Israel

Company IncorporationIsrael Company Formation

In Israel it is possible to establish the following types of companies: Corporation, Private Companies, Public Companies, Companies limited by shares, Partnership, Joint Ventures.

The following government bodies are charged with enforcing and administering regulatory policy in Israel:

  • The Standards Institute of Israel (SII) is charged with setting the standards for imports and domestic goods.
  • The Israel Investment Center is the government organization responsible for approving incentives for foreign companies wishing to invest in Israel.
  • The Ministry of Industry and Trade promotes and approves all foreign investment which requests governmental incentives.
  • The Bank of Israel has control over the exchange rate and the nation’s monetary policy.

A foreign company setting up a branch in Israel must register as a foreign company with the Registrar of Companies. Registrar of Companies is the department of Ministry of Justice.
A foreign company may operate in Israel through a branch or through a subsidiary formed under Israeli law. A foreign company wishing to set up a branch in Israel must register as a foreign company with the Registrar of Companies. According to the requirements of the Israeli Companies Ordinance, a list of its directors and a power of attorney authorizing an individual residing in Israel to receive legal process served on the company must be filed with the Registrar of Companies.

In Israel there are the following limitations in concern with the title of the company:

  • The company with the limited liability should contain the abbreviation LTD
  • The title of the company should exclude the following words: royal, imperial, government, municipal, chartered, cooperative, chamber of commerce, society, association;
  • Other words that denote organizations established with respect of a special law.

The amount of the authorized capital should not be below 30 000 of the new Israeli Shekels. The minimum amount of the share holding capital equals to 2 new Israeli Shekels.

Annual Taxation and Fees

In Israel the following taxes must be paid: Corporate Taxes, Branch Operations Taxes, Partnerships Taxes, Capital Gains Tax, Value Added Tax.

Israel’s primary laws on income taxes are the Income Tax Ordinance (New Version) (ITO) and the Income Tax Law – Inflationary Adjustments of 1985 (the Inflation Law). According to the ITO, companies and individuals are subject to tax on “all income derived from, accrued in or received in Israel.” Taxable income includes business and trade profits, wages and salaries, as well as passive income, such as dividends, interest, royalties, rentals, real estate profits and capital gains.

Resident and non-resident companies are liable to pay corporate tax at a rate of 36 percent on income derived from, accrued or received in Israel. Companies that are residents of Israel are also liable to pay capital gains tax on capital gains, regardless of where such gains are derived. A non-resident company is also liable to pay capital gains tax on capital gains derived from the disposition of an asset located in Israel or an asset that, although not located in Israel, represents a direct or indirect right to an asset in Israel. An Israeli resident company is defined as a company registered in Israel and whose main activity is in Israel. A foreign registered company, however, will be deemed an Israeli resident only if it so requests or if it is controlled and managed in Israel.

Israeli offshore company profits passed via Israeli banks are taxable in the amount of 52% (36% capital gains tax and 25% dividends tax).

Capital gains tax is imposed on the gain derived upon the disposition of fixed and intangible assets.

Exempt from capital gains tax are gains from the sale of personal effects, sale of state-issued bonds and the sale of assets held outside Israel by a new immigrant, provided such sale took place within seven years from the date of establishing Israeli residency.

While keeping to the certain requirements, it is possible to get exempts from all corporate taxes. The requirements are the following:

  • Directors and share holders are non-residents of Israel
  • The absence of any business affaires in Israel or with Israeli legal entities or individuals
  • Company management and office is situated abroad
  • All the accounts are executed via foreign banks

Economy and Infrastructure

Israel’s international position in some areas of industrial and agricultural production capacity and exports is remarkable. Free trade agreements with Europe (the European Union and European Free Trade Association) and the United States facilitate Israel’s $32.5 billion of exports and its participation in international business enterprises, contributing to the country’s accelerated growth.

Israel’s unit of currency is the shekel was known as early as the second millennium BCE as a unit of weight for means of payment in gold and silver.