Step-by-Step Guide to Registering a Company in Israel

Business Opportunities in Israel

Israel is categorized as a developed nation that produces most of its goods for a wide range of industries using cutting-edge technology and in-depth research and development. Manufacturing is one of the most significant businesses, and it is still a booming market that contributes significantly to the country’s economy. Israel’s GDP increased significantly in 2022 by 6.3% and is projected to grow further by 2.8% in 2023 too. 

Israel has a robust economy driven by the high-tech industry. The market is ready to import high-end technology from American manufacturers with superior technology over rivals. 

In 2021, Israel imported $90.1 billion of goods from around the world. The top five international imports were: fuels (10%), diamonds (6%), consumer goods (26%), and investment products (15%).

The country has a stabilized economy, developed international ties, a balanced tax policy, and simple business rules. As per the World Bank’s Ease of doing business report 2020, Israel ranked 35th out of 190 economies performing well in different categories of paying taxes, protecting investors, and starting a business. 

Businesses that want to expand internationally can establish themselves in Israel and profit from its growing economy. Read this guide to learn the requirements to start a business in Israel.

Benefits of Starting a Business in Israel

Setting up a company in Israel offers numerous advantages to business owners:

• Israel is a resourceful nation and is brimming with petroleum and oil. As a result, the nation’s economy is extremely robust and powerful. Because the country has abundant natural riches, Israel’s mining industry is expanding. For investors and company owners, this presents numerous options. The nation’s resources are quite attractive to foreign businesses and investors.

• The nation has a business-friendly location with a growing economy, low inflation and offers tax-friendly investment opportunities. Business owners can set up an offshore company in Israel with 100% foreign ownership. 

• One of the advantages of doing business in Israel is its cutting-edge technology. The nation’s research and development sector is flourishing positively. It offers advanced methods and new technologies the rest of the world.

• Despite being a desert nation, the country has grown its agriculture industry with the aid of its creativity and innovation. Its agriculture sector relies on technology driven ‘induced’farming rather than ‘natural’ farming. High-speed internet is widely available throughout the nation. This connects every industry sector globally and makes every nation’s region accessible.

• Israel highly values education and annually produces a sizable number of new graduates. The development of creative thinking and innovative techniques depends heavily on advanced education. From young children to seasoned workers, people of the country have capabilities for profound thought and to work in challenging situations. 

Requirements for Starting a Business in Israel

It could seem like an excellent idea to start a business in Israel, but without the correct guidance, it can be tricky. 

To set up business in Israel, companies must master the correct procedures. The prerequisites for conducting business in Israel are as follows:

Minimum capital

In Israel, there is no minimum capital requirement for establishing any organization.

Important management personnel

In Israel, a privately owned business must have at least one shareholder and director. The stockholders don’t have to mandatorily live in Israel. It is optional to be an Israeli citizen to start a business. The requirement to designate a representative would apply to a foreign corporation creating a branch or representative office.

Name of the business

The company name ought to be distinctive and one-of-a-kind. The name cannot be an acronym for an already-established business. Companies must write corporate names in Hebrew, the official language, and English.

Residency prerequisites

It is not necessary for the stockholders to live in Israel. A citizen of Israel is not necessary to establish a firm. A foreign corporation, however, would need to appoint a representative if it were operating a branch or representative office.

Types of Business Structures in Israel

When setting up a business in Israel, you can opt for any of the following business structures:

Private company:

• The most common form to set up business in Israel is a private company. 
• A private business must have one or more directors. 
• Additionally, there are a set number of shareholders. Companies may add a maximum of 50 shareholders after the initial shareholder. The public cannot purchase shares or debentures from this corporation.
• ‘Additionally, the articles of association must specify the limitation on the interchangeability of its shares.

Public Company

• A public business necessitates a minimum of two directors and seven stockholders. 
• Following the ICO and Securities Law guidelines, it may make its shares and debentures available to the general public. 
• A public corporation must also provide an annual report that includes the directors’ statement and audited financial accounts. These should be filed with the Companies Register to be available to the public.

Legal partnership

• General partnerships and restricted partnerships are the two varieties of partnerships. 
• There must be, at minimum, one general (unlimited) partner for a limited partnership. 
• The limited partner is not permitted to take part in business operations. Otherwise, they will be responsible for the partnership’s liabilities as a general partner. 
• This legal structure is unusual in Israel except for Israeli law firms, which frequently take the form of partnerships.

Co-operative

• In Israel, this legal company is mostly created for the transportation and agricultural industries. 
• Companies can establish a cooperative in one of two ways: by seven or more people or businesses that are not cooperatives or by one or more cooperatives themselves.

Foreign company 

• Branch – A foreign firm that wants to conduct business in Israel may establish a branch corporation. The entire conduct of the branch will be accountable to the foreign firm (parent company).

