Tighter American tax laws have encouraged U.S. citizens to withdraw approximately $2 billion from Israeli banks in less than two years.
“The blow is not just in the drop in assets, but also in the drop in investments. Some of these customers, especially the wealthy ones, use the money to make investments and acquisitions in Israel. There is now little chance that they will make these investments, after they moved the money back to the US,” a banking source told Globes business newspaper.
In some cases, Americans used the money to buy property in Israel, but most of the money was sent overseas.
The Foreign Account Tax Compliance Act (FATCA) at the end of this year will require financial institutions in foreign countries to report bank accounts and assets held for American citizens, who must pay taxes regardless of where they are living. Approximately 100,000 first-generation American citizens live in Israel.
With the absence of a tax advantage by leaving assets in Israel, many Americans began withdrawing their money from local banks
Managed accounts of Americans in Israel are estimated to be valued at billions of shekels.