Doing business in Israel- six important things you need to know
If you are an international company, interested in doing business in Israel, we have six important questions and answers you should know, in order to start your business activity in Israel.
Israel has many business opportunities for foreign companies. Starting a new business activity in Israel usually brings different questions. From my experience many companies have the following questions before they start their business activity in Israel.
Should I register my company with the Israeli Registrar of Companies?
Yes. If you have a foreign company that wants to conduct business activities in Israel, you must register with the Registrar of Companies in Israel.
It is possible to incorporate as an Israeli company and issue shares, or to be registered as a foreign company without registered shares.
Does my foreign company have to open a bank account in Israel?
Yes. If your foreign company wishing to be incorporated in Israel, and open files with the Israeli tax authorities, you must open a bank account in Israel. This is a condition for opening VAT files.
Does my foreign company have to open a VAT file in Israeli tax authorities?
In general, yes.
If you have a foreign company that is interested in doing business in Israel is a company that probably liable to a VAT payment on its income. The advantage is that opening a VAT file allows the company to also receive VAT back for expenses, and therefore paying lower VAT as possible.
As of 2020, the VAT tax in Israel is 17%.
Does my foreign company have to open an Income tax file in Israeli tax authorities?
In general, yes.
If your company is foreign and interested in doing business in Israel, your company probably liable to income tax payment on its income.
By opening an income tax file, the company report and pay advance tax payment, and at the end of the year will submit an annual report and calculate the corporation final tax.
As of 2020, the corporation tax in Israel is 23% on profit.
In which cases the company may not be required to open an income tax file ?
If your company have a business activity for only a few months in Israel, there may be no obligation to open an income tax file.
Accordingly, there may also be no obligation to submit an annual report and pay corporate tax.
Our tax experts will analyze your company’s business activity, and in accordance with the International double tax treaty, will consult a solution for you.
Do I need a fiscal representative in Israel?
Yes. If your company conducts business activities in Israel, and does not have an Israeli shareholder or director, it must appoint a fiscal representative.
The fiscal representative is personally responsible for the company’s taxes in Israel. That is, in case the company does not pay taxes in Israel for any reason, the tax authorities can turn to the fiscal representative and claim the tax debts of the company in Israel.
Your company considering business activity in Israel?
Managing-Partner, Allwira & Angel
International Taxation expert