Israel is a tech-driven economy and one of the world’s leading hubs for innovation, particularly in cybersecurity, fintech, life sciences, and agritech. Strategically located between Europe, Asia, and Africa, Israel offers strong access to global markets, advanced infrastructure, and a highly educated workforce. Government-backed R&D incentives and a thriving startup ecosystem make it attractive for foreign investment. Known globally as the “Startup Nation,” Israel boasts one of the world’s highest concentrations of high-tech companies and R&D investment relative to GDP.
Unlock growth opportunities in Israel with Cerity Global as your trusted partner. We offer end-to-end support for establishing your legal entity, navigating Israel’s often complex regulatory landscape with clarity and efficiency.
From company registration to ongoing back-office support, including HR, payroll, benefits, accounting, tax and compliance, Cerity Global simplifies the process so you can focus on growing your business.
Need to hire quickly before your entity is set up? We offer interim EOR services in Israel, enabling you to onboard talent fast. Once your entity is established, we ensure a smooth transition of your employees from the EOR Structure to your own legal entity, without disrupting payroll or compliance.
Our experts stay ahead of regulatory changes to keep your operations aligned with Israel’s employment and tax laws, helping you scale confidently and compliantly.
The most common structure for foreign investors. Can be 100% foreign-owned, offers limited liability, and requires at least one shareholder and one director (directors may be foreign nationals).
Allows a foreign company to operate in Israel without creating a separate legal entity. The parent company remains fully liable.
For non-commercial activities like market research and liaison. Cannot generate revenue in Israel.
For large-scale operations, subject to more stringent reporting, audit, and disclosure requirements.
No residency requirement for directors. At least one director is required, who can be a natural person or legal entity, and can be a foreign national. However, having a local director can facilitate banking and administrative processes.
Requires a minimum of two directors, with no mandatory residency requirement. However, at least 25% of directors must be Israeli residents if the company’s shares are listed on the Tel Aviv Stock Exchange.
Partners can be natural persons or legal entities, with no residency requirements. However, general partners must have unlimited liability for partnership obligations.
The owner must register with Israeli tax authorities and obtain appropriate work permits if they are not Israeli citizens or residents.
Must appoint a local authorized representative who can be a foreign national but must be registered with Israeli authorities.
Bank account setup in Israel follows stringent procedures due to comprehensive regulatory requirements:
Bank Account Setup in Israel: Process and Requirements
Before Incorporation:
After Incorporation:
Note:
Israeli banks have strict compliance requirements including extensive KYC procedures. Enhanced due diligence is mandatory, and banks may request additional guarantees or documentation, particularly for foreign-owned entities.
Required documents include certificate of incorporation and Memorandum of Association, extract from the register of companies, board resolution authorizing account opening, identification and documents of all directors, shareholders, beneficial owners, business plan and proof of business activities, proof of registered office address, and tax file number from Israeli Tax Authority.
Cerity Global supports companies in their global expansion plans and helps in legal entity setup, registration and ongoing support services. With us, you can quickly set up a legal entity, operate compliantly, and expand globally. Banking and account activation timelines vary by bank and the completeness of documentation; allow several business days to a few weeks in practice.
Employment in Israel is primarily governed by the Working Environment Act and related legislation:
Employment contracts must be in writing within 30 days of employment commencement for contracts exceeding one month, provided in Hebrew or Arabic (English contracts are accepted if both parties agree).
Some of the standard details mentioned in the written contract include:
The different types of employment relationships are:
Permanent Employment
The standard form of employment where employees work under indefinite-term contracts with full rights under Israeli labor law. Permanent employees enjoy comprehensive protection and benefits, including severance pay rights and extensive social benefits.
Fixed-Term Employment
Employment contracts with specific end dates, permitted for temporary needs, seasonal work, or specific projects. Fixed-term contracts cannot be used to circumvent permanent employment rights and are subject to strict limitations on renewals.
Part-Time Employment
Employees working fewer than the standard full-time hours with proportional rights to benefits and social insurance coverage. Part-time employees have strong protection against discrimination and equal rights per hour worked.
Temporary Employment
Employment through temporary staffing agencies, subject to specific regulations. Temporary workers have rights to equal treatment regarding basic working conditions after certain periods.
In Israel, the probationary period can be up to 6 months for most positions (3 months for employees under 18). During this period, either party can terminate employment with one week’s notice or payment in lieu.
The standard working hours in Israel are 42 hours per week and 8 hours per day. The working week typically runs Sunday through Thursday, with Friday and Saturday being the weekend (48-hour rest period). Some sectors operate different schedules based on collective agreements.
Overtime
Overtime work is limited and requires employee consent. Weekly overtime is limited, and employees can refuse overtime work beyond legal limits.
