Israel has a powerful economy with a high level of development of modern technologies and medical industry. Competent policy of the state in the fiscal sphere and stability of the banking sector allow the country to maintain a favorable investment climate over the past decades.

The government of Israel uses all available ways to develop entrepreneurship at the international level. In particular, it has signed free trade agreements with key European Union countries, Latin and Central American countries, including the United States. In addition, with more than 40 countries have concluded double taxation treaties.

Business in Israel

The country takes an active part in industrial and technological cooperation between states. All this increases the level of competitiveness and attracts additional investments. In this article we will answer the question of how to open and conduct business in Israel to a foreigner in 2024.

How to open a business in Israel

Before we move on to a practical guide to registering a business in Israel, I would like to note a few features of business life in this country.

In general, Israeli entrepreneurs adhere to a fairly democratic behavior in business culture. During official meetings and signing contracts, a friendly and relaxed atmosphere prevails. A person's openness and honesty are valued.

Before negotiations it is desirable to collect information about the partner's company and during the conversation unobtrusively share your knowledge. Israeli businessmen are very ambitious and motivated people, so mentioning their activities will help to show a serious approach to business and build trust.

There is no strict dress code in Israel. However, foreign entrepreneurs who are just beginning to settle in the country, the minimum requirements of business style should be observed. Many Israelis are very religious people, in particular with regard to the use of kosher food. Therefore, when choosing a restaurant or dining at home, you need to take this point into account.

According to many reputable rating agencies, Israel takes the leading position in the world in terms of return on investment and innovation potential. It is not surprising that the largest multinational companies, such as Microsoft, Google, Apple, Apple, Facebook, Philips open their offices in this country and increase financial investments. And there is an explanation for this.

Advantages of doing business in Israel

  • Competitiveness and innovative potential.

  • Highly educated and skilled labor force, as universities in Israel provide quality knowledge.

  • The use of modern technology and scientific advances.

  • Flexibility of the economy and government support.

  • Multinationality and richness of culture.

In Israel, a foreigner can register as a foreign company, in the form of a branch, subsidiary or representative office, and open a new business. To do this will need to use the services of local professional law offices, consult with Israeli lawyers and accountants.

Company registration in Israel

Procedure and cost of company registration in Israel

  1. Registration of the basic documents of the company, certified by an Israeli lawyer in the Ministry of Justice of Israel.

    • Form 1 (application for registration of the company);

    • Memorandum of Association (specifying the objectives and responsibilities of the shareholders);

    • Articles of Association, with the signatures of the owners of the company verified for authenticity by an attorney.

    The Articles of Association must be drafted in Hebrew, the rest of the documentation can be in English or Arabic. The cost of company registration in Israel is 2,645 shekels. The services of a lawyer will cost an average of 450-500 euros. After registration, the company will be assigned an identification code and a certificate will be issued.

  2. Registration with the Income Tax and VAT Departments of the Israeli Ministry of Finance. These are two separate procedures. Copies of all company registration documents and passports of the owners must be submitted. The procedure is free of charge, but can take more than a month.

  3. Registration with the National Insurance Institute. Registration of the social package for employees, including unemployment benefit, health insurance and pension. Takes about 7 days.

As a result, the procedure for registering a business in Israel can take from one to three months.

Forms of ownership for business in Israel

You can open a business in Israel in the following forms:

  1. Foreign company. Opening a branch or office of a foreign firm in Israel.

  2. Self-employed person.

  3. Partnership. Represents the conclusion of an agreement between several persons to jointly conduct business.

  4. Cooperative. This form is mainly used for enterprises in the transportation and agricultural industries.

  5. Company. The most common form of ownership in Israel.

    • Closed Joint Stock Company. Mainly choose the limited liability of shareholders. It can be registered for one or more persons. There are no requirements for the minimum authorized capital. Very often this amount is 100 shekels.

    • Open joint-stock company. It is used for large companies whose shares are freely traded on stock exchanges.

Another form of ownership for a company in Israel is a non-profit organization. This includes budgetary institutions, charitable foundations and other non-profit organizations. This form is not suitable for doing business.

Taxes in Israel

Taxes in Israel

Almost all companies in Israel are audited annually. As a result, a tax report is prepared, which is submitted to special services within 5 months after the end of the calendar year.

Rates of major taxes in Israel in 2024

  • Corporate tax – 23% (as of January 1, 2018)

  • Dividend tax – 25 to 32%

  • VAT – 17%, reduced rate (non-profit organizations) – 7.5%

  • Social insurance funds – from 3.95 to 14.6%

Income tax in Israel in 2024

  • Annual income from NIS 0 to 84,120 – 10%

  • Annual income from NIS 84,120 and 120,720 – 14%

  • Annual income from NIS 120,720 to 193,800 – 20%

  • Annual income from NIS 193,800 to 269,280 – 31%

  • Annual income from NIS 269,280 to 560,280 – 35%

  • Annual income from NIS 560,280 and 721,560 – 47%

  • Annual income over NIS 721,560 – 50%

In order to optimize taxation, you will most likely have to hire an experienced accountant from local specialists. In addition, the Israeli government has developed special programs to provide tax incentives and grants for foreign investors. Especially in the fields of industry, tourism and scientific sphere. Sometimes the amount of coverage reaches 50%.

Directions for business in Israel

The most common type of business in Israel for foreigners is small business. The influx of migrants from the former Soviet Union in the early 90's of the last century forced the Israeli government to look for additional ways to stimulate small business.

The main goal was to provide people with jobs. As a result, today in Israel there are special centers for small business development, where immigrants can get advice and take special courses.

Among the promising areas for business in Israel stand out medical industry, tourism and information technology. The structure of the Israeli market is quite diverse, depending on the demand in a particular region, you can organize your business in the service sector. Starting from repairing plumbing and ending with legal advice.

As you know, Israel actively supports innovation and scientific development. Therefore, the road is open to talented entrepreneurs with interesting ideas. In addition, in 2015 it was announced the beginning of the issuance of innovation visas to foreigners to create startups on Israeli territory.

After all, you can buy a ready-made business in Israel and not break your head over the opening of something new.

Investing in the Israeli economy will not allow you to obtain a residence permit. It remains to conduct business in Israel remotely, living in their own country. In this case, you will need the help of Israeli business partners. Alternatively, you can use another way of moving to Israel to obtain official status.

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