Accountancy in Israel

>> Choice of Legal Form in Israel

Limited liability company

A limited liability company with share capital is the most common form of business to do business in Israel.

Incorporation is fast and easy. The Registrar of company’s fee is about $ 700, and once you submit the documents it will take a few days to register a company.

The shareholders can be individuals or any registered entity, Israeli or foreign.

Once the company is registered you have to open a bank account in order to open an income tax and VAT files.

The companies tax rate is currently 23% and dividends are taxed at 25% (30% for a substantial shareholder who has 10% or more of the shares of the company).

If there is no Israeli shareholder a fiscal representative must be nominated and registered with the tax authorities.

Public limited company

A limited liability company can have a maximum of 50 members, a public limited company must have a least 7 members. According to the Israeli Company’s Act a public company is a company that its shares are traded in the stock exchange or its shares were offered to the public. A public company in Israel is regulated by the Israel Security Authority and must comply with its regulations.

General partnership

Partnerships are less common than companies. A partnership can be either registered with the Registrar of Partnerships or not. In any case a partnership must register with the VAT authorities and gets a special registration number for a partnership.

The maximum number of general partners is 20 and there is a partnership ordinance that governs the relationship between the partners unless otherwise agreed.

Limited liability partnership

A partnership can be either a general partnership or a limited liability partnership.

In a limited liability partnership usually one partner with a minimal share in the partnership is the unlimited partner and all other partners are limited. This kind of partnership in Israel is common in venture capital partnerships and oil and gas exploration partnership.

Subsidiary and branch

Many foreign entities have subsidiaries in Israel. Many are R&D centres that were established by the foreign entity, agencies of foreign entities or became a subsidiary after the foreign entity bought the Israeli company. Branches are less common. The main advantage of a branch is that a branch avoids the tax on dividend when profits are paid to the parent company.

The registration of a branch is more complicated than registering an Israeli company as the subsidiary. For legal protection, a subsidiary is preferred. In any case, if there is no Israeli as an owner an Israeli fiscal representative must be nominated.

Sole trader

To register as a sole trader is fast and easy. Once you have a bank account you register with the Inland Revenue and with VAT authorities and you can start your business.

There are bookkeeping regulations that are accustomed to the nature of the business, turnover and number of employees. A sole trader will have to prepare a profit and loss account and submit a tax report once a year.

Nonprofit organization

There are several kinds of nonprofit organization in Israel. The most common ones are an association or a public benefit company. A nonprofit entity is exempt from paying tax, a donation can receive a tax credit and regarding VAT a nonprofit organization cannot claim the VAT on expenses and pays VAT at a reduced rate on salary expenses.dfk.com +44 (0)20 7436 6722 5

Setting up and organization

A company must register with the Registrar of Companies. Companies must have at least one shareholder and there is no minimum of the share capital. Registration is fast (will take a few days). A company must have at least one Israeli director and if not must nominate a fiscal representative, that can be an Israeli entity, in order to represent it and take its liabilities to the tax authorities. A company must have audited financials by an auditor who is registered with the Board of Certified Public Accountants in Israel. Tax reports must also be certified by the auditors and are submitted to the Inland Revenue once a year. The Tax Year ends on December 31st but in some circumstances, the tax year can be changed to March 31st.


Latest version updated 4th April 2019

Country Breakdown

8.7

Million

Population

?

Israeli New Shekel

Currency

$ 318.7

Billion

GDP

20,770

km2