Providing services to a foreign resident

Providing services to a foreign resident - is he entitled to zero-rate VAT?

Article 30(a)(5) of the Israeli VAT Law provides zero-rate VAT for the rendering of services to a foreign resident, and it states, as follows: 

"These are transactions for which the tax will be at a zero rate:

(5) providing services to a foreign resident, except for a service determined by the Minister of Finance in this regard; no service shall be deemed to be provided to a foreign resident when the subject of the agreement is the actual rendering of the service, in addition to the foreign resident, also to an Israeli resident in Israel, to a partnership in which most of the rights are held by partners who are residents of Israel or to a company that for the purposes of the Income Tax Ordinance is considered to be a resident of Israel, unless it is a service for which the consideration constitutes part of the value of the goods stipulated in article 129 to 133T of the Customs Ordinance, as applicable; "

The term "foreign resident" is defined for the purposes of this article, as follows:

"In this article, "foreign resident" refers to a foreign resident as defined in article 1 where he located outside of Israel and has no business or activity in Israel, ...".

Where article 1 of the Law defines "foreign resident" -

"Foreign-resident"-

1. Regarding an individual - an individual who permanently resides outside of Israel;
2. With regard to a corporate entity - a corporate entity registered or incorporated only outside of Israel;"

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