Set Up Business in Israel

Israel Expansion Guide

Global Upside helps companies set up, hire, and operate in Israel. Set up a legal entity quickly and easily with our solutions for branch, subsidiary, and rep office. Looking for an alternative to permanent establishment? Hire and pay employees in Israel without a legal entity by using our PEO & employer of record services. Once your business is set up, our teams can support with recruitment and staffing, human resources, employee benefits, payroll, accounting, and tax.

Capital City

Jerusalem

Currency

Israeli Shekel (₪)

Language

Hebrew

Government

Parliamentary Democracy

Country Overview

Israel’s economy has been seeing constant growth and during the last few years, has also registered for one of the best performances of OECD countries. Israel is one of the top exporters of diamonds, integrated circuits, cars, petroleum, and photo lab equipment.

  • Israel ranks as the 32nd largest economy in the world in terms of nominal GDP.
  • Israel ranks as the 11th largest economy in Asia.
  • Israel is the 24th best country for business.

Options for setting up a legal entity in Israel include:

Company

Company is a form of legal establishment that can have an unlimited number of investors, however, having more than 50 investors will lead the organization to various reporting prerequisites. There is no personal liability for the investors and the complete administration responsibility is governed by the board of directors.

Branch / Representative Office

Branch / Representative Office is an establishment that is not an individual entity but is the same as the original entity. It is characterized under the Israeli Companies Law 1999, as a Foreign Company.

It takes approximately two months to establish a legal entity set up in Israel.

According to the Labor Law of Israel, it is not necessary to provide a written employment contract, though it depends on the employers.
However, an employment contract needs to mention the below details in writing:

  • Name and address of the employer and employee
  • Date of commencement of the job
  • Job description
  • Identity of direct supervisor
  • Remuneration
  • Working hours
  • Probationary period
  • Leaves
  • Termination and notice period

The payroll frequency is monthly and wages can be paid in cash, cheque, or by electronic transfer.

The accounting standard-setting, in Israel, is initiated by the Israeli Accounting Standards Board (IIASB). Through its declaration of Accounting Standard No. 29, Adoption of International Financial Reporting Standards (IFRS), and in compliance with the Israeli Securities Authority (ISA) Securities Regulations (Annual Financial Statements) 2010, the IIASB necessitates the application of IFRS for all recorded establishments.

Corporate Tax

The corporate tax rate in Israel is 23%.

Value Added Tax (VAT)

The VAT rate in Israel is 17%.

In Israel, the laws that regulate the right to privacy are the Basic Law: The Protection of Privacy Law (PPL), 5741‑1981, and the guidelines published thereunder, Human Dignity and Liberty, 5752 ‑ 1992, and the regulations of the Israel Privacy Authority.

Anti-Bribery & Anti-Corruption Law

Israel recently approved the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. It is referred to as the OECD Anti-Bribery Convention. The OECD, also known as Organization for Economic Co-operation and Development, is a committee of experts that regulates the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism.

An alteration to the Israeli Penal Law, in July 2008, included the crime of bribery of a foreign public authority (Section 291A to the Israeli Penal Law 5737-1977).

The legal consequences of being found guilty of bribery and corruption offenses for public officials are:

i) Imprisonment for up to 10 years.
ii) A monetary fine of 1.13 million Israeli Shekels.
iii) An equal amount of four times the value of the advantage gained via bribery.

For any individual who provides bribe to a public officer, the penalty is imprisonment of up to 7 years or a similar fine.

Legal entities that are guilty of bribery have to pay a fine of:

i) An equal amount of four times the value of the advantage gained via bribery.
ii) A monetary fine of 2.26 million Israeli Shekels.