Business in Israel

Show me the Money

Pension Tips and Investment Risks with Motty Handler

Our second networking event was a huge success! We learned all about saving for retirement from Motty Handler, while enjoying sushi, fresh fruit and candy. Most importantly, we met other professionals, traded advice and dreamed up new collaborations.

Check out these pictures from the event:

Business in Israel

Office Space in Har Chotzvim

Route 38’s office space in Har Chotzvim, Jerusalem is available for rent. Choose a dedicated desk or a private office. Take advantage of the conference room, internet, printing facilities and free hot drinks.

Additionally, members of the Route 38 family may come and enjoy any of our hot desks for free , up to 20 times a year.

Prices for monthly rentals are as follows:

Business in Israel

Networking at Route 38’s New Offices in Jerusalem

On March 9, 2022, Route 38 celebrated the opening of its new offices in Jerusalem with its first networking event. A light dinner was served in the lobby of the new co-working space in Har Hotzvim, accompanied by lots of schmoozing. This was followed by short presentations by Baruch Swinkin and Yael Frydman and a networking session by Helena Baker, in which she taught everyone how to give an unforgettable elevator pitch. And we will certainly not forget Mike Kashnow’s pitch!

Here are a few pictures from the event:

Business in Israel

Osek Patur – Guidance for Your New Business

Mazel tov on setting up your new business! If you’re just starting out, chances are that you will be an “Osek Patur,” a business which is exempt from collecting and paying VAT. The following is a brief overview of what you need to know for your new Osek Patur.

  • Mas Hachnasa- Your tik (file) in Mas Hachnasa (Israeli Tax Authority) is registered on both your name and your spouse’s name.
    Every year a Doch Shnati (annual report – tax return) is submitted which should include all income earned both in Israel and abroad for both spouses. If you work with an accountant or tax consultant (and we recommend that you do), send your receipt book, expense invoices and any other documents you have to your accountant in January of the next year for preparation of the Doch Shnati.
  • Bituach Leumi (National Insurance) – If, according to the definitions of Bituach Leumi you are required to make payments to National Insurance, you have the choice to pay via credit card or a monthly set payment (horaat keva). You should set this up as quickly as possible so you don’t end up with back payments.
  • Ma’am (VAT) – Your file at the VAT office is only under your name and doesn’t include your spouse. The updated ceiling for your income in 2021 is 99,893 NIS per year. Please check your income during the year making sure you are not approaching the ceiling, and if you are please update the VAT office as soon as possible.
  • Revenue recognition (receiving payment from a client) –  Israeli accounting requirements dictate that an official receipt (kabala) must be issued immediately upon receipt of payment from a client, or as soon as you become aware of a cash receipt (in the case of a bank transfer). It is important that this practice is strictly enforced. Non-issuance or late issuance of invoices may cause accounting complications and headaches, even possibly fines.

Receipts can be issued in two ways:

  1. Use of online programs or applications – many of which are easy to use and are readily available, including: Easy Count, Cheshbonit Yeroka, Cheshbonit Online, iCount and more. (Some are free and some come with a low monthly fee.)
  2. Manual receipt book – this book can be purchased and printed in a printshop. Ask them for a receipt book for an Osek Patur – Original + two copies per receipt.

The invoice must include the following details on the top:

Full name/Business name, Address, Phone number of the business and osek patur number (which is generally your teudat zehut number).

The receipt should provide information about the service provided and the method of payment (cash, bank transfer, check – including check number). If payment was in another currency, include the rate of exchange to shekels. 

  • Important highlights when filling out a receipt:
    • Receipts should be issued at the time of the receipt of payment, even if the service will be provided at a future date.
    • The dates and numbers of each receipt must be consecutive. Do not issue receipts out of order!
    • The original should be given to the client, and copies should remain with you (the business).
    • When a receipt has to be cancelled, or a numbered receipt was skipped, the cancelled/skipped receipt should stay in the book and you should write “cancelled” or “skipped” on it.
    • Receipts in the amount of more than 5,000 NIS should include the client’s teudat zehut or business number in addition to their full name.
    • In cases of receipts over NIS 11,000, per law, cash cannot be exclusively used – payment must be remitted via check or bank transfer.
  • Saving expense documents/paperwork:

It is strongly advised to keep as many expense documents as possible. Any expense that you submit will save you from higher income tax and Bituach Leumi payments.

It is also advised to keep donation receipts in order to reduce tax payments (or receive a tax payment refund), if you have any. Please note that receipts must be from Chapter 46 recognized organizations,and their status must be noted on the receipt. This applies even in years that one did not make any tax payments, as donation receipts may be used for 4 years.

