Establishing a company in Israel can bring significant benefits to owners and open up new business opportunities. The jurisdiction is interesting due to the operation of many small and medium-sized business development funds. They provide financial support to repatriates and non-residents by a provision of loans on concessionary terms, including for newly established enterprises. Prompt and convenient company registration in Tel Aviv, Jerusalem, Haifa, or any other city in Israel is just the first benefit of starting a business operation here.
Advantages of the Jurisdiction
If you are evaluating an opportunity of company registration in Israel, you may potentially gain benefits thanks to these advantages the jurisdiction offers:
- Quick procedure for the Israeli company incorporation and opening a bank account for it
- Low transactional costs for establishing a business in Israel
- Comparatively simple requirements for arranging document flow
- Favorable conditions for IT and fintech (for example, R&D grants)
- Plenty of modern facilities and technology centers.
Major Forms of Legal and Business Presence
If you are evaluating an option of company registration in Israel or look for other suitable alternatives, your business presence may be arranged in one of these options:
- Private Limited Company – an Israel entity that is the most common organizational form of business with a minimum of risks for owners and broad opportunities. By registering in the corporate charter a limitation of liability for debts/obligations of an enterprise, you can begin to work safely and productively. At least one shareholder is required to establish this Israel enterprise, either a natural or corporate person. The number of such members is restricted to 50. The shares of the Israel enterprise cannot be freely transferred and offered to the public. There are no requirements concerning the minimum statutory capital of this Israeli enterprise.
- Public Limited Company – an Israel corporate entity where the liability of shareholders is also limited. Still, this company may offer its shares to the public. Specific share capital demands are applied depending on the type of activities that the company conducts.
- Branch – an opportunity suitable for any foreign entity that wishes to carry out in Israel the same types of commercial activities as aboard at minimal costs. A mother company will remain fully liable for the results of the operation that its branch shows.
- Representative Office – an option workable for market research and promotion of activities of overseas companies only without an opportunity to carry out business in Israel.
Registration Requirements and Steps
If you intend to register a company in Israel, this objective can be realized by completing these preliminary steps:
- Defining commercial objectives you are going to realize through the legal entity in Israel.
- Choosing and verifying a corporate name for a future company (at least three alternatives are required).
- Collecting all required data about shareholders, beneficial owners, and future managers of the company subject to incorporation.
- Forming and submitting the set of documents to the state registrar, among which are:
Documents of foreign origin must be apostilled and notarized by a local notary, translated into Hebrew. If everything is done correctly, you will receive a certificate in a few days. Also, the procedure can be accelerated up to one day.
- Memorandum and Articles of Association which, in addition to the standard information (founders, their responsibility, size of contributions, type of company) must contain information about the real targets and activities of the future business;
- copies of passports of the founders, or a package of constituent documentation, if a legal entity acts as the establisher (registration certificate, a decision of a meeting on the company establishing);
- declarations of the first directors, owners of the shares;
- completed and signed registration forms.
- Registration for tax and social security purposes.
- Opening a corporate bank account.
- Arranging the company's record-keeping.
- Obtaining licenses and special permits (required for certain types of regulated activities only).
Legal and Regulatory Framework
It is important that any person, including citizens of foreign countries, as well as companies from external jurisdictions, can be founders or beneficiaries of a business in Israel. The registration process differs slightly - you just need to submit the standard package of documents with a copy of your passport or constituent papers.
The Companies Law, the Companies Regulations, and the Securities Law are principal legal acts for business in this jurisdiction. The Israel Corporations Authority of the Ministry of Justice of Israel, the Income Tax Authority, and the Israel Securities Authority are the major state bodies in the area of doing business.
Tax System of Israel
If you are considering an option of company incorporation in Israel, these basic highlights may be of help during the preliminary assessment:
- Corporate income tax (CIT) rate – 23%
- Personal income tax rate – 50%
- Value-added tax rate – 17%
- Withholding tax (for non-residents) – (i) dividends - 25 or 30% (ii) interests - 23% (iii) royalties - 23%
- Capital gains tax rates – (i) corporate – equals to the basic CIT rate, (ii) individual – 25%
Company income is taxable if this income is received in Israel. If the directors and shareholders are not residents of Israel, the company does not operate in the country and does not interact with local legal/private entities - there are no taxes.
How Prifinance Specialists May Help You
If you have preliminarily decided to register a company in Israel, Prifinance specialists may guide you maximally precisely on the process and its peculiarities, prepare all required documents and complete the registration process upon your request. Reach us shortly for more precise discussions and suggestions.