Steps to incorporate
- Choose a name and check availability with the Registrar of Companies.
- Prepare articles of association, share capital and first directors.
- File the incorporation application and pay the registration fee.
- Open income tax, VAT and withholding files and register with Bituach Leumi.
- Open a business bank account and appoint an auditor (CPA).
Company vs. working as an individual
Profits kept in the company are taxed at 23%. When paid out as dividends, a further 25%–30% applies, so the combined burden is roughly 42%–46% before surtaxes. Salary from the company is taxed at personal rates. The right mix of salary and dividends — and whether to retain profits — drives the real saving.
For new olim and returning residents, the company's residency and where it is managed matter: an Israeli-managed company is Israeli-resident and taxed on worldwide income.
Common mistakes
- Incorporating too early, when profits don't yet cover company running costs.
- Taking money out as loans instead of salary or dividends (deemed income rules apply).
- Ignoring founder equity: shares should be issued before value builds up.
- Not documenting IP assignment to the company before raising investment.
What Tax-IL handles for you
- Deciding whether and when to incorporate
- Founder share structure and IP assignment
- Salary vs. dividend planning
- Coordinating incorporation and tax registrations
- Incentive eligibility and tax rulings
Planning to set up in Israel?
One free 15-minute call. Tell us what you're setting up and where you're coming from — we'll map the right structure and next steps.
- Licensed Israeli tax advisors
- Reply within one business day
- Confidential — never shared
Frequently asked questions
How much does it cost to open a company in Israel?
Government fees are modest; most of the cost is professional fees for the articles, registrations and annual audit. Contact us for a quote for your situation.
Can a non-resident own an Israeli company?
Yes. There are no nationality or residency restrictions on shareholders or directors.
What is the corporate tax rate in Israel?
The standard rate is 23%. Qualifying Preferred and Technology Enterprises may pay reduced rates.
When should I move from Osek Murshe to a company?
Usually once profit is well above what you need to live on and you can leave money in the company — we run the numbers on the free call.
Figures reflect Israeli rules as of 2026 and change periodically. This page is general information, not tax or legal advice. See also corporate tax services.