Israeli Tax Laws and Regulations
Israeli Tax Laws
Dealing with tax, payroll, and employment regulations for your staff from overseas is always a tricky process and poses complications that demand expert guidance. Israel is no exception and having experts in place will remove the demands of complying with both tax and social security regulations.
By using our PEO-service, we will take care of the complicated legwork so that you can focus on your business goals. Bradford Jacobs’ dedicated specialists remove the burdens of worrying about these complications while you focus on building your business in a new territory.
We have made it our goal to keep track of the latest changes in the tax policies to always ensure complete compliance.
Overview of Taxes in Israel
- Personal Income Tax: Taxable income up to ILS 75,480 (€20,937, US$23,692)) – 10.0%; Six further rates up to ILS 647,640 (€179,653, US$203,285) – 14% to 50% (50% rate include 3% surtax on top rate); Minimum rate applying to some passive income – 31.0%
- Social Insurance Taxes:
Resident employees’ contribution – Monthly income up to ILS 6,331 (€1,756, US$1,988) – 0.4%; Monthly income above ILS 6,331 – 7.0%; Up to a maximum of ILS 44,020 (€12,215, US$13,826)
Non-resident employees’ contribution – Monthly income up to ILS 6,331 (€1,756, US$1,988) – 0.04%; Monthly income above ILS 6,331 – 0.87%; Up to a maximum of ILS 44,020 (€12,215, US$13,826).
- Health Insurance Tax: Monthly income up to ILS 6,331 (€1,756, US$1,988) – 3.10%; Monthly income above ILS 6,331 – 5.00%; Up to a maximum of ILS 44,020 (€12,215, US$13,826). Non-residents do not pay Health Insurance Tax.
- Corporate Income Tax (CIT): The rate of 23% applies to companies incorporated in Israel and foreign companies with a presence in Israel.
- Capital Gains Tax (CGT): Generally applied at 25% although can be levied at 30% in certain circumstances.
- Value Added Tax (VAT): The standard rate is 17% applied to most goods and services. Exported goods and certain services are exempt.
Israel Individual Tax – Single, Married
Married couples in Israel may file joint or separate tax returns. They can expect to be taxed on their worldwide income if they reside in Israel for 183 days or more in one tax year, or a combination of 30 days in the current year and 425 days in the previous two years, although the Israel Tax Ordinance offers these parameters only as guidelines.
The tax year runs from January 1 until December 31 and returns should be filed by April 30 of the following year, or May 31 if filed online.