As an immigrant to Israel, you have the advantages of speaking another language and connections in the country you came from. These advantages can be translated into a lucrative freelance career working with clients abroad who require your expertise. Here’s what you need to know about freelancing in Israel for clients abroad.
How do I price my services?
Price your services by investigating how much these services cost in the country where your clients are located. You may want to charge slightly less than that price, as an incentive for clients to use your services instead of someone more local. If the salaries in that country tend to be higher than they are here in Israel, you won’t feel slighted by taking less and you will get more business, ultimately leading to you making more money.
Alternatively, charge the market price your clients are used to and give them other reasons to hire you – such as your unique expertise or your quick turnaround.
How do I create invoices and receipts for clients abroad?
You need to provide the tax offices with receipts for payments for all clients, regardless of where they are located. These receipts must be in Hebrew but you can send the client a version in another language. Many of the invoicing programs which are approved by the Israeli government will provide you with an English version of your invoices and receipts to send to the client, while simultaneously creating a Hebrew version for your reporting and accounting.
Do I need to charge VAT?
If you’re an Osek Murshe, you generally charge your clients VAT. However, the general rule is that clients abroad, with no presence in Israel at all, do not pay VAT. Sometimes individuals living in Israel have a corporation or nonprofit registered abroad and mistakenly think that they can pay you through that entity without having to pay VAT. If you are in any doubt about whether to charge a specific client VAT, consult with a knowledgeable accountant. You don’t want to get in trouble with the VAT office retroactively, so it’s best to get the correct information upfront.
How can clients abroad pay me?
There are a few ways that you can collect payment from clients abroad.
- Ask them to send funds via international bank transfer. There is a fee on both ends, so the client will pay to send the transfer and you pay to receive it. The funds can be transferred into shekels at the rate that the bank provides, which is not always the highest rate. The transfer can take up to 7 business days, although it often arrives sooner. Due to money laundering laws, you may be required to show the bank where this money came from before they allow you to access it. Alternatively, you can have funds transferred through Wise, which is the easiest, fastest and least expensive way to move money from abroad to Israel.
- If you have a bank account in the country your clients are located in, they can pay into that account. This is easy for your clients, but then you have to get the money here in order to pay your bills and buy groceries. If you have a credit card for that account with no fees or low fees, using it to pay for things in Israel can be a good solution. But be aware that not every company will accept every foreign credit card, so you need a shekel alternative as well. Also note that even if the money is in a foreign account, it needs to be accounted for and reported in Israel.
- Payment can be transferred through Paypal. There are fees here too (although they tend to be lower than the bank) and the conversion rate isn’t always in your favor. If you transfer small amounts into your bank account, you will be charged a fee, but if your client pays you a larger amount or you let a few payments build up, you can then deposit the funds in your bank account in shekels for free.
- Your client can mail you a check here in Israel, which you can take to a change place and exchange for cash or a check in shekels. Not all change places are willing to accept checks and those that do will give you a lower rate than they give for cash. This method is time consuming and dependent on an unreliable postal system, so we don’t recommend it as a first choice.
- You can register with an Employer of Record (EOR) service. You officially become an employee of the EOR company and they take care of fees and exchanging currency. There is a fee involved here too (a flat fee or a percentage of your income), but you also save on accounting fees and time spent on admin work for your business, so it may very well be worthwhile.
Is it better to freelance for Israeli clients?
The answer to this question is dependent on a number of factors. These include market prices in Israel vs. abroad, your level of Hebrew, where clients in your industry tend to be located and whether you need to work during the hours that your clients are in their office.
Of course, you don’t necessarily have to choose one or the other – if your expertise is required internationally, there’s no reason why you can’t work both for clients in Israel and abroad. The important thing is to find a mix that works for you and to stay compliant with government regulations and proper reporting.