Passive income includes:

income from interest or indexation differentials;

income from dividends, except dividends derived from income of a “held company” taxed at a rate exceeding 15% (a “held company” being a body of persons directly or indirectly held by the CFC at least 10%, or 5% if publicly traded);

income from royalties;

income from rental fees;

proceeds from the sale of a non-security asset, provided the sale is not classified as business or vocational capital gains;

proceeds from the sale of a security held for more than one year (“long-term proceeds”), even if sold within business or vocational activity under Israeli or foreign tax law.

Where a security is sold within less than one year, the capital gain is classified as passive income unless the assessing officer is convinced the sale constitutes business or vocational activity; the burden of proof rests with the taxpayer.