Who must register
- Israeli companies carrying on business (registered as an Osek Murshe for VAT purposes).
- Individuals operating a business, as Osek Murshe or, below the ceiling, Osek Patur.
- Foreign businesses with a presence or certain taxable supplies in Israel, which may need to register or appoint a representative.
- Foreign providers of digital services to Israeli consumers may face registration requirements.
Rates
| Supply | Rate |
|---|---|
| Standard rate (from January 2025) | 18% |
| Qualifying export of goods and certain services to foreign residents | 0% |
| Eilat (free trade zone) supplies within the area | Generally 0% |
| Some financial activity | Profit/wage tax instead of VAT |
Zero-rated services to foreign clients
Services supplied to a foreign resident can be zero-rated if the conditions in the VAT law are met, broadly that the client has no business or activity in Israel and the service does not relate to Israeli assets or is not consumed in Israel. Israeli R&D subsidiaries invoicing their parent usually rely on this, and freelancers with foreign clients too. Keep contracts and proof of the client's foreign status.
Filing and payment
- Small businesses usually file bi-monthly; larger ones monthly.
- Returns and payments are due by the 15th of the month following the period (online filing allows a few extra days in practice).
- Larger businesses also file a detailed transactions report (PCN 874).
- Input VAT on business purchases is reclaimed against output VAT, with specific restrictions (for example on private cars and entertainment).
- Israel is rolling out an e-invoicing allocation number system for larger B2B invoices; check current thresholds.
How to register
- Osek: open a file online or at the local VAT office with ID, bank details and a description of activity.
- Company: after incorporation, submit the company certificate, directors' details and lease or address documentation.
- Foreign business: usually through an Israeli representative or a new Israeli entity, depending on the activity.
Further reading
This guide is general information, not advice for your situation. Tax rates and thresholds change; confirm current figures before acting. Tax-IL advises on tax structure and registrations; bookkeeping, payroll and banking are handled by your accountant and bank.
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