A trust will be classified as an Israeli Resident Trust in accordance with the section 75 G of the Ordinance in the following circumstances:

If at the time of its creation at least one of settlors and one of beneficiaries are tax residents of Israel, and in the tax year there was one settlor or a beneficiary that is a tax resident of Israel and a trust that all of its settlors died while there was at least one beneficiary who is an Israeli tax resident in the tax year.

1. A trust that is not a Foreign Residents Trust, Foreign Resident Beneficiary Trust and Relatives Trust shall be deemed as an Israeli Resident Trust.

2. A trust shall be considered as an Israeli Resident Trust, whether it is revocable or irrevocable trust.

Incomes and assets of the trustee should be deemed as incomes and assets of the settlor. If the settlors of the trust have passed away, incomes and assets of the trustee shall be deemed as income and assets of an individual resident of Israel.

An Israeli Resident Trust will be deemed as a resident of Israel, even if the settlor ceases to be a resident of Israel, and the income and assets of the trustee shall be regarded to an individual resident of Israel.

Transfer of assets to a trustee in the Trust should not be considered as a "sale" for the Ordinance purposes, if it made without any consideration.

Distribution to a beneficiary in the Trust should be taxed as if it would have been taxed while transferred from the settlor to the beneficiary directly. In this regard, the settlor will be considered as an Israeli tax resident even if he ceased to be a resident of Israel, and the income and assets of the trustee shall be regarded as of individual resident of Israel.