VAT in Israel
Value Added Tax is imposed in
Israel on a sale or the provision of a service in Israel if the
sale/transaction has a commercial character.
The rate of VAT in Israel is uniform and at present is fixed rate at
Institutions and Non-Profit Making Institutions
Financial Institutions such as
banks and insurance companies, do not issue tax invoices for money they
receive. The same is true for non-profit making institutions. The method of
payment to the VAT authorities is different for these bodies.
VAT Exempt/ 0% VAT
There are a number of instances
in which VAT is not charged. Among them are:
2. Hotel accommodation and various services to tourists.
3. Air freight or sea freight to and from Israel.
4. Sale of unprocessed fruit and vegetables.
5. Renting premises for residential purposes.
6. The sale of an asset from which it was not possible to deduct the VAT at
the time it was purchased.
Date of Report
The date for reporting to the VAT
authorities is the 15th of the month for the preceding month. Thus for
example on February 15, the return is made to the VAT Authorities for the
month of January. Businesses with an annual turnover of less than NIS
565,000, report on the 15th of the month as well but the return they submit
refers to the two months that preceded the date on which the report was
How to Open a V.A.T. File in
An Israeli company held by
foreign shareholders cannot open a V.A.T. file. The V.A.T. Authority
require the signature of an Israeli Resident (not especially a
director of the company).
This resident is a sort of
guaranty to the V.A.T. Authority that the company will pay the
monthly V.A.T. taxes. If the company lacks to pay, this Israeli
resident will be sued criminally.
Our firm undertakes to sign
for foreign clients at the V.A.T. Authority only if we are nominated
as Director of the company in order to be able to follow the
activity and be sure the V.A.T. tax will be paid.