Company Registraion in Israel
We are pleased to present an overview of the process to register a new company in Israel. We have been accommodating many companies in this process over the years:
Establishing a company in Israel involves three stages. The first stage is the registration of an entity with the Registrar of Companies. The next stage is to open a bank account. Once a bank account is opened, the company can proceed to register with the tax authorities.
The above three stages are by sequences
- Company Registration
Under the Israeli Companies Law, 5759-1999 (the “Companies Law”), any person may establish a company in Israel, provided that none of the objectives of the company is illegal, immoral or contrary to public policy. The registration of a company must be requested in writing by one of the company’s shareholders (the “Applicant”), while one shareholder is sufficed to incorporate a company in Israel. The Applicant should file an application form with the Israeli Companies Registrar (the “Registrar”), certified by an Israeli lawyer (or, if executed abroad, by an Israeli consul) in which the Applicant should suggest different names for the new company, in Hebrew, which the option to add an English name as well.
Following the filing of the registration application and all required documents, the Registrar will issue to the company a certificate of incorporation and a company number of 9 digits within approximately 3 working days.
- Opening a bank account
The banking system in Israel is both bureaucratic and sophisticated. The role filled by the banks in the process of establishing business activity in Israel is more that of gatekeeper rather than one-step in the process.
Under the Israeli Companies Law, all company finances must be managed through a commercial bank account opened in Israel.
- Tax Authorities and National Insurance
Registration with the tax authorities comprises three components – first with the VAT authorities, next with the taxation office, and finally with National Insurance Institute. At the end of this process, the newly established entity will hold an authorized dealer certificate from the VAT authorities and a confirmation from the taxation authorities that books of account are kept.
If the company pays rent for offices in Israel, it must also open a deductions file with the income tax authorities. If it employs personnel in Israel, it must open a deductions file with the income tax authorities and with the National Insurance Institute.
Furthermore, the authorities will set a tax prepayment rate for the company on its turnover and a withholding tax rate on its transaction receipts.
Company’s name – During the process of registering your company you can check online whether your company’s name is available in order to prevent any refusal from the register of companies (the system is connected to the registrar of company’s database).
Bank account – Opening a bank account for an LTD is very complicated in Israel. It is worthwhile to hire an experienced agent to assist you with the procedure to save time.
Choose VAT Representative: Section 60 of the Value Added Tax Act 1975 (“the VAT Act”) states that a foreign company, which carries on business in Israel, will nominate a local representative/ Director within 30 days from the start of his business activities in Israel. VAT representative must be both an Israeli citizen and resident and who will be liable to the tax authorities jointly and severally with the foreign resident. Foreign company must appoint a VAT representative before VAT registration.
Written by: Lillian Zhang, Head of the China desk and a Director of Finance at Brooks-Keret.