Summary
In a landmark ruling concerning international taxation and VAT, our firm secured a significant achievement for "Hagshama Cosmy Project Management" at the Tel Aviv District Court. The Court accepted the appeal we filed against the VAT Director and annulled an assessment of approximately NIS 9 million. The legal dispute concerned eligibility for zero-rate VAT on hostess services provided to foreign cosmetics companies (non-residents) operating in the Duty Free shops at Ben Gurion Airport.
The firm's team, led by Adv. Shlomi Vaknin and Adv. Raquel Scheinwald, succeeded in refuting the Tax Authority's argument, which sought to deny the exemption on the grounds that the service was also provided to Israeli residents. Through complex and precise legal argumentation, we demonstrated that the exception to the statutory exclusion was satisfied: the cost of the hostess services is priced and embedded as an integral part of the value of the products sold at the Duty Free.
Judge Hari Kirsh adopted our legal position and held that there is no requirement to prove actual payment of VAT along the supply chain as a condition for the exemption, and that economic logic mandates viewing the service as part of the value of the goods. The significance of this ruling is the prevention of double taxation and the strengthening of business certainty for Israeli companies providing services to international companies, while saving our client millions of shekels.
