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Your business is ready to launch – Congratulations! Now it’s time to get set-up and registered. Registering a company in Israel is done in three stages.
1. Israeli Company Incorporation
A company is a legal entity in its own right. So, the first step of setting up a company in Israel, is to submit an incorporation application to the Israeli Registrar of Companies. A lawyer or accountant can do this for you. Once the application has been approved, the Registrar of Companies will issue a Certificate of Incorporation and an ID number for the new company.
2. Opening a bank account
Once the company has been registered, it’s time to open a bank account. Without a bank account, the company can’t register with the Tax Authorities and begin trading. If you’re company will have international transactions, make sure to choose a bank which can care for those requirements.
You’ll need to provide several documents during the process of opening a company bank account in Israel. In addition to the FATCA & CRS forms, you’ll need to provide several documents certified by an Israeli lawyer. As you’ll need to stamp the relevant forms with the company stamp make sure to purchase this in advance.
3. Registering an Israeli company with the Tax Authorities
Only after the company incorporation and the opening of the bank account, can an application for the tax registrations be submitted. The application should ideally be done by an accountant and will usually cover all the relevant tax offices – Corporation Tax, VAT, Tax Deductions (Payroll etc.), and Bituach Leumi.
You’ll need to provide a confirmation of bank account ownership and a contract with a supplier or customer. This shows the Tax Authority that the company has intentions of trade.
As a result of this three stage process, registering a company in Israel can take some time. As you’re not allowed to trade before you’re registered, it’s advised to plan in advance and register as early as possible.
How much tax do Israeli companies pay?
Just like individuals, companies also need to pay tax on their profits. The rate of tax for Israeli companies is currently 23% (2022). In addition to corporation tax, when the individual shareholder withdraws profits, they’ll pay a dividend tax at a rate of up to 30%. Often, shareholders withdraw payments from the company in the form of a salary. This is treated as an expense to the company and will allow the shareholder to make use of the lower tax rates available to individuals.
