tax, as though the sale was of a finished apartment, fit for habitation. This was despite the fact that the sale was of an unfinished apartment, considered an asset for tax purposes, and not eligible for an exemption from capital gains tax.
A spokesperson for Nehama told "Globes" at the time: "The process of the sale of the residential apartment was carried out in close consultation with legal counsel and with opinions from all the relevant professionals. It's surprising that this incident has turned out this way. We hope that through professional dialogue with the Authority, this matter will be settled. Nehama is cooperating, and has cooperated, with the authorities." Today, sources close to Nehama said that the situation had not changed.
At the time of Nehama's successful deal to sell the apartment, "Globes" reported that the apartment was sold as a shell, such that the buyer could adapt it to his needs and taste. In such circumstances, the seller is not entitled to an exemption from capital gains tax. By obtaining an exemption, Nehama saved himself a tax payment of 25% of the profit on the sale, that is, NIS 2-2.5 million.
The Tax Authority said that "the investigation material on the file has indeed been sent to the Tel Aviv District Attorney's Office Taxation and Economics Division for a decision."
Nehama was chairman of Bank Hapoalim, one of Israel's two largest banks, between 1998 and 2007. He was close to the late Ted Arison and took a leading role in Arison's acquisition of control of the bank, but left after his relationship with Arison's daughter Shari Arison cooled, with capital estimated at NIS 700 million. Nehama's highest profile role at present is his control of Ellomay Capital, which is traded in Tel Aviv and New York, and invests in clean energy and natural resource companies in Italy and Israel, and is invested in the Dorad private power plant in Ashkelon.
Published by Globes [online], Israel business news - www.globes-online.com - on November 5, 2015
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