VAT (Value Added Tax) LAW

According to the Value Added Tax Law, 1975:

“Foreign resident with business or activity in Israel.

  1. (a) A person liable to tax, whose businesses or activity is mainly abroad and who has business or activity also in Israel shall – within thirty days after he began to carry on business or activity in Israel – appoint a representative whose permanent place of residence is in Israel, and he shall so inform the Director, attaching the representative’s written consent.

(b) A representative appointed under this section shall, for purposes of this Law, be treated like the person liable to tax.

(c) When a representative ceased to represent the person liable to tax, then the person liable to tax or the representative shall inform the Director in writing of that fact not later than 14 days after the representation ended; the person liable to tax shall, within the same period, appoint a new representative in the manner specified in subsection (a), and he shall inform of the name of the new representative and attach his written consent to the notification.

(d) As long as the representative has not notified the Director that he ceased to represent, the obligations under subsection (b) shall continue to apply to him; and if he gave advance notice of the end of the representation, then the said obligations shall apply to him until the date on which the representation ends.

      (e) In this section, “foreign resident” – as defined in section 1, including –

(1) in respect of an individual – an individual who stays in Israel under a visa or permit for a residence that is not a permanent residence, as the Director shall order;

(2) in respect of a body of persons – if one of the following holds true:

(a) it is a body corporate, over which control and management are carried out from abroad;

(b) it is a company registered in Israel as a foreign company; for this purpose, “foreign company” – as defined in section 1 of the Companies Law, 1999.”

In addition to the mentioned above, Income Tax Ordinance [new version], 1961 came into effect in section 68 which states that:

“Appointing a representative 68B.

(a) If under section 60 of the Value Added Tax Law, a foreign resident is required to appoint a representative, then he shall appoint as representative – also for the purposes of the Ordinance – an individual Israel resident or an Israel resident body of persons that has a business in Israel.

(b) The representative shall be authorized to report to the Assessing Officer, to accept income and profits for the foreign resident, and to pay the tax that the foreign resident must pay only out of the foreign resident’s assets.

(c) If the foreign resident did not appoint a representative as said in subsection (a), then the representative appointed under the Value Added Tax Law shall be his representative for the purposes of the Ordinance.

(d) The Minister of Finance shall, with approval by the Knesset Finance Committee, prescribe provisions for the implementation of this section and also provisions on the returns the representative must submit”.

To fiscal representative in Israel