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The Alternatives when starting a Business in Israel

22/04/2020

Starting a business in a new territory can be challenging. Yet, if your company is looking for new opportunities overseas, Israel might be an option for you to consider. Israel state tenders have great potential for international companies to win projects and starting a business in Israel. So, your company won a tender offer for a project or a job in Israel. Congratulations! Now, it is time to take the next step.

Take a step towards a business in Israel

Awareness is the first step. Each company starting a business in Israel is subjected to local law and have two options to conduct business activity in Israel:

  1. Establish an Israeli company.
  2. Register an Israeli branch operated by a fiscal-representative office.
  3. The process might take a while.

The process might take a while. Our recommendation is to start the process before the actual business activity start.

To choose a suitable legal structure for your business activity. To register or establish the relevant business entity of your choice before conducting any business activity in Israel.

Short-term or long-term?

A primary factor in the decision of the preferable legal structure is the length of the project. To choose the model, which will 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, the preferable choice will be to the registration of a branch through a fiscal-representative.

Fiscal Representative:

The registration of a fiscal-representative office means that the local representative is responsible for the legal and financial issues, taking care of all tax-related issues for the foreign company, including representation before the local Israeli authorities. Since there are cultural and legal gaps, it is required to have someone who can bridge these gaps for you; dealing with the local authorities, knowing what to do and how to fulfill the requirements. 

It might be the perfect solution for your business. Since it is suitable and recommended for both short-term projects and long-term projects.

Note that, in most cases, the representative will not handle the professional and operational aspects of the organization’s activity in Israel.

The downside is that you are subjected to the head office overseas and need its approval. 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 full legal 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 business activity in Israel and need to work independently and freely without the business and legal approvals of the head office overseas. You should establish a local permanent office,  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, 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  present are:

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 application 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