Business Opportunities in Israel for Immigrants and Foreigners

Israel is the perfect place to do business. All conditions have been created here for the successful activities of both beginners and experienced businessmen. The state supports entrepreneurial initiative - more than 80% of jobs in the country are created by small and medium-sized businesses. Business in Israel will be especially profitable for repatriates who enjoy many benefits and advantages here. Foreigners and future immigrants wishing to start their own business in Israel should take a closer look at the business opportunities in the country.

Why business in Israel is attractive

The conditions for entrepreneurship in the Israeli state correspond to those in Europe. Among the factors that will help bring business ideas to life in Israel:

• favorable economic situation: industrial growth, low inflation, hard currency (new shekel), financial stability, liberal banking policy;
• stable political situation;
• reliable legal framework that guarantees the safety of investments, protection of the rights and interests of businessmen;
• state policy of support for small and medium-sized businesses;
• transparent business schemes,
• high quality of life;
• dynamic development of the real estate market;
• rapid development of resort and tourist infrastructure;
• availability of a highly qualified workforce;
• profitable purchase and sale of business in Israel;
• balanced taxation policy.

The uniqueness of Israel lies in the fact that this country has concluded agreements on free market trade with the European Union, the USA, Canada, Turkey, Latin American countries (MERCOSUR), the European Market Trade Association (EFTA), Eastern Europe, Southeast Asia.

Israeli firms have a high reputation in the world, which helps in lending, in relationships with counterparties and other aspects of business. Opening a company in Israel means gaining significant competitive advantages.

The most promising types of business in Israel

The most profitable segment of entrepreneurship is small and medium-sized businesses. This article will focus on him, although Israel has both large-scale production facilities and world-renowned firms.

Despite the high competition, everyone will be able to find their own business niche, and a good idea will always find a worthy embodiment. Business in Israel is especially beneficial for repatriates: for them, the help and support of the state is tangible in many moments.

Among the most promising areas of activity are:

• real estate investment. For example, speaking about which business is most in demand in Tel Aviv, it should be noted that rented real estate is always in great demand in the city. Renting out an office or residential space will generate a regular income;
• service of tourists. Millions of visitors come to Israel every year, which creates the need for both the constant development of the existing infrastructure for servicing pilgrims and tourists, and the creation of new tourism industries;
• the sphere of personal services: cleaning companies for cleaning premises and territories, services of a plumber, an electrician, a carpenter, caring for pets;
• medical and cosmetic services - consulting and treatment centers, massage and beauty salons;
• car rental. The demand for cars from tourists is high, including a car with a driver who can also be a guide;
• IT business;
• advertising business;
• the sphere of innovative technologies;
• waste recycling.

Organizational and legal forms of business in Israel

The success of a business largely depends on the correct choice of the appropriate organizational and legal form. Israeli law defines the following:

• Individual entrepreneurship. There are two options for individual entrepreneurship in Israel. The first is “esek patur” (income is limited to 99,003 shekels per year), exempt from VAT (MAAM). The second - "esek murshe" - is not limited in circulation, not exempt from MAAM.
• Company. May be:
  • LLC - "khevra baam" - the most common form of doing business in Israel with a large authorized capital and several founders;
  • private - CJSC (no more than 50 shareholders).
  • public - JSC - "hevra tsburite".
• Representative offices, branches, subsidiaries of foreign companies.
• Partnerships - "shutafut" - a business association of several persons on an equal footing.
• Cooperatives - in agriculture, transport
• Non-profit organizations - "amutot" or "amuta" - charitable foundations and companies, interest clubs that are exempt from taxes. When doing business, their income is taxed.

How to open a business in Israel for a foreigner

Regardless of the decision made by a foreigner about how to open a business in Israel and in what form to conduct it, it is necessary to go through the registration procedure with government agencies. There are no business visas in Israel, a non-resident of the country has the opportunity to register a business by arriving as a tourist or using a "visa-free". You can manage a company remotely - using communication means, trusted persons from among Israeli citizens.

Before registering a business in Israel, a businessman needs to open an account at a local bank.

Next, you should go through several stages, which differ depending on the chosen legal form.

So, to apply for an individual entrepreneur, you must register at:

• the accounting service of the Value Added Tax Administration (MAAM) - fill in “Tofes 821”, get a certificate (ishur);

• Income Tax Office (mas ahnasa) - fill out two forms, the yellow one is taken by the client;

• at the Jewish National Insurance Service (Bituach Leumi). Here the amount of insurance premiums will be set (revised annually depending on profit).

To register “khevra baam” it is necessary to write a charter or draw up a memorandum of association, choose the name of a new company, which should not repeat the existing ones.

With the charter, you should contact the Registrar of Companies (Rasham Khevrot) under the Ministry of Justice of Israel and pay the fee. Then you need to go through the same instances as when registering an IP.

