Court ruling10/22/2026

Tax Authority’s Undisclosed Position Did Not Entitle Contractor to Benefit

The Appeals Committee rejected Briga’s demand for a refund of one-sixth of the purchase tax paid on land for a residential project in Ra’anana. Although the committee criticized the Tax Authority for withholding its professional position for a long time, it ruled that the authority’s breach did not create a right to a benefit whose conditions had not been met.

Key facts

•The company: Briga
•The project: approximately 150 apartments in southern Ra’anana
•The tax: approximately NIS 6.3 million at a rate of 6%
•The refund sought: approximately NIS 1.06 million
•Legal costs: NIS 10,000
•The case number and date of the decision are not specified in the source

Land for Approximately 150 Apartments

In June 2020, Briga purchased, under two agreements, rights to land in southern Ra’anana for the construction of approximately 150 apartments. It paid purchase tax at the full rate of 6%—approximately NIS 6.3 million—and sought a refund of one-sixth of that amount, approximately NIS 1.06 million. This benefit is prescribed by Regulation 2(1a) of the Real Estate Taxation Regulations, provided that a permit to build at least one apartment is obtained no later than 24 months from the date of the transaction.

The Permit Was Issued After the Prescribed Deadline

The permit application was filed in June 2021, but the company received a full permit only in December 2022, after the 24-month period had already elapsed. The Ra’anana Municipality had previously rejected the request to issue a separate permit for excavation shoring and earthworks, due to a policy opposing the splitting of permits. The Planning Committee’s conditional approval, received in March 2022, was not recognized as a building permit.

The Dispute Over the Authority’s Undisclosed Position

The company argued that it had advanced the project without delays and that the lateness resulted from the municipality’s policy. It further noted that the Tax Authority had not published the position reflected in a 2020 tax ruling and a 2024 document: under certain circumstances, a permit for earthworks and excavation shoring may be considered a building permit. According to the company, timely publication of the position would have enabled it to insist before the municipality that the permits be split.

The Benefit Depends on a Permit Actually Obtained

The committee, chaired by Judge Avi Gorman and with the participation of Ruth Ashkenazi and Geva Balter, dismissed the appeal in full and ordered the company to pay NIS 10,000 in costs. It ruled that within 24 months the company had obtained neither a full permit nor a permit for earthworks, and that the prescribed period is a substantive condition of the benefit and cannot be extended. A separate excavation permit may be taken into account only in exceptional cases, when the Local Committee itself requires the split because of the project’s enormous scale; in Briga’s case, by contrast, the city engineer opposed the split.

Criticism of the Tax Authority

The judge sharply criticized the authority because its 2020 position had not been published for a long time, and described such conduct by an administrative authority as problematic. Nevertheless, this defect does not substitute for compliance with the statutory conditions of the tax benefit. The committee ruled that the assumptions that the company could have obtained a separate permit had it been aware of the position were theoretical.

What this means for you

For developers, entitlement to a refund of one-sixth of the purchase tax depends on actually obtaining the required permit within 24 months after the transaction. A conditional approval or an assumption that a separate permit could have been issued does not replace this requirement. Even a public authority’s breach of its duty to publish its position does not, in itself, confer a tax benefit that the law did not establish for the specific circumstances.

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