The following are considered direct business expenses, and are 100% recognized and deductible:

  1. Furniture and equipment for business, office equipment
  2. Travel by taxi and public transportation
  3. Advertising, marketing, education, advanced training
  4. Accounting, professional advice/consulting
  5. Subcontractors (external consultants, professional temp positions)
  6. Credit card fees

Indirect/mixed expenses, partially recognized:

  1. Private car expenses (including insurance, license, fuel, maintenance/repair) – 45%
  2. Cell phone – 50%

Home expenses- 25%:

  1. Landline, internet
  2. Electricity, water
  3. Municipal taxes (Arnona) and Homeowner Association Fees (Va’ad Bayit)
  4. Renovations
  • Inventory

One is obligated to count all inventory in one’s possession on December 31st of every year, in the event that one has raw materials or equipment or other items for sale that require evaluation. 

  • Hatzarat Hon (Financial statement):

Sometime after the opening of your independent contractor tax file, Mas Hachnasa will request and require a Hatzarat Hon (financial statement) as of December 31st of the year that the tax file was opened. The statement details all the assets and liabilities of the business owner as of the date of the statement. Additional Hatzarat Hon requests are generally made once every 4-5 years.
It is generally recommended to submit this statement with the help of an accountant or tax consultant, since it can be complex. The first one should certainly be submitted with professional assistance, since it serves as the basis for all future statements.

Business in Israel Podcasts

Podcast: A Story That’s Worth a Thousand Words

Videographer and photographer Yirmiyahu Vann is an expert in visual storytelling. Listen to his tips on getting great headshots, creating meaningful videos to grow your business and mountain biking in Israel (VR camera in hand)!

Business in Israel Podcasts

Podcast: A Couples Therapist in Israel Shares Intimate Details

Abby Weisz, LCSW, M. Ed, tells us about her work as a marriage therapist focusing on sexuality and intimacy: What made her choose this field, why she’s sad to have so much work and what rabbis say about what she does. Oh yeah, she also tells us why she chose to work with Route 38 in their Wellness Center division and how that helps her run a successful therapy practice.

Business in Israel Podcasts

Podcast: The Golden Rules of Networking

Helena Baker of English Speaking Networking shares the do’s, the don’ts and the OMGs of networking, as well as the trials and tribulations of a new olah restarting her career in Israel. 

Business in Israel

Business Culture in Israel

If you’ve owned a business in another country or seen firsthand how a foreign business is managed, you may be surprised at some of the business practices which are common in Israel.

Payment Terms

One of the most surprising (and challenging) aspects of doing business in Israel is the concept of shotef plus – delayed payment. Many organizations and businesses don’t pay immediately upon receipt of an invoice. In 2017, a law was passed in the Knesset requiring most institutions and businesses to pay up to 45 days from receipt of an invoice. If you expect payment sooner, this should be included in your service agreement/contract, but don’t be surprised if you are told that the institution simply can’t pay earlier. These payment terms are usually based on cash flow issues (i.e. they are also being paid late), so you may have to accept these terms if you want to work with certain clients.

Acceptable forms of payment are cash, bank transfer and checks. Checks have become less popular in recent years and they aren’t worth the hassle if you can avoid them. Your clients may want to pay with Paypal, Paybox or Bit. Check fees and ease of use to decide which of these you choose to accept. You can also sign up for a paid credit card processing app and accept payments through it. Keep in mind that the easier you make it for clients to pay you, the sooner you will receive the money.

Becoming a Supplier

If you supply services or goods to another business, they might ask you for your Nikui Mas BaMakor and Ishur Nihul Sefarim. The Ishur Nihul Sefarim states that you keep your books according to the regulations of the Israeli Tax Authority. Nikui Mas BaMakor instructs the paying entity whether they are required to withhold tax and at what percentage. These documents can be obtained from your accountant or via the Israeli Tax Authority website.


In keeping with the informality prevalent in Israeli culture, business culture can be pretty informal too. Clients often prefer to communicate via WhatsApp or Facebook Messenger and some eschew use of email entirely. If you find that this way of communicating wreaks havoc on your business processes and organization, consider signing up for a task management system. There are lots of free options out there, and you can keep everything organized in one place, regardless of the form of communication utilized by your clients.

Price Haggling

Haggling over price is a time-honored Middle Eastern tradition and Israelis are well-versed in the art. You can choose not to work with clients who bargain or you can quote a higher price and expect to lower it in negotiations. In either case, you don’t want to lower your price below what your work is worth or to an amount that doesn’t leave you enough profit after taxes and expenses. A strategy that reduces the chance that a client will haggle is to let them know what they are getting for this price so that suddenly the amount seems low. 


Meetings at coffee shops are totally acceptable in Israeli business culture. It’s understood that you may work from home or have an office space that’s not set up for hosting and your client or colleague may be in a similar situation. Etiquette requires that if you are the one who has asked for the meeting, you pay for the drinks or meals. Location should be closer to the person who was invited to the meeting and the initiator should check about dietary restrictions, including kashrut, before choosing a cafe or restaurant.


Most clients will ask you for an invoice before they send payment for a service. An official invoice is called cheshbonit mas, and it obligates the business owner to pay VAT once issued.  Therefore, many business owners will send a “drishat tashlum” or “cheshbon iska” which is not an official document, in order to avoid getting stuck with a VAT expense before receiving payment. However, your client may fear making a payment and then getting stuck tracking the official cheshbonit mas. They are allowed by law to request the official, numbered cheshbonit mas before issuing payment and you must provide it.   

