Claim for compensation for "indirect damage" (red track) - loss or prevention of profit as a result of war damage in the area of frontier localities, or due to the impossibility of utilizing assets located in the area of frontier localities

Eligibility conditions for filing a claim

These are the conditions for receiving compensation for "indirect damage" in a claim filed under the law and regulations - a claim track that has been named the "red track":

• The business of the parties who suffered damages is located in frontier localities.
• The parties who suffered damages proved the causal link between the damage they suffered and the acts of war or hostilities.
• The parties who suffered damages met the conditions for the cessation of activity and proved that they suffered damage and its extent.
• The existence of all the conditions and requirements specified in the law, regulations and rulings.

Conditions for cessation of activity - "the value of the indirect damage"

A cessation of activity is defined as a complete cessation of activity caused by a restriction imposed by the Home Front Command (Pikud HaOref).

• In the industrial sector - the actual damage and provided that there was a production stoppage of at least 24 hours.
• In the commercial and services sector - the actual damage and provided that the damage was caused by an interruption of the activity for more than a week.
• In agriculture - the actual damage that will be proven - there is no requirement to stop minimal activity.
• In tourism - the actual damage that will be proven - there is no requirement for a minimum stoppage of activity.
• "Restaurants", “eateries”, "culture and leisure" - the actual damage and provided that there was an interruption of activity for more than 24 hours.
• For cancellation of events or spoilage of raw materials due to the cessation of activity - the actual damage that will be proven.

What should be attached to the claim?

• The method of calculating the claimed damage, which includes a reference to the expense saved in an Excel sheet.
• Profit and loss report for the year of the damage and the previous year.
• Certificates supporting the claimed damage:
  • Description of the circumstances causing the damage.
  • The existence of a causal relationship.
  • The essence of the damage and its scope.
• In cases where additional details need to be ascertained, the Israel Tax Authority might require documents to check the eligibility conditions and the grant payment.

Receipt of the compensation

• The red track has no limit to the amount of compensation.
• Payment of the compensation due to the indirect damage (after reductions such as: withholding tax, and foreclosures), will be transferred to the bank account specified in the online claim form.
• Interest and linkage differences will be added to the amount of the claim that will be approved, starting at the end of 30 days from the date of the damage until the day of payment.

How to submit the claim 

The claim form must be filled out online on the Israel Tax Authority website.

When should the claim be submitted

• Notification of damage will be submitted to the manager within two weeks of the date of the damage - submitting a notification of damage is not a substitute for the submission of a claim.
• A claim for compensation will be submitted to the manager within three months from the date of the damage.

Appeal and Appeal Committee on the Israel Tax Authority's decision

• An appeal against the decision of the Director can be submitted within 30 days of the decision being made to the appeal committee with regard to the claim, with regard to a war damage and indirect damage.
• In the appeal process, parties who suffered damages can represent themselves or through a lawyer.
• An appeal against the decision of the appeals committee, will be an appeal about a right based on a legal issue only and will be submitted to the district court within 30 days of receiving the committee's decision. The parties who suffered damages have to forward upon submission to the district attorney's office to the Israel Tax Authority a copy of the appeal.

Legal sources

• Real Estate Taxation and Compensation Fund Law, 5721 - 1961
• Real Estate Taxation and Compensation Fund Regulations (payment of compensation (war damage and indirect damage), 5733 - 1973