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

In case of emergency, call Gabriel Hanner at his
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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 BRANCH	ISRAEL SUBSIDIARY	ISRAEL REP. OFFICE
Legal Type	Not a separate legal entity but an extension of the parent company	Separate legal entity distinct from its parent company	Has no legal status but just a temporary administrative arrangement
Liabilities	Liabilities extend to parent company	Liabilities limited to subsidiary	Liabilities extend to parent company
Entity Name	Must be the same as the parent company	Can be the same or different from parent company	Must be the same as parent company plus must include Representative Office
Allowed Activities	Must be the same as the parent company	Can be the same or different from parent company	Can only conduct market research or feasibility studies
Validity Period	Registered forever until closed	Registered forever until closed	No need to register
Registration time	One week	One week	No 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 Filing	Must file branch office as well as parent company’s accounts.	Must file accounts of the Israeli subsidiary.	No need to file.
Bank Account	Can open bank account in Israel	Can open bank account in Israel	Can open bank account in Israel to run the cost centre operations. Must be funded by the parent company.
Staff Hiring	No restrictions on hiring local or foreign staff	No restrictions on hiring local or foreign staff	No restrictions on hiring local or foreign staff
Appointment of Officers	In order to open VAT file must appoint at least one locally resident person or local entity directed by a local resident person	In order to open VAT file must appoint at least one locally resident person or local entity directed by a local resident person	No special rules