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

 

Open business in Israel seek entrepreneurs from different countries. Many diasporas are widely represented in the country, which significantly helps to establish business ties.

 

The Government of Israel uses all available means for the development of entrepreneurship at the international level. In particular, agreements on a free trade zone were signed with key states of the European Union, countries of Latin and Central America, including the United States. In addition, double taxation treaties have been concluded with more than 40 countries.

 

The country takes an active part in industrial and technological cooperation between states. All this increases the level of competitiveness and attracts additional investment. In this article, we answer the question of how to open and conduct a business in Israel for a foreigner in 2020. 

 

How to open a business in Israel

Before moving on to a practical guide on registering a business in Israel, I would like to note several features of the business life of this country.

 

In general, Israeli businessmen have a fairly democratic behavior in business culture. During official meetings and signing of contracts, a friendly and relaxed atmosphere prevails. The openness and honesty of a person is appreciated.

 

Before negotiations, it is advisable to gather information about the partner company and during the conversation, unobtrusively share your knowledge. Israeli businessmen are very ambitious and motivated people, so references to their activities will help show a serious approach to business and build confidence.

 

There is no strict dress code in Israel. However, foreign entrepreneurs who are just starting to learn in the country, the minimum requirements of a business style must be observed. Many Israelis are very religious people, in particular regarding the consumption of kosher food. Therefore, when choosing a restaurant or dinner at home, you need to consider this point.

 

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

 

Business Benefits in Israel

1. Competitiveness and innovative potential.

2. Highly educated and skilled workforce, as Israeli universities provide quality knowledge.

3. Use of modern technology and scientific achievements.

4. Flexibility of the economy and government support.

5. Multinationality and cultural wealth.

In Israel, a foreigner can be registered as a foreign company, in the form of a branch, subsidiary or representative office, or open a new business. To do this, you will need to use the services of local professional law firms, consult with Israeli lawyers and accountants. You can use the services of an accountant in Haifa.

 

Procedure and cost of registering a company in Israel

 

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

Form 1 (application for registration of a company);

Association memorandum (goals and responsibilities of shareholders are indicated);

charter, with the signatures of the owners of the company, authenticated by an attorney.

The charter must be drawn up in Hebrew, the rest of the documentation can be in English or Arabic. The cost of registering a company in Israel in 2019 is 2,645 shekels (630 euros). The 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. Organize a accountancy firm in Israel.

 

1. Registration with the Departments of Income Tax and VAT at the Ministry of Finance of Israel. These are two separate procedures. It is necessary to provide copies of all registration documents of the company and passports of the owners. The procedure is free, but may take more than a month.

2. Registration at the National Insurance Institute. Registration of a social package for employees, including unemployment benefits, medical insurance and pensions. 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

Learn how to opening a new business in israel in the following forms:

 

• Foreign company. Opening a branch or branch of a foreign company in Israel.

• Self-employed person. An analogue of a Russian individual entrepreneur (IP) or a Ukrainian private entrepreneur (PE).

• Partnership It is the conclusion of an agreement between several persons for joint business.

• Cooperative. This form is mainly used for transport and agricultural enterprises.

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

• Closed Joint Stock Company. Mostly select limited liability of shareholders. You can register for one or more persons. There are no requirements for a minimum authorized capital. Very often this amount is 100 shekels.

• Public corporation. Used for large companies whose shares are freely traded on stock exchanges.

• Another form of ownership for an enterprise 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

Business Taxes in Israel

Almost all Israeli companies undergo an audit every year. As a result, a tax report is prepared and submitted to special services within 5 months after the end of the calendar year.

 

Israel's main tax rates in 2020

1. Corporate tax - 23% (from January 1, 2018)

2. Dividend tax - from 25 to 32%

3. VAT - 17%, reduced rate - 8.5%

4. Social insurance funds - from 3.95 to 14.6%

5. Income tax in Israel in 2019

6. Annual income from 0 to 75 720 shekels - 10%

7. Annual income from 75 721 to 108 600 shekels - 14%

8. Annual income from 108 601 to 174 360 shekels - 20%

9. Annual income from 174,361 to 242,400 shekels - 31%

10. Annual income from 242,401 to 504,360 shekels - 35%

11. Annual income from 504,361 to 649,560 shekels - 47%

12. Annual income of more than 649,560 shekels - 50%

 

In order to optimize taxation, most likely you will 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 science. Sometimes the amount of cost coverage reaches 50%.

 

Directions for doing business in Israel

The most common type of business in Israel for foreigners is small business. The influx of migrants from the countries of the former USSR in the early 90s 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 the development of small business, where immigrants can get advice and take special courses. Here is a link to the official MATI agency.

 

Among the promising areas for business in Israel, the medical industry, tourism and the field of information technology stand out. In principle, the structure of the Israeli market is quite diverse, depending on the demand in a particular region, you can organize your own business in the service sector. Starting from the repair of 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 that innovation visas would be issued to foreigners to create startups in Israeli territory.

 

In the end, you can buy a ready-made business in Israel and not puzzle over the discovery of something new.