• Subsidiary- A subsidiary is considered a brand-new legal entity in Israel. As a result, the parent business is not liable for its deeds.

• Office of representative. This kind of office can be established by a foreign company that wants to know more about the marketplace before entering it. This office is a part of the parent corporation and is not a distinct legal entity.

Company Registration Process

Deciding on your firm’s legal business structure is the first step in the Israeli company registration procedure. The following actions are necessary for offshore business registration in Israel:

Naming of the business

• Employers should choose the business’s name first. 
• The company name ought to be distinctive and one-of-a-kind. 
• The name cannot in any way resemble an already-established business. 
• You must write the business’s name both in Hebrew and English.

Fulfilling the eligibility criteria

• The business must provide a physical address throughout the registration procedure.
• The applicant must nominate at least a single stockholder and one director to establish a private limited company in Israel.

Submitting application and documents 

• The petition filing and documentation submission process come next. For company registration in Israel, the directors’ and stockholders’ names and agreements must be on the document. 
• A copy of the directors’ and shareholders’ passports is required if they aren’t Israeli citizens.
• To form a corporation in Israel, you must file the application form and supporting documentation online. 
• After completing this, the authorities will check the application and supporting documentation to identify any problems.

Obtaining certificate of incorporation

• You’ll obtain a certificate of incorporation for the business if the relevant authorities accept your application. 
• You would also get a validation stamp and the certificate of incorporation.

After completing the company registration in Israel, you can register your business as an employer. After that, you can start your business and appoint more employees.

How Much Does it Cost to Incorporate a Company in Israel?

Businesses in Israel are obliged to pay a registration fee to the Ministry of Justice’s Department of Corporations. As of 2021, the registration price will be 2,645 NIS, or just over USD 800.

Are Foreigners in Israel on Certain Passes Allowed to Start a Business in Israel?

The Israeli government provides a variety of visas to business owners from other countries willing to start a business in Israel. 

Before arriving in Israel, foreign workers must acquire a B/1 work visa. This visa is valid for 30 days. Employees must also obtain a work permit to continue working in Israel after the initial 30 days. A work visa and an Israeli work permit may be applied for simultaneously.

The employer and the foreign employee work together to complete the request for an Israeli work permit. You must submit the paperwork to Israel’s Interior Ministry as an employer. In the interim, the worker must provide the necessary paperwork to the Israeli embassy in their nation of residence.

You must submit your original application to the Israeli Ministry of Trade, Industry, and Labor if you request a work permit and a visa. After approximately four to eight weeks of assessment, the Ministry will propose something to the Ministry of Industry. 

Once you get a work permit upon authorization from these Israeli state agencies, the employee can depart for Israel and start working for your business. Employers must renew Israeli work visas yearly as long as the employee plans to continue living and working in Israel beyond their original one-year validity period.

Government Assistance for Foreign-owned Businesses

Opening a business in Israel has become more accessible due to the simple business rules established by the Israeli government. 

Israel welcomes international investment, and the administration actively promotes and aids in this process.

The state’s office promoting foreign direct investment is called ‘Invest in Israel’, and it is part of the Israeli Ministry of Economy and Industry. ‘Invest in Israel’ offers a comprehensive range of solutions on Israeli legislation, rules, taxes, bonuses, and costs and developing business relationships between early investors, competitor firms, and industry executives. Additionally, it has a staff of advisors for every continent and arranges familiarization trips for prospective investors.

The Israeli law system safeguards the freedom to form and run businesses and engage in lucrative activities for local and international corporations. Private companies are free to establish, purchase, and sell business venture interests. The Israeli government promotes foreign participation in the privatization of government-owned companies as part of continuous privatization efforts.

Although monopolies and oligopolies exist in several areas, including network infrastructure, food manufacture, distribution, and some manufacturing divisions, innovation is stifled despite Israel’s initiatives to equalize competition among private and governmental firms. Government pricing limits apply to businesses that provide more than 50% of the marketplace or recognized monopolies.

In July 2018, the World Trade Organization (WTO) completed Israel’s fifth and most recent trade policy assessment. The Israeli government has not reviewed its investment strategy through the United Nations Conference on Trade and Development (UNCTAD) or Organization for Economic Cooperation and Development (OECD) in the last three years.

How Can Multiplier Help?

Planning, research, and finances must all be carefully considered when starting a business abroad. Once your firm has been officially incorporated in Israel, you must employ the appropriate personnel to guarantee efficiency. It is a lengthy procedure that could be challenging without assistance from a global PEO-EOR company like Multiplier.

By overseeing your global employee team, handling employee payroll, and onboarding recruits, Multiplier reduces your HR workload. Without the need to create a subsidiary, our experts can assist you in expanding your business globally by helping you acquire people abroad. While we take care of the ordinary HR responsibilities, you get to look into new markets and concentrate on the administrative parts of your company.