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Israel Branch vs Subsidiary vs Rep Office

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
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 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

We are here for you to help founding anyone of those 3 options.

 

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
cellular: +972 50 552 33 33

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