Decision details
| Date | 2013 |
|---|---|
| Court | Tel Aviv District Court |
| Case | Not stated in the source (class action on excess withholding tax: against Mizrahi, Leumi, First International and Igud) |
| Type of decision | Settlement approvalClass action |
| Amount | Not set / not published |
| Topic | Excess tax withheld at source: fees not deducted from the yield |
| Source | Source |
Background and facts: tax withheld at source from interest and dividends
The details here are based on the contingent liabilities note in Mizrahi Tefahot Bank's financial report, and on a report on Walla from the day the claim was filed. The full text of the settlement and of the judgment was not found openly online.
According to the report, in November 2008 a claim and a motion to certify it as a class action were filed in the Tel Aviv District Court. The defendants were Mizrahi Tefahot, Bank Leumi, First International Bank and Bank Igud. The amount of the claim according to the report was NIS 68 million.
According to Walla, the class plaintiff was Noah Perlman, through attorneys Arnon Garfi, Ram Efrati and Moshe Holtzman. Walla reported that the class's damage was estimated at NIS 43 million, and that the plaintiff's personal damage in the years 2004 to 2007 was estimated at NIS 534.
The parties' arguments
According to the plaintiff, the banks overcharge customers who hold bonds or shares. According to the claim, the banks do not deduct the fee from the yield before withholding tax at source, and so the tax withheld is higher than required.
According to Walla, the plaintiff argued that the method shifts the tax base from a tax on enrichment to a tax on receipts, without taking the investor's expenses into account. It was also reported that, according to him, Bank Hapoalim deducts the fee before calculating the tax, and so was not sued. The sources checked do not set out the banks' arguments.
What the court held: approval of a settlement
According to the financial report, the parties held negotiations out of court. In April 2013 the court approved the settlement and gave it the force of a judgment. A settlement is not an admission by the banks of the claims.
The report does not set out the terms of the settlement: not the amount of the refund, not the payment mechanism and not the award and legal fees. Therefore there is no detail here of who is eligible and what they receive.
What it means for Mizrahi Tefahot customers
The class action dealt with a technical question: whether the fee the bank charges on yield events is deducted from the base on which tax is withheld. A customer who holds securities can check in the annual tax report the bank sends how the withholding was calculated. More claims on fees appear in the collection of class actions.
Sources
- Mizrahi Tefahot financial report, contingent liabilities note
- Walla: Motion filed for class action over excess tax withheld at source, November 2008
Status and caution
The full text was not found openly online; details according to a report, not yet verified against the text of the decision
More court rulings against Mizrahi Tefahot on fees
- Class Action 28695-05-16 Shefagat: settlement approved with Mizrahi Tefahot over small business classification
- Class Action 2959-01-19 Keren Aviv: Mizrahi Tefahot ordered to pay NIS 82.4 million over a warning notice fee
- Class Action 39049-04-21 Cyberlogic: Mizrahi Tefahot will refund securities redemption fees
- Class Action 30742-08-18 Tidan: Mizrahi Tefahot will credit businesses for quarterly management fees
- Leave to Appeal (Civil) 8674/19 Shefagat: Supreme Court orders Mizrahi Tefahot and Igud to provide data on "small business" classification
- Class Action 2959-01-19 Keren Aviv: court holds Mizrahi Tefahot unlawfully charged a warning notice fee
- Bank guarantee issuance fee: class action certified against Mizrahi Tefahot
- The fee information exchange affair: Mizrahi Tefahot will pay NIS 4.85 million under a consent decree
- Zimmerman v. Mizrahi Tefahot: class action certified over the minimum fee on a securities deposit
All 39 decisions in the database ›
Questions and answers
What was the class action on excess tax withheld at source about?
According to Mizrahi Tefahot's financial report, it was alleged that the banks did not deduct the fee from the yield on bonds and shares before withholding tax at source, and so withheld excess tax.
Which banks were sued?
Mizrahi Tefahot, Bank Leumi, First International Bank and Bank Igud.
What was the outcome?
In April 2013 the Tel Aviv District Court approved a settlement and gave it the force of a judgment, according to the bank's financial report.
What is the amount of the refund to customers?
The sources checked do not set out the terms of the settlement or the refund amounts.
Did Mizrahi Tefahot Bank admit a violation?
No. The decision approves a settlement, and in such a settlement the bank usually does not admit a violation. The court examines whether the settlement is fair and reasonable for the class members.
Where can I read the full text?
The full text was not found openly online. You can search for it by case number in the Net HaMishpat database of the Israeli Judiciary.
Read also
- Small business or large business? Mizrahi Tefahot will pay NIS 17,855,040 in a settlement over company classification
- Early repayment at Mizrahi Tefahot: what happens when a borrower asks to pay off the loan and nobody answers?
- How do you know how much you really owe Mizrahi Tefahot Bank?
- Class actions against Mizrahi Tefahot Bank: all settlements, judgments and certifications