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Israel Branch vs Subsidiary vs Rep Office
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Israel Branch vs Subsidiary vs Rep Office

A foreign company planning to setup an office in Israel has three options:

1. Branch Office for your foreign entity;

2. Subsidiary Company held by your Foreign Company; or

3. Representative Office.

This article compares these three type of entities to help a foreign company decide the best option for their particular needs.

You may also want to refer to the related guide foreign company options in Israel >>

 

Miss Sahara Ozer, will attend to you (in English)
at Phone No. +972 3 546 88 88

 

In case of emergency, call Gabriel Hanner
at his cellular: +972 50 552 33 33

 

Israel Branch vs Subsidiary vs Rep Office

A key point to note is that a representative office is not allowed to engage in any business activity except market research and liaisoning activities. Two of the ways in which a foreign company may carry on business in Israel are by registering a branch office or by incorporating a limited liability company (i.e. subsidiary company) in Israel.

 ISRAEL BRANCHISRAEL SUBSIDIARYISRAEL REP. OFFICE
Legal TypeNot a separate legal entity but an extension of the parent companySeparate legal entity  distinct from its parent companyHas no legal status but just a temporary administrative arrangement
LiabilitiesLiabilities extend to parent companyLiabilities limited to subsidiaryLiabilities extend to parent company
Entity NameMust be the same as the parent companyCan be the same or different from parent companyMust be the same as parent company plus must include Representative Office
Allowed ActivitiesMust be the same as the parent companyCan be the same or different from parent companyCan only conduct market research or feasibility studies
Validity PeriodRegistered forever until closedRegistered forever until closedNo need to register
Registration timeOne weekOne weekNo need to register
Taxation

 

Taxed as non-resident entity, local tax benefits not available.Taxed as Israel resident entity, local tax benefits and ASHRA Services available.N/A as Rep Office cannot generate income.
Annual FilingMust file branch office as well as parent company’s accounts.

 

Must file accounts of the Israeli subsidiary.No need to file.
Bank AccountCan open bank account in IsraelCan open bank account in IsraelCan open bank account in Israel to run the cost centre operations. Must be funded by the parent company.
Staff HiringNo restrictions on hiring local or foreign staffNo restrictions on hiring local or foreign staffNo restrictions on hiring local or foreign staff
Appointment of OfficersIn order to open VAT file must appoint at least one locally resident person or local entity directed by a local resident personIn order to open VAT file must appoint at least one locally resident person or local entity directed by a local resident personNo special rules

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Miss Sahara Ozer, will attend to you (in English)
at Phone No. +972 3 546 88 88

 

In case of emergency, call Gabriel Hanner
at his cellular: +972 50 552 33 33

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