“Amuta” can be registered in the special department of the Ministry of Justice of Israel - “rasham ha-amutot”. For registration, 2-7 adult founders with Israeli citizenship are enough.

Required papers and registration cost

To legalize a business, you must prepare documents and pay a fee.

Non-residents of Israel should additionally provide a copy of their foreign passport, certified by a notary.

Buying a ready-made business in Israel

In order to become an entrepreneur, it is not necessary to develop a business idea, to raise production from scratch - you just need to buy a ready-made business in Israel. The search can be conducted independently - on the Internet, through friends or relatives. This will save you money, but it will take a lot of time.

A more reliable option would be to find what you want through an intermediary company, which will issue papers for a commission, tell you what key points you should pay attention to, conduct an audit, analyze the transaction and assess its objectivity (Due Diligence).

During the negotiations, the parties to the transaction conclude a preliminary agreement, a letter of intent with the payment of a deposit of 10% of the total cost. To finalize the transaction with a notary, you will need the services of a professional lawyer. When making a deal by a non-resident of the country, it is important that his business partner in Israel or a trustee who will represent the company has an Israeli passport.

Banking system in Israel

The Israeli banking system includes government and commercial financial institutions and is highly reliable. The country's main bank is the Bank of Israel.

Every Israeli must have a bank account: the calculation of salaries, pensions, payments for purchases are carried out by bank transfer - through bank cards and checkbooks. Foreign clients also have the opportunity to freely open accounts with Israeli banks. To do this, they must provide a passport and their other document with a photograph (driver's license, civil passport.

The largest banks in Israel:

• "Hapoalim" or "Bank of workers";
• Leumi Bank or National Bank;
• "Discount";
• "Mizrahi-Tfahot";
• "Beinleumi" or "First International Bank";

Interesting fact. The State Post of Israel also performs banking functions. "Post Bank" (http://www.israelpost.co.il/) is more loyal to citizens, it serves, including inveterate debtors, provides discounts, the best exchange rates for currency. The only negative is the lack of credit.

Business in Israel: specifics and features

The main specificity of business in this state is that it is small and almost all businessmen are somehow familiar. Therefore, everything secret quickly becomes apparent. This must be taken into account when negotiating. Business in Israel for Russians is simplified by the fact that over 20% of the population speaks Russian.

Practice has shown that in Israel one should always write receipts for payment - this will prevent conflicts with the tax authorities; and when paying taxes, always round up the amounts.

The state provides real assistance to businessmen. MATI organizes training courses for novice businessmen, provides credit benefits (from 3 to 7.25% instead of 9% for a regular loan). Thousands of currently successful entrepreneurs have passed through the business incubator in Israel. Today there are 26 business incubators in the country.

Investing in the Israeli economy

The country's leadership is successfully working with foreign businessmen in order to attract additional investments to Israel in those areas that are recognized as priority areas: cosmetology, pharmaceuticals, construction, food processing, agriculture, energy.

Foreign citizens cannot obtain permanent residence for investments in the Israeli economy. But for such investors, preferential taxation is applied, including exemption for up to 10 years from mandatory fees.

Investment programs in Israel are also used to solve the problems of energy substitution, desalination of water and other global problems of human survival.

It should be borne in mind that there is a lot of competition among investors from the USA, China, and the Russian Federation in the investment market today, so often startups in Israel choose the investor themselves, and not vice versa.

Tax system in Israel

Taxes in Israel are a significant expense item for entrepreneurs. The amount of deductions depends on the form of doing business, the level of income. So, for example, individual entrepreneurs with income less than 100 thousand shekels are not paid by MAAM.

In Israeli firms, an audit is carried out annually, after which a report is submitted to the relevant government services within 5 months after the end of the calendar year. If the report is late, the businessman is penalized for the delay.

Income tax in Israel is progressive: the higher the profit of the company, the higher the rate of deductions. So, in 2021, income tax on income up to 74,880 shekels was 10%, from 498,361 shekels and more - 47%.

In addition, entrepreneurs pay:

• corporate tax - 23%,
• dividend tax - from 25 to 32%,
• VAT - 17%, reduced rate - 8.5%
• fees to social insurance funds - from 3.5 to 17.5%.

Let's sum up

Whether it is profitable to open a business in Israel is of interest to many foreign citizens. The country has created favorable conditions for business activities, and the number of pluses exceeds the possible minuses. Foreigners have the opportunity to do business on an equal basis with Israelis. The most common business forms are individual entrepreneurs (“esek patur” and “esek murshe”) and private companies - “hevra baam”.

The Israeli state actively supports repatriates in their desire to do business: immigration to the country is increasing every year and such a policy helps to solve the problem with jobs.