In separate rulings, the Israeli Tax Authority (the “ITA”) recently granted
waivers to Tamir Fishman and ESOP in their roles as trustees of Section 102
supervisory trustee arrangements (e.g., trustee arrangements where the
shares are not actually transferred to the Israeli trustee but instead remain
with the plan sponsor’s broker) from the requirement to obtain copies of
each individual award agreement for which Section 102 trustee-track tax
treatment was being sought (the “deposit requirement”).
Pursuant to these rulings, rather than securing copies of each individual
award agreement, the trustees can comply with the deposit requirement
by obtaining a one-time, hard-copy consent to the trustee arrangement
from each grantee in Israel and thereafter, receive broker reports for all
Subsequent to these rulings, we understand that the ITA has begun to
incorporate a similar waiver of the deposit requirement into new supervisory
trustee tax rulings.
As a result, companies operating Section 102 supervisory trustee
arrangements with Israeli trustees should consult with their Israeli trustee
(including those companies using the services of Tamir Fishman and ESOP)
to determine whether or not the deposit requirement has been waived or still
applies to the company’s Section 102 arrangement.