Notice periods in Israel vary based on length of service and method of payment:
Monthly salary employees:
Hourly/daily employees:
Severance pay is mandatory for employees terminated after at least one year of service, calculated as one month’s salary for each year of employment, subject to certain caps and adjustments.
Foreign nationals can live and work in Israel by securing appropriate work authorization. The process varies significantly based on nationality, with different pathways for Jewish individuals and non-Jewish foreign nationals.
Work Visa & Permit Options in Israel
B-1 Work Visa
For foreign nationals with employment offers from Israeli employers.
A-1 Temporary Residence Visa
For investors, entrepreneurs, and those with significant economic ties to Israel.
Expert Worker Visa
For highly skilled professionals in shortage occupations.
Investor Visa
For significant investors in Israeli businesses or real estate.
Student to Work Transition
For international students completing studies in Israel.
Key Requirements:
Israel has specific programs to attract talent in high-tech and R&D sectors, with streamlined processes for qualified professionals in these areas.
Employees are entitled to annual leave based on length of service:
Annual leave must be taken within 14 months of the entitlement year, with vacation pay at 105% of regular salary.
Female employees are entitled to 26 weeks of maternity leave:
Male employees are entitled to 7 days of paternity leave, with 5 days paid by the employer and 2 days by National Insurance.
Israeli employees called for military reserve duty are entitled to leave with partial compensation from the state. Employers must hold positions and provide additional compensation in many cases.
Employees are entitled to paid sick leave after 3 months of employment:
The following statutory holidays are observed in Israel:
The most common pay frequency is monthly, typically paid by the last working day of each month.
Payslips are mandatory and must include detailed breakdown of gross salary, deductions, taxes, and net pay in Hebrew (English translations accepted for foreign employees).
Various mandatory contributions are deducted from gross salary including National Insurance, health insurance, and pension contributions, totaling approximately 18-22% of gross salary.
Israel has a comprehensive social insurance system with mandatory contributions:
National Insurance (Bituach Leumi)
Health Insurance
Recreation Payment (Dmei Havra’a)
Pension and Severance Fund
Accounting standards in Israel follow Israeli Generally Accepted Accounting Principles (Israeli GAAP) for most companies, while public companies must use International Financial Reporting Standards (IFRS).
Companies in Israel must file annual reports with the Registrar of Companies:
Statutory audit is required for companies that exceed two of the following thresholds:
Public companies, banks, insurance companies, and companies with public debentures have mandatory audit requirements regardless of size.
Audits must be conducted by qualified auditors certified by the Institute of Certified Public Accountants in Israel.
The standard corporate income tax rate is 23% for most companies. Special rates apply to certain sectors and qualifying companies in development areas may receive reduced rates.
Israel levies VAT at a standard rate of 18% (increased from 17% in January 2025). VAT registration is mandatory for businesses with annual turnover exceeding ILS 101,773.
Corporate income tax returns are due by 15th of following month for National Insurance and income tax withholding.
Penalties for late filing and tax non-compliance can include monetary fines and criminal penalties for serious violations.
Israel has comprehensive transfer pricing regulations requiring arm’s length pricing for related party transactions:
Israel has implemented CbC reporting requirements for multinational groups:
Israel follows OECD transfer pricing documentation standards:
Master File
Local File
Israel’s Privacy Protection Law governs personal data collection and use. It aligns with GDPR principles, with specific rules for data transfer outside Israel. The Privacy Protection Authority (PPA) is the main regulator.
Israel’s AML framework is governed by the Prohibition on Money Laundering Law and implementing regulations.
Obligated entities: Banking corporations and financial institutions, insurance companies and agents, securities dealers and portfolio managers, foreign currency dealers, credit card companies, real estate agents and lawyers (in certain transactions), dealers in precious metals and stones, casinos and gaming operators.
Key requirements:
Penalties: Significant administrative fines up to ILS 2.3 million for individuals and ILS 11.6 million for corporations, plus criminal penalties including imprisonment up to 10 years for serious violations.
Reasons you should setup legal entity in Israel:
Cerity Global ensures your business expansion in Israel is fast, compliant, and future-ready, so you can focus on growth while we manage the back-office tasks.
Economic figures are subject to change based on quarterly reports and market conditions.
Cerity Global combines deep local knowledge with proven expertise to make your Israel business establishment effortless and compliant. Whether you’re looking for legal entity setup and registration or ongoing support, we’re your trusted partner for sustainable global expansion in Israel.
Disclaimer – The information provided is for informational purposes only and does not constitute legal, business, or tax advice. Entity setup requirements, tax rates, and economic data are subject to change and may vary by location.
To discuss your needs and how we can help you achieve a compliant and efficient expansion.