The days when everybody had to be in the office all day every day have thankfully ended. Nowadays, many companies understand that remote work can be productive for the company while being convenient for the worker. Companies have even begun to be more open to having people work for them who live in a different country.
If you’ve made aliyah from the UK or a different English-speaking country, or if you are planning your aliyah right now, working for a UK company from Israel might be the right career choice for you. It allows you to easily work in English, in a work culture you are more familiar with and helps you transition smoothly if you are a new immigrant.
When you work in Israel, you are required to report your salary and pay taxes to the Israeli government. This is true regardless of where the company you work for is situated. You don’t want to pay double taxes, so you need to make sure that the HMRC (the UK’s tax authority) knows that you are no longer a UK-resident. You do this by submitting Form P85 and attaching a Form P45 if you were employed during the current tax year. (More information about tax considerations when making aliyah from the UK can be found on the Nefesh B’Nefesh website.)
Now that you’ve gotten UK taxes out of the way, you have to decide how you will report your income in Israel. This can be accomplished in a number of ways, including becoming an employee of an Israeli Employer of Record service or opening an Israeli business.
Employees of Israeli companies get a payslip each month and all necessary deductions (income tax, Bituach Leumi, pension deposits and health tax) are automatically withheld. Business owners report their income bi-monthly by providing the government with receipts for payments made. Then they pay all taxes and legally required payments directly to the relevant government offices. If their income is above 120,000 NIS (as of 2024), they are also required to collect and pay VAT – although in many cases it will be at 0%. (If they happen to be American citizens, the US government will also require them to pay 15% of their income to Social Security.)
Reasons to choose an EOR
Working through an Employer of Record service provides these advantages:
- Less paperwork – You let the EOR know how much to bill the UK company for your services each month and they take care of the rest. You don’t need to file reports, report income or make payments yourself.
- No need to exchange currency – If you’re being paid in pounds but need shekels to live in Israel, an EOR will exchange your salary for you.
- No accounting costs – Business owners need to hire accountants or tax consultants to assist with filing reports which are often too complex to do on your own, especially if you aren’t a native Hebrew speaker.
- Get paid the same time each month – The EOR will send an invoice to the company well before the date your salary gets deposited, so you know when to expect your paycheck.
- More transparency – What you see is what you get. Your pay stub shows exactly how much money is going into your bank account, so you never have to guess how much your take home pay is. This is also useful when dealing with banks and mortgages, since you can easily show what your income is.
Reasons to open a business
You may want to consider opening a business for these reasons:
- No fees to an EOR – Employer of Record services charge a fee for their services and you will save this amount if you have your own business. It’s important to calculate whether this savings is more or less than your accounting fees.
- Ability to scale and expand – If you open a business, you can take on additional clients easily and smoothly transition away from your UK job at a later date. Although you can use an EOR for more than one client, this will only work if you are providing services but not if you are selling a product.
Personalized advice
Everybody’s situation is different and there may be tax and financial implications that you haven’t considered, so it is recommended that you get personalized advice that takes into account your career goals, lifestyle and income.
We offer consultations with unbiased advice on the best way for you to structure your career. Write to info@route38.co.il to book a time to speak.