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The Alternatives when starting a Business in Israel

22/04/2020
Your company won a tender offer for a project or a job in Israel, Congratulations!
What is coming up next?

Be aware that the local law requires, either to establish an Israeli company or to register a branch and to operate with a fiscal representative office; to conduct business activity in Israel.

We recommend starting the process before the actual business activity starts. To decide on the suitable legal formal structure, and to register or establish the chosen business entity before conducting any business activity in Israel. For your notice, the whole process might take a while.

Short-term or long-term?

The project period should be a major factor in the decision of the preferable legally structure to serve your business in the best way.

Project contractors, services providers, consultants of any kind, under a short-term or a long-term agreement. In many cases, register a branch with a fiscal representative office pat will be the preferable choice for you.

Fiscal Representative:

Registering with a fiscal representative office means that the local representative office is responsible for the legal and financial issues, dealing with the company’s tax obligations and representing the foreign company before the local Israeli authorities. Yet, the professional and operational aspects of the organization’s activity in Israel, usually are not handled by the representative office.

Since there are cultural and law gaps it is required to have someone who can bridge these gaps over for you, dealing with the local authorities, knowing what to do and how to fulfill the requirements. 

It is a recommended option as a solution for both short-term and long-term projects; you should consider it.

The downside is that you can’t work freely, you need the approval of the head office overseas. Legally you are operating under the supervision of the head office company, which is located abroad.

Therefore, if you are counting on working as an independent office with a full legally freedom, our suggestion is for you to keep reading.

Independent office:

You also need to consider the potential of future activity in Israel.

If you are about to base your activity in Israel, having a head office and establishing an Israeli company with a local permanent office, which is working independently and freely without needing the business and legal approvals of the head office overseas. An office that functions as an independent unit, as an Israeli company essentially.

If this is your case, you should be familiar with the local Israeli companies’ law.

The local companies’ law (1999) states that a foreign company, which manages its business activity in Israel, is required to register with the Ministry of Justice’s Registrar of Companies.

The Company Law, 1999, Section 1 has defined a foreign company as:

“… a company registered outside Israel and anybody of persons, other than a partnership, registered or incorporated outside Israel.”

The Companies Law, Section 346, demands that:

“A foreign company shall not keep a place of business in Israel, and in particular shall not maintain an office for the transfer of shares or for the registration of shares, unless registered as a foreign company under the provisions of this section and unless it pays the registration and publication fees prescribed by the Minister under this section.”

A foreign company is required to register with the tax authorities in Israel, including the VAT, income tax and national insurance authorities.

The registration process should be completed before the company commenced any business activity in Israel.

Applications to register a foreign company must be submitted to the Registrar of Companies within one month following the establishment of the business.

The documents a foreign company requires to fill in and to present are:

(1) A copy and translation of the company’s Articles of Association authenticated by a notary in Hebrew, which confirms the accuracy of the translation. Signatures are not required on a copy of the regulations.

(2) A list of the directors of the company.

(3) The name and address of Israeli representatives authorized to receive documents and mail for the company.

(4) A copy of the document appointing a representative to handle the company’s affairs and to act under a power of attorney.

(5) The certificate of incorporation of the company from its state of origin signed by a notary and a document showing that the company’s registration is still valid and active as of the date the application is filed.

We are acting as the fiscal representative of many foreign companies in Israel; on top of that, our experts provide services for foreign companies’ wishes to register as Israeli companies.

We provide full support through the process of the establishment of an Israeli company; from filling the required documents towards the achievement of the desired recognition as an Israeli company.

Furthermore, after receiving the recognition as an Israeli company; we can provide the company with all the required financial and fiscal services needed.

For more information about Fiscal Representation services in Israel:

FISCAL REPRESENTATION IN ISRAEL

THE REGISTRATION OF A FISCAL REPRESENTATIVE OFFICE IN ISRAEL