Sole proprietorships in Israel

sole proprietorships in Israel Accounting firm Dray & Dray

Definition of legal structure 

The legal form of sole proprietorship in Israel is similar to self-employed status as we know it, i.e. the legal form is registered under the self-employed status of the individual.

Your structure number will therefore be your Teoudate Zeoute number, so there is no "legal separation" between the shareholder and the legal structure.

Legal opening 

The self-employed status does not require any legal opening, as no legal structure is created as such.

That way, you don't need a lawyer, or to draw up articles of association or other partnership agreements.

If you intend to employ staff, we strongly recommend that you draw up solid employment contracts, which will enable you to clearly define the relationship established, and the expectations expected from both parties.

Registering with the tax authorities 

Opening the file with the tax authorities is very quick, but requires several administrative forms to be completed.

Tax and social security obligations 

The self-employed person will be subject to progressive taxation as well as the payment of bitouah leoumi (social security contributions) and VAT, depending on his status.

From a tax point of view, there are 2 types of sole proprietorship in Israel:

  • Ossek patour (invoicing without VAT), which can be applied to any self-employed person with annual sales of less than around 100,000 shekels (see table below, by year). (Except in exceptional cases - doctors, lawyers, etc.).
  • Ossek Mourchei (invoicing with VAT), which applies to any self-employed person with annual sales in excess of around 100,000 shekels (see table below, by year).

Osek Patur

He must submit an annual profit and loss statement summarizing income and expenditure to the mas ahnassa (Israeli tax office), together with the annual tax return.

There is often no need to make monthly declarations, but only at the end of the year.

However, it is quite likely that the mas ahnassa, or Bituah Leumi, will require monthly installments.

It's important to point out that certain business sectors are not allowed to bill as Ossek Patour. These include lawyers, doctors and consulting services.

Read also: Questions & Answers : The Ossek Patour

Osek Murshe 

  • He must declare his sales to VAT (maam) and the tax office (mas ahnassa) on a regular basis (usually every 2 months) by making the various payments.
  • Can reclaim VAT paid, unlike Ossek Patour.
  • He must pay monthly installments to the bituah leoumi.
  • He may have employees, to whom he will pay a salary and declare them in accordance with Israeli law.

Balance sheet and annual declaration 

The self-employed person must submit an annual profit and loss statement summarizing income and expenses to the mas ahnassa (Israeli tax office) with the annual tax return.

Read also: Understand how Israel's tax brackets work.



Kanfei Nesharim 68. Merkaz Oranim.

Tel Aviv

31 boulevard Rothschild


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

Talk to the Experts


Our latest tax and accounting videos

In partnership with :

Read our latest articles & tips.

In partnership with :
Leasing in Ossek mourche
Osek Murshe

Leasing in Ossek mourche

Leasing in Ossek Mourche - Optimize your expenses and benefit from tax deductions with leasing for Israeli entrepreneurs. Discover the advantages and obligations of leasing in Israel

Read more "


Our offices in Israel

Our firm specializes in Israeli accounting and taxation, with in-depth expertise in Olim Hadashim benefits and tax optimization.

Our consultants in Tel Aviv

English speaking accountants in Israel
Address: 31 boulevard Rothschild, Tel-Aviv (Israel)
Phone number: 03-9446635
Fax: 03-9494682
Email: office@cpa-dray.com

Our consultants in Jerusalem

English speaking accountants in Israel
Address: Kanfei Nesharim 68. Merkaz Oranim
Phone number: 02 631 9000
Fax: 02 631 9005
Email: office@cpa-dray.com