Choosing the status of your company in Israel
Is it better to be in Hevra Baam or Ossek Mourche?
This article summarizes the advantages and disadvantages of each status.
For ease of reading and comparison, we present this article in the form of a comparison table.
|Ossek Mourche||Hevra Baam|
|1. Organizing an ownership relationship||Decisions are taken directly by the Ossek Mourché.||Company decisions are taken in accordance with the company's articles of association and the law on companies in Israel.|
|2. Relations with the tax authorities in Israel.|
Directly in front of the business owner.Exposure to collection procedures (seizures, ban on leaving the country, etc.), direct imposition of civil and criminal penalties. at owner of the company.
The Ossek Mourché is directly responsible for his actions.
Directly in front of the company. The exhibition concerns only the company's assets.
(With the exception of sanctions against the manager in the event of fraud or criminal intent).
A "significant shareholder" (+10% of the company's shares) must file an annual tax return.
|3. Income tax in Israel.||Ossek Mourché can be taxed up to a marginal tax rate of 50%.Click here to find out about personal tax brackets in Israel.|
The company is subject to corporate income tax in Israel, at the linear rate of 23%.When funds are withdrawn from the company, the shareholder is taxed according to the nature of the withdrawal:
- 30% of taxation for a shareholder holding more than 10%,
- 25% of taxation for a shareholder holding less than 10%.
|4. Bitouah Leoumi||Tax of 5,97% up to a monthly profit of 6,331 Nis.17,83% for a monthly profit of 6,332 to 44,020 Nis per month||No charge for Bitouah Leoumi on the company's profits.|
|5- Reputation and stability||Based on the company owner: function, knowledge...|
Corporate image, unlimited lifespan, easy transfer of ownership / exchange of managers / transmission and succession.
We remind you that sucession is not taxed in Israel.
|6. Bookkeeping.||Single entry or double entry for high sales files.|
Double entry only. (Mandatory bank reconciliation on all company accounts.
Bank card reconciliation.
|7. Legal fees||No, an Ossek Mourché does not have to be registered with the Chamber of Commerce in Israel.|
|8. Recognition from expenses||Partially (Adjustments in the annual balance sheet).||Entirely (subject to certain rules).|
|9. Employment law|
Does not apply to business owner There's no convalescence, sick leave or unemployment... The Ossek Mourché doesn't receive pay slips.
He may, however, have employees.
Applies to employees and shareholdersFor example: a shareholder must pay a pension contribution to himself on his payslip.
(Possibility of adapting and adjusting as required).
|10. Liability and bankruptcy|
Complete personal exhibition Ossek Mourché's personal liability.
No legal separation between Ossek Mourché's actions and his person.
The company is liable for the value of its assets.
No personal exhibitions (except - personal guarantees, non-payment of shares, liabilities to the company, removal of screen ...)
We suggest consult a chartered accountant before making a final decision on the subject.
The choice between a Hevra Baam or an Ossek Mourche must be carefully considered.
Our accounting firm based in Tel Aviv and Jerusalem will advise you and optimize your tax choices.
This article is not intended as legal advice.
Opinions, conclusions and other information contained in this article that have not been delivered in the course of Dray & Dray's business activities are neither given nor endorsed by Dray & Dray.