According to media reports in Israel, one of the three presiding justices, Menachem Mazuz, said that the law was “just a method with which Israel’s financial institutions can assist in compliance with a law that the petitioners are required to follow anyway, and would be required to follow even if there was no agreement”.
He added: “This is life today. Privacy is very limited today. The alternative would be crimes of all types. There is nothing new here, the only difference is that there is a law involved now. It is like requiring licenses to run a business – a limitation by the government, and subjecting the individual to regulation and supervision. Without this, modern society cannot function.”
His fellow justice Hanan Meltzer, who ordered that the Fatca preparations be suspended, said that the value of preventing tax evasion, cooperating with other countries combatting the issue, and the threat of US sanctions on Israeli banks were reasons to allow the law.
Lawsuit
Israel’s parliament, the Knesset, approved a law implementing Fatca two years ago, with the Knesset Finance Committee approving legislation in August 2016 that would enable Israeli banks to comply with Fatca.
This prompted the lawsuit from a non-profit group with links to the US Republican Party.
Lawyers representing the group argued that the law makes no effort to minimise the damage it causes or to secure the information being shared.
At the start of September, Meltzer ordered that preparatory work to implement Fatca be halted to give opponents of the lawsuit an opportunity to respond.
Fatca
Fatca requires financial institutions to report details of US citizens and green card holder accounts to the Internal Revenue Services (IRS) if they hold more than $50,000 (£37,630, €44,496).
Following the high court ruling, Israeli institutions will now resume preparations for the implementation of Fatca, which is due to come into force on 1 January 2017.
