Israel (IL)
Start-Up Nation with world-class tech ecosystem, rich ancient history, stunning Mediterranean beaches, and a vibrant expat and immigrant community.
Capital: Jerusalem
Region: Middle East
Language: Hebrew
Currency: ILS (₪)
Cost of living: Expensive (index 72)
Emergency: 100
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Business Setup
Start a business or go freelance in Israel.
🧑💻 Freelancer / Self-Employed Guide
Steps to register:
- 1 1. Register as Atzmai (self-employed) with the Israel Tax Authority (Rashut HaMisim) at taxes.gov.il — obtain Osek Murshe (licensed dealer, VAT-registered) or Osek Patur (exempt dealer, below VAT threshold) status.
- 2 2. Register with the National Insurance Institute (Bituah Leumi — btl.gov.il) as self-employed within 90 days of starting — you pay both employee and employer shares of National Insurance and health insurance contributions.
- 3 3. Open a separate business bank account (recommended; not mandatory for sole traders but required for most corporate clients).
- 4 4. Determine VAT status: Osek Patur (exempt) if annual turnover is below NIS 120,000 (2026 threshold — updated annually by the Tax Authority); Osek Murshe if above the threshold or if you choose to register voluntarily for B2B invoicing.
- 5 5. Issue invoices (Hosha'ot) with your tax file number (Mispar Tik) — invoices must comply with Israel Tax Authority format requirements.
- 6 6. File quarterly VAT returns (if Osek Murshe) via the Tax Authority online portal.
- 7 7. File annual income tax return (Doch Shnatee) by 30 April each year for the prior tax year.
- 8 8. Hire an accountant (Ro'eh Heshbon) — strongly recommended for first-year compliance; typical fee NIS 3,000–8,000/year for basic bookkeeping and filings.
Tax registration
Israel Tax Authority (Rashut HaMisim) at taxes.gov.il. Registration is free — you receive a tax file number (Mispar Tik) and Osek status. Register for Bituah Leumi separately at btl.gov.il. For company incorporation, register with the Companies Registrar (Rasham HaChevrot) via the Justice Ministry portal.
VAT threshold
NIS 120,000 annual turnover (2026; adjusted annually). Below this: Osek Patur status — VAT exempt, simpler compliance, no VAT charged to clients. Above this: Osek Murshe — must charge 18% VAT (rate raised from 17% effective January 2025), file bi-monthly VAT returns, remit net VAT to the Tax Authority. Voluntary Osek Murshe registration is permitted below the threshold and is common for B2B service providers.
Invoicing
Invoices must include: your full name or business name, tax file number (Mispar Tik), client name and tax file number (if business), sequential invoice number, date, description of services, amount in NIS, VAT amount and rate (if Osek Murshe), and payment terms. Digital invoices are fully legal. Invoices must be issued within 15 days of the transaction. For Osek Patur, state exempt status on the invoice.
Social security
Self-employed pay both employee and employer portions of Bituah Leumi (National Insurance) and Bituah Briut (health insurance) contributions on declared income. Combined contribution rate: approximately 9.61% on income up to half the average wage, rising to around 16.23% above that level (2026 rates). Register with Bituah Leumi within 90 days of starting activity. Contributions entitle you to the same benefits as employees: maternity, disability, old-age pension.
💡 Israel has a relatively straightforward self-employment system but compliance is strictly enforced. Many tech freelancers set up a Chevra Baam (Ltd company) even as sole operators for tax efficiency (23% corporate tax vs. personal rates up to 50%), liability protection, and easier invoicing of large corporate clients. Olim Hadashim (new immigrants) receive significant income tax benefits for the first 10 years — the Tax Authority's Olim desk can advise on applicable exemptions.
🏢 Business Structures
Atzmai (עצמאי) · Atzmai — Self-Employed / Sole Trader
Sole Trader / Self-Employed
None
Min. capital
1–3 days
Setup time
Liability: Unlimited personal liability
Setup cost: NIS 0–500 (registration fees at Tax Authority; no minimum capital)
Best for: Freelancers, consultants, sole traders with low liability risk. Simplest structure. Must register with the Israel Tax Authority (Rashut HaMisim) and National Insurance Institute (Bituah Leumi).
Chevra Baam (חברה בע"מ) · Chevra Ba'eravan Mugbal — Private Limited Company
Private Limited Company (Ltd)
NIS 1 (effectively no minimum in practice)
Min. capital
2–4 weeks
Setup time
Liability: Limited to company assets; shareholders protected from personal liability
Setup cost: NIS 2,500–6,000 (Companies Registrar fees + lawyer)
Best for: The standard structure for startups, SMEs, and contractors in Israel. Most Israeli tech companies use this structure. Offers liability protection and facilitates investment. Corporate tax rate: 23% on profits.
Shutafut (שותפות) · Shutafut — Partnership
General Partnership
None
Min. capital
1–2 weeks
Setup time
Liability: Unlimited joint and several liability for all partners
Setup cost: NIS 500–2,000 (Registrar of Partnerships filing fee)
Best for: Small professional practices (lawyers, accountants, architects). Partners share profits and liability. Requires registration with the Registrar of Partnerships (Rasham HaShutafuyot). Partnership income is taxed at each partner's personal income tax rate.
Amuta (עמותה) · Amuta — Non-Profit Association
Non-profit Organisation / NGO
None
Min. capital
3–8 weeks
Setup time
Liability: Members generally not personally liable for association debts
Setup cost: NIS 1,500–4,000 (Registrar of Amutot filing fee + legal)
Best for: NGOs, charities, religious organisations, community groups. Tax exemptions available with recognition by the Tax Authority (Section 46 status). Registered with the Registrar of Amutot (Rasham HaAmutot).
Snif Chevra Zarit (סניף חברה זרה) · Snif Shel Chevra Zarit — Branch of a Foreign Company
Foreign Company Branch
None (parent company equity applies)
Min. capital
3–6 weeks (registration with the Companies Registrar — Rasham HaChevrot)
Setup time
Liability: Parent company bears full liability for all branch obligations
Setup cost: NIS 2,000–6,000 (Companies Registrar registration fee + legal and translation costs)
Best for: Foreign companies wanting a registered presence in Israel without incorporating a separate legal entity. Subject to Israeli corporate tax (23%) on Israel-source income. Must file annual Israeli financial statements. Popular with foreign tech, pharmaceutical and defence companies entering the Israeli market.
Business Setup
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