Verified Facts
The tax rates in Israel range from 10% to 50% for personal income tax, with a corporate tax rate of 24% and a value-added tax (VAT) rate of 17%.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
Israel has a territorial taxation system, which means that residents are taxed on their worldwide income, but non-residents are only taxed on their Israeli-sourced income. To be considered a tax resident in Israel, an individual must have been present in the country for at least 183 days in a calendar year, or have a center of life in Israel, which includes having a family, a permanent home, and economic ties to the country. The Israeli tax authorities consider various factors to determine an individual's tax residency status, including their physical presence, family ties, and economic connections to the country.
The tax system in Israel is administered by the Israeli Tax Authority, which is responsible for collecting taxes, enforcing tax laws, and providing tax guidance to individuals and businesses. The tax authority also offers various incentives and relief measures to encourage investment, innovation, and economic growth. For example, Israel has a special tax regime for new immigrants and returning residents, which provides a 10-year exemption from tax on foreign-sourced income. Additionally, Israel has a foreign tax credit system, which allows taxpayers to claim a credit for taxes paid in other countries on foreign-sourced income.
Personal Income Tax
| Income Bracket (ILS) | Tax Rate |
|---|---|
| 0 - 75,720 | 10% |
| 75,721 - 109,560 | 14% |
| 109,561 - 153,400 | 21% |
| 153,401 - 242,400 | 31% |
| 242,401 and above | 50% |
| The tax rates in Israel are progressive, with higher income earners paying a higher tax rate. Taxpayers are also entitled to various deductions and allowances, such as a deduction for mortgage interest, charitable donations, and education expenses. The tax filing deadline in Israel is typically May 31st of each year, and taxpayers can file their tax returns online or through a tax professional. Additionally, Israel has a tax withholding system, where employers are required to withhold taxes from employees' salaries and remit them to the tax authority. |
Corporate & Business Tax
- The corporate tax rate in Israel is 24%, which applies to companies that are tax residents in Israel.
- Small businesses and start-ups may be eligible for tax incentives, such as a reduced corporate tax rate of 12% for companies that are located in certain development areas.
- Israel has several free trade zones, which offer tax exemptions and other benefits to companies that operate in these zones.
- Companies that are tax residents in Israel are required to register with the tax authority and obtain a tax identification number.
- Foreign companies that do business in Israel may be subject to withholding tax on dividends, interest, and royalties paid to non-resident shareholders.
VAT / Sales Tax
- The standard VAT rate in Israel is 17%, which applies to most goods and services.
- There are reduced VAT rates of 0% and 8% that apply to certain goods and services, such as basic food items and public transportation.
- Some goods and services are exempt from VAT, such as healthcare services and educational services.
- Tourists who purchase goods in Israel may be eligible for a VAT refund when they leave the country, provided they meet certain conditions.
For Expats & Foreign Workers
- Expats who are tax residents in Israel are subject to tax on their worldwide income, but may be eligible for tax credits for taxes paid in other countries.
- Israel has double taxation treaties with 57 countries, which help to prevent double taxation and fiscal evasion.
- Expats who work in Israel may be required to participate in the social security system, which provides benefits such as pension, disability, and unemployment insurance.
- Expats who receive income from abroad may be subject to remittance tax, which applies to foreign-sourced income that is remitted to Israel.
- Expats who are tax residents in Israel may be eligible for tax relief on foreign-sourced income, provided they meet certain conditions.
- Expats who are not tax residents in Israel may be subject to withholding tax on Israeli-sourced income, such as dividends, interest, and royalties.
Crypto & Investment Income
- Investment income, such as dividends and interest, is subject to tax in Israel, but may be eligible for tax credits for taxes paid in other countries.
- Cryptocurrency is considered an asset for tax purposes, and gains from the sale of cryptocurrency are subject to capital gains tax.
- Dividends received from Israeli companies are subject to a withholding tax of 20-30%, depending on the recipient's tax residency status.
- Foreign investment income may be subject to reporting requirements, such as the Foreign Account Tax Compliance Act (FATCA), which requires Israeli financial institutions to report certain information about foreign account holders to the US tax authority.