Non-resident retailers of goods and digital services to Israeli consumers will remain outside of the Israeli VAT net. This is the result of a decision of the High Court that has struck down a petition from local online retailers that E-retailers based outside Israeli were benefiting from an unfair tax advantage and not having to charge 18% VAT. The Israeli VAT office claimed that under the current VAT code the foreign e-retailers were outside the scope of VAT based on their residency, and the mere use of local services did not trigger a liability to VAT or a permanent establishment for direct tax purposes.
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