Some clients are prompt in their payments but others may need a little nudging. Sometimes clients will even ask to pay in installments or reduce the payment that was already agreed on. Stand firm when necessary and choose clients wisely to avoid these issues as much as possible.


Once payment is made, if you are an Osek Patur, a receipt (kabala) is issued. If you are an Osek Murshe, you will need to issue a cheshbonit mas, which is a legal document and must be numbered. The ORIGINAL is what has value, so when using officially printed books the original document must be given to the payee. A digital copy is not enough for the payee to claim the VAT back on the expense.

In many cases, especially when funds are exchanged at the time services are provided, these documents are issued together in what’s called a cheshbonit mas kabala.

If you are using an electronic invoicing system, it’s easiest to create the payment request in the system and transform it into a receipt once payment has arrived.

Receipts are legal documents and it’s important to use a government-approved electronic system or an official printed booklet. Clients generally prefer to receive receipts electronically, so if you use a printed book, take a picture or scan it to send immediately and then send the paper one in the mail afterwards.

Professionalism and Extenuating Circumstances

In some countries, the lines between work and life are sharply defined, but they are a bit blurrier in Israel. Business owners may tell you why they can’t provide a service as quickly as they usually do – for example, they are taking a vacation, their baby is sick or they are dealing with a family crisis. It is assumed that you will be understanding, and that, if your project isn’t urgent, you will wait a little longer. If you feel comfortable, you can also let clients know how life events affect your productivity. Constant excuses won’t go over well, but an occasional hiccup is understood and accepted.

Business in Israel Podcasts

Podcast: In Good Company

Shuey Fogel of Fogel CFO & Management Services gives some of the best advice you will ever get about aliyah, opening a business in Israel and pivoting your career. You’ll also hear how a bloody nose in a basketball game can change your life and how a book signing can make a lasting impression.

Business in Israel Employment in Israel

Should I freelance, open a business or work as an employee?

One of the great things about living in Israel is that there are endless ways of making a living. Olim are often surprised to discover that their new neighbors are working in many different types of jobs and that they are not necessarily working full-time jobs at established companies. They may be freelancers, small business owners or founders of start-ups. The Israeli economy and social structure promote creativity, flexibility and out-of-the-box thinking about careers.

You don’t always have a choice on how to structure your career path, but there are some circumstances in which you will have to choose whether to be an employee, a freelancer or a business owner:

  • The Israeli company you work for wants to hire you as a freelancer
  • You work for a foreign company with no Israeli office
  • You work for multiple clients in Israel or abroad
  • You are starting your own company

Here are the some of the differences between employees, freelancers and business owners:

EmployeeFreelancer (atzma’i – osek patur or osek murshe)Business owner (b’am)
Taxes and social benefit obligations are deducted automaticallyTaxes and social benefit obligations are paid independentlyTaxes and social benefit obligation payments are set up as automatic deductions by the company accountant 
Minimum sick days and vacation days provided by lawNo sick days or vacation daysYou are your own boss. You make the rules.
Keren hishtalmut savings plan may be includedKeren hishtalmut savings plan can be set up independently Keren hishtalmut savings plan can be set up via the business
US citizens will not owe a 15% Social Security (FICA) tax for filing as an independent contractorUS citizens will be taxed 15% of their income to Social SecurityUS citizens will not owe Social Security
No accountant needed to file an annual return, assuming no other reportable incomeAccountant strongly recommended for the end of the year report. Osek murshe has additional, periodic reporting requirements over the course of the year (best done with an accountant).High accounting fees. Monthly, bi-monthly and annual reporting requirements
No additional administrative or accounting responsibilitiesMinimum level of administrative responsibilities in addition to tax reporting responsibilities indicated aboveSignificant additional administrative responsibilities and required understanding of Israeli corporate income tax requirements in addition to tax reporting responsibilities indicated above
Receives maternity leave and maternity payment (after accrual of minimum required months on payroll)Receives maternity leave and maternity payment (after accrual of minimum required months reported)Receives maternity leave and maternity payment (after accrual of minimum required months on payroll)
Work schedule determined by employerSelf-determined work scheduleSelf-determined work schedule
Payment generally deposited directly into employee’s bank accountPayment collected directly from client(s)Payment collected directly from client(s)

One of the reasons that we founded Route 38 was because being an employee in Israel is legally and financially simpler than being a freelancer or opening up a company. We are the employer of record for people who work for foreign companies or provide services to clients and are not employed by another Israeli company. Our solution allows people to focus on their work without spending time and resources on collection of funds, paperwork and government reporting. In many cases, the employees retain control over their schedule and choose which projects they want to work on, while enjoying the benefits of an Israeli pay stub.

There are career paths which don’t lend themselves to the Route 38 employer of record service. In fact, every case is different, and professional advice is highly recommended before making a choice that has long-term effects. We provide objective and professional advice to help you make the choice that’s best for you. Email us at with information about your situation and we will get back to you as soon as possible.