Wishing to start a business in Israel- The options
Your company won a tender offer for a project or a job in Israel – Congratulations.
What is coming next?
In order to work in Israel, you need to make your choices about the path you are about to take; since the local law requiring you to do so.
There are two main options available for you and your business while considering starting a business operation in Israel, as for the authorities’ requirements and obligations.
The questions that you need to answer are:
- Are you coming for a short or a long-term contract?
- Do you believe that you will keep and working on other projects after the contract will end?
Those two answers are crucial for your activity in Israel.
Many German companies are already working on projects in Israel, some of them are coming for a short-term or long-term project signing agreements to provide services, consulting, engineering jobs or consulting in many sectors of activities here in Israel.
As for the short-term and long-term agreements we are offering our services as your fiscal representatives in Israel.
What does it mean?
Establishing a fiscal representative office means that the local office is responsible for the legal and financial issues, dealing with the company tax obligations and representing the company in front of the authorities. Not managing the operational nor professional activities of the company.
Since there are cultural and law gaps it is needed to have someone that can bridge those over for you, confronting the local authorities, knowing what to do and how to fulfill the requirements. So it is recommended to consider this option as a solution for a short and long-term project.
However, if you are about to base your activity, having a head office and establishing a foreign company with a local permanent office working freely without needing the business approval of the head office overseas, an office that is functioning as an independent unit you need to be familiar with the local companies law from 1999:
A foreign company, which manages its business activity in Israel, is required to register with the Ministry of Justice’s Registrar of Companies.
The Company Law, 1999, Section 1 has defined a foreign company:
“… a company registered outside Israel and any body of persons, other than a partnership, registered or incorporated outside Israel.”
The Companies Law, Section 346, demands that:
“A foreign company shall not keep a place of business in Israel, and in particular shall not maintain an office for the transfer of shares or for the registration of shares, unless registered as a foreign company under the provisions of this section and unless it pays the registration and publication fees prescribed by the Minister under this section.”
Moreover, before commencing business activity in Israel, a foreign company is required to register with the tax authorities in Israel, including the VAT, income tax and national insurance authorities. Applications to register a foreign company must be submitted to the Registrar of Companies within one month following the establishment of the business.
Documents required for registering a foreign company include:
(1) A copy and translation of the company’s Articles of Association authenticated by a notary in Hebrew which confirms the accuracy of the translation. Signatures are not required on the copy of the regulations.
(2) A list of the directors of the company.
(3) The name and address of Israeli representative authorized to receive documents and mail for the company.
(4) A copy of the document appointing a representative to handle the company’s affairs and to act under a power of attorney.
(5) The certificate of incorporation of the company from its state of origin signed by a notary and a document showing that the company’s registration is still valid and active as of the date the application is filed.