Features of Doing Business in Israel

Choosing Israel for doing business, a novice entrepreneur will inevitably encounter the complexities and peculiarities of this jurisdiction. Below we will consider and analyze in detail the possible problems of registering a business in Israel, and familiarization with this article will allow you to avoid most of the mistakes at the very beginning of your path.

First of all, it is worth determining whether your business is aimed directly at Israel, whether you have counterparties in this country.

Offshore

If your customers and contractors have are outside of Israel, you only need to choose a place to register the company. However, after registration, the question naturally arises of the possibility of opening an account in Israel or beyond.

It must be borne in mind that when opening an account outside of Israel, the company is exempt from paying taxes and acting through an account in Israel, the company will be forced to pay them in a general manner.

Law and Trust International approaches this task comprehensively and builds on the immediate needs of the client. Depending on the individual task, the jurisdiction for opening an account is selected.

Onshore company

If your business is directly related to Israel, you have tax liabilities in the country. Due to the strict tax regulations of Israel, foreign citizens are not allowed to independently provide the tax burden of the new company.

This limitation entails the need to appoint a local tax pledger. One of the following persons may act as a guarantor:

• accountant;
• lawyer;
• hired director, resident of Israel.

A pledger of a company with a foreign founder assumes responsibility for possible tax evasion. In order for the pledger to be able to cover the costs of penal, tax and legal costs in case of a violation on the part of the company, the founder must create a trust fund.

The amount of compensation for the services of a tax representative, the amount of cash security directly depends on the selected type of company activity and the level of risk of the inability to provide tax obligations.

In order to prevent these costs from becoming an unexpected discovery, Law and Trust International specialists conduct a thorough analysis of the customer’s activities, determine the level of risk and the size of expenses, and select the necessary specialists.

Banking sector

When opening an account in Israel, it is worth taking into account the presence of difficult relations between the banking sector of Israel and the banks of the Arab countries, including the UAE.

Despite these difficulties, by registering a company in Israel, you get undeniable advantages:

• A company with foreign founders that does not operate in Israel receives a tax exemption;
• Remote business;
• If a company operates in Israel, its tax burden may be reduced;
• Israel has a stable economy;
• Reliable banking system;
• Prestigious jurisdiction;
• Great investment potential.

More information about the registration procedure itself can be found in the relevant section on our website: https://lawstrust.com/en/company-formation/israel

For advice on issues related to doing business in Israel, please contact our managers.