Looking to open a branch here in Israel?
shares
𝐖𝐀𝐈𝐓!
There are 3 ways an Int’l company can register their business here in Israel. Which is best for you?
First, before we go into the options, I’m going to stress that this is a conversation that must include your accounting and legal teams – companies need to be protected while also minimizing what they’ll need to pay the government. Don’t decide without consulting both professionals.
Second, I will be intentionally vague regarding the Pros and Cons of each option as they vary depending on the types of business, location of management and IP, location of various staff etc. Each of these factors and their myriad nuances affect the ultimate decision.
Of course, for our clients we’re there at every stage of this conversation, as it’s not only about understanding the answers but ensuring that the right questions are being asked. But I digress.
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Without further ado, your options for registering your foreign business in Israel.
(𝟏) 𝐎𝐩𝐞𝐧 𝐚𝐧 𝐈𝐧𝐝𝐞𝐩𝐞𝐧𝐝𝐞𝐧𝐭 𝐂𝐨𝐦𝐩𝐚𝐧𝐲 𝐢𝐧 𝐈𝐬𝐫𝐚𝐞𝐥
The foreign business registers a new company in Israel and lists various individuals as the owners (shareholders). These people can be the same as those who own the foreign entity, or they can be different ones.
(𝟐) 𝐎𝐩𝐞𝐧 𝐚 “𝐃𝐚𝐮𝐠𝐡𝐭𝐞𝐫” 𝐂𝐨𝐦𝐩𝐚𝐧𝐲 𝐢𝐧 𝐈𝐬𝐫𝐚𝐞𝐥
In this option, a new company is formed just like in the previous case BUT here there is only one owner, and that’s the foreign entity.
Here, the new Israeli company is colloquially referred to as the Daughter Company with the foreign entity referred to us the Parent Company.
(𝟑) 𝐎𝐩𝐞𝐧 𝐚 𝐁𝐫𝐚𝐧𝐜𝐡 (𝐢.𝐞. 𝐑𝐞𝐠𝐢𝐬𝐭𝐞𝐫 𝐚𝐬 𝐚 𝐅𝐨𝐫𝐞𝐢𝐠𝐧 𝐂𝐨𝐦𝐩𝐚𝐧𝐲)
In this last case, there is no new Israeli entity created.
Rather the foreign entity reaches out to Israel’s Tax Authority to register and open a “Tik” (government file).
A Tik allows the foreign business to conduct itself fully here in Israel (incl. hiring employees and submitting VAT reimbursements), but everything is still
considered as a direct income/expense of the foreign entity.
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Each of the above options has its own consequences regarding profit sharing, transfer pricing, and taxes.
Now you know the possibilities so you can set yourself up for success and avoid the classic, “If I only would have known…”
Happy hunting.
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Setting up a business abroad is a daunting task even before you add the challenges of working in a different language and culture.
We work with our clients to ensure that their operational and financial considerations always lead the conversations with the relevant local professionals.
Then we top it all off with full and transparent communication with all of the global players.
𝐅𝐨𝐠𝐞𝐥𝐂𝐅𝐎: 𝐎𝐮𝐭𝐬𝐨𝐮𝐫𝐜𝐞𝐝 𝐟𝐥𝐞𝐱𝐢𝐛𝐢𝐥𝐢𝐭𝐲; 𝐈𝐧-𝐡𝐨𝐮𝐬𝐞 𝐚𝐩𝐩𝐫𝐨𝐚𝐜𝐡.
