Registration of Company in Israel

Registration of company in Israel

Israel is the state located on the eastern shore of the Mediterranean Sea. According to its political system, Israel is the Parliamentary Republic. The capital is the city of Jerusalem.

The country is inhabited by approximately 7 million people. The official languages in Israel are Hebrew and Arabic.

Currency is Israeli Shekel (NIS).

Israeli corporate legislation takes the common law system as a basis. It makes fast registration of the companies possible in Israel with a relatively small number of formalities. At the same time, the company may be engaged in any form of legal activity. Company in Israel is not an offshore company in the classical meaning of the word, but it can be effectively used in the trade and investment schemes. When the direct use of offshore is impossible, it is a company in Israel which may be the best solution for business owners.Business in Israel becomes increasingly popular.

The legal framework in Israel

The activity of commercial companies in Israel is regulated subject to the Law "On companies" (1999).

The forms of doing business in Israel

• companies (associations);
• branches and representative offices of foreign companies;
• partnerships;
• cooperatives;
• noncommercial organizations.

In accordance with the legislation the companies are divided into two categories:

- public companies (joint stock companies);

- private companies (private companies limited by shares).

The most common organizational and legal form of Israeli companies is a limited liability company (LLC).

Why it is profitable to register or buy a company in Israel:

If the LLC becomes insolvent in Israel, only company assets are used to repay its debts.Employees of the company in Israel do not bear personal obligations, and liability of shareholders is limited to the amount of outstanding shares.It is also important that shareholders have more possibilities to control over the activity of the company.

LLC in Israel has the advantage of raising finance through the sale of issued shares to investors.The new shareholders and investors can easily assimilate. The relatively small tax is reduced year by year, and in 2016 it amounted to 18%.

The company continues to exist even in case of death, resignation or bankruptcy of board members and participants.

Cons of LLC in Israel.

Relatively high cost of establishing a company, and longer lasting registration, in comparison, for example, with a small business.

Higher level of:

- imposed penalties,

- duties,

- current expenses,

- control by the public authorities.

Private or public company.

The public company must publish an annual report, which includes financial statements and the report of the Board of Directors, in the form prescribed by law. This information is publicly available.

Private company should not be composed of more than 50 participants (shareholders).

Information concerning the activity and financial conditions of the company is not available to a wide range of people.

Branches/representative offices of foreign companies.

A foreign company that wants to register its branch, representative office, or subsidiary in Israel must be registered in the Register of Companies. It is necessary to provide a list of directors and the company's representative in Israel.

Partnerships.

Registration and activities of Israeli partnerships are controlled according to the Decree on partnerships. Contract acquiring the value of the Charter is at the core of the relationship between the partners.

Cooperatives.

This form of business in Israel is primarily used in agriculture and transport.

Noncommercial organizations.

Noncommercial enterprises are generally used by sports, charitable, educational and other types of organizations that do not aim to make a profit with the further distribution among members of association(as opposed to companies and partnerships). Pay attention that these enterprises may be engaged in economic activities.The only nuance is laid down in the fact that the incomes should be directed at the development of the statutory activity of the organization.

Registration of the company in Israel. Primary requirements.

• At least one director and one shareholder are required.
• Shareholder and director (that may be one and the same person) should not necessarily be the residents of Israel.
• The founding documents are allowed to be registered in English. The Charter of the company must be in Hebrew.
• Company Name should be chosen in Hebrew, but English translation can also be registered. The title should not contain such words as royal, government, cooperative, municipal, chartered, chamber of commerce, imperial, society of association and others.
• Company Name of LLC in Israel must necessarily include an abbreviation LTD.
• The registration procedure is simple, but requires attorney’s certification of the signature of the registering person.
• If a company has non-resident owners or directors, its registration initially takes place on behalf of local incorporators, and only after that all the necessary changes shall be carried out.

Bookkeeping in Israel

All the companies doing business in Israel are required to submit audited annual financial statement, within 5 months after the end of the fiscal year. The company's activities throughout the year should be reflected in the report. Reporting tax period shall usually be a calendar year. Sometimes other time-limits apply with regard to branches of foreign public companies.

Taxes in Israel

Company in Israel shall pay the following types of taxes:

- corporate,

- on representations,

- collaborating taxes,

- on profits,

- value added.

The tax system in Israel is based on the territorial principle, Thus, the income of the company is subject to taxation if this income is received in Israel.

The company in Israel does not pay taxes in the following circumstances:

• The company's shareholders are non-residents of Israel:
• All directors of the company are not residents of Israel;
• The company does not conduct activities in Israel and does not interact with the Israeli legal entities/individuals.
• Management of the company is carried out abroad.

Earnings of Israeli offshore company, which pass through the accounts in local banks, are subject to taxation at a rate of up to 52%.

It is possible to conclude an agreement on the amount of recognized income from operations related to mediation, at a rate of 1%.

Thus, the aggregate tax may amount to 0.52% of the turnover. A taxable base may be reduced by means of recognized costs.

Registration of the company in Israel can be a great start and the continuation of international business.

With our help You can register or buy a company in Israel at the shortest possible time.

Registration of companies and offshore companies is one of the main directions of our work. If it is necessary, the clients can be provided with additional information regarding the offshore areas of Israel.