The Osek Patur Guide

Osek Patur guide

Starting a small business in Israel? What to know before opening an Osek Patur, how to register and file your taxes. Let’s start with the basics:

  • Who can register as an Osek Patur?
  • What tax compliance is required from an Osek Patur?
  • Does an Osek Patur pay tax?
  • What are the legal responsibilities of Osek Patur?

What is an Osek Patur?

The Osek Patur is the equivalent of a sole trader or self-employed. It’s an individual who opens a business without forming a corporate entity e.g. a company or partnership.

The Osek Patur program was established to enable small businesses to open and operate without being weighed down by complicated and costly compliance. So to help, the Israeli Tax Office has given small businesses the benefits of simpler administration (and as a result also lower professional fees) by simplifying the registration process and the annual reporting once the business has been established.

An Osek Patur must open a tax file and register with the Ma’am Office as a “VAT-exempt” business.

Registering an Osek Patur with the Ma’am & Tax Office

An Osek Patur can register directly with the nearest VAT office. It is not compulsory to call on an accountant for the opening of the file.

However, as with any business, several rules apply. It is important to understand the advantages but also the limits of the Osek Patur program before deciding to embark on the registration process.

Given the complexity of dealing with tax administrations in Israel, it is strongly recommended that you use the services of an accountant. In the long run you will save time, money and aggravation.

What is the status of an Osek Patur?

Does the Osek Patur have the legal status of a corporate entity?

The answer is no. An Osek Patur is an individual and is registered as such with the Ma’am Office. In other words, there is no legal separation between you and your business.

Who can register as an Osek Patur?

The Osek Patur program was created for small businesses. To be eligible to register and operate as an Osek Patur, the annual turnover of the business cannot exceed the specified threshold. The maximum revenue for the Osek Patur in 2024 is NIS 120,000 (2023: NIS 107,692).

This turnover is an annual limit – not monthly. So, if for example you register your Osek Patur during the month of July, and you bill 15,000 ILS per month until the end of the year. Your turnover for the year would be 15,000*6 = 90,000 ILS and you are therefore eligible to be registered as an Osek Patur for this year.

If you exceed the annual limit the following year, you will have to transform your business to an Esek Murshah (A VAT registered business). Read also: The Esek Murshe Guide.

An Osek Patur can be registered by individuals who trade in goods and merchandise, or by individuals providing services. Be careful, however: certain trades are excluded and are not eligible to be an Osek Patur. See the list here.


Who cannot register as an Osek Patur?

Professions, such as:
• Architect
• Engineer
• Private detective
• Lawyer
• Accountant
• Doctor
• Management advisor
• Insurance agent
• Psychologist
• Dentist
• Medical clinic.
• University Professors & lecturers
• Translator & interpreter
• Artistic performers
• Exam Administrators (Preparing, supervising, reviewing/marking)
• Authors.

Other sectors of activity:
• The instructor of a driving school
• Real estate agent
• Teacher at a school (also including Gan for children)
• Car dealer

If you are working in a profession featured on the list above, you cannot register as and Osek Patur. You can however, register as an Osek Murshe. The full list can be found in Hebrew under Section 13 of the VAT Ordinance 

What tax compliance is required from an Osek Patur?

An Osek Patur must submit information to the Israeli Tax Office twice a year. In this Osek Patur guide, we present the outline. If you need to know how to report as an Osek Patur don’t be shy to get in touch below.

1: Declaration of annual turnover

During the month of January which follows the tax year (calendar year: January I – December 31), the Osek Patur must declare its previous year’s turnover to the VAT Office. For example: in January 2022, you will have to declare the turnover achieved during the year 2021.

2: Annual tax declaration

From the month of March following the tax year (calendar year: January 1 – December 31), the Osek Patur must submit to the Tax Office an annual tax return. This declaration must be submitted on a Form 1301 and must include all your incomes: • Turnover and profit from your Esek Patur • Salaries received (if you were an employee) • Interest and dividend income • Rental income (if you owned a property which was rented to tenants) • Any other income received For example: In March 2022, you will have to declare all the income received during the year 2021.

Does an Osek Patur pay tax?

The word “Patur” in Hebrew means “exempt”. Many people are mistaken in thinking that the Osek Patur is exempt from taxes. The Osek Patur is’ Patur ‘ only in respect of Ma’am (VAT) only. It is however, taxable for Mas Hachnasa (Income Tax) as well as for Bituach Leumi (National Insurance). It goes without saying that given the low annual threshold limit for an Osek Patur (see above), the amount of tax levied are relatively low. For example, an Osek Patur (with no other income) and working 10 hours per week, with a monthly income of 3,000 ILS per month might not pay a single shekel in Income Tax or Bituach Leumi contributions.

The Osek Patur compliance package – annual fee

Dray & Dray accountants offer an Osek Patur compliance package for a fixed annual fee.

The Osek Patur program is designed to keep tax reporting simple and cheap for small businesses – and that’s exactly what we do! We worry about your compliance whilst you grow your business.



Kanfei Nesharim 68. Merkaz Oranim.

Tel Aviv

31 boulevard Rothschild


Téléphone : 02 631 9000
Fax : 02 631 9005
Email : office@cpa-dray.com

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