Set up a company in Israel.
The world’s densest tech ecosystem — Startup Nation. 23% standard CIT, but qualifying technology enterprises pay as low as 7.5%. OECD member since 2010. First-ever US Free Trade Agreement (1985). 60 income-tax treaties. Coordinated through senior local Israeli counsel.
To set up a company in Israel, you choose a legal structure (most commonly a Private Limited Company — Chevra Ba’am, or “Ltd”, equivalent to a UK Ltd or German GmbH), prepare and notarise the Articles of Association, register with the Israeli Registrar of Companies (Rasham HaChavarot) at the Ministry of Justice, open an Israeli bank account, and register with the Israel Tax Authority (ITA) for corporate tax and VAT, plus the National Insurance Institute (Bituach Leumi) for any employees.
Standard formation takes 1 to 3 weeks for a Private Ltd. There is no minimum share capital. CIT is 23% standard, but qualifying technology enterprises pay 7.5% in development area A or 16% elsewhere under the Preferred Technology Enterprise (PTE) regime. Large tech groups (revenue > ILS 10bn) qualify for the Special PTE regime at 6%. VAT is 18% (raised from 17% on 1 January 2025).
Grant & Graham coordinates the engagement through senior local Israeli counsel and accountants — structure advice, Registrar filing, banking introductions, ITA registration, VAT setup (which requires an Israeli resident director or fiscal representative), NII employer registration, Israel Innovation Authority grant scoping where relevant, and ongoing compliance.
23% standard. 7.5% for qualifying tech enterprises.
Israel’s headline 23% CIT positions it in the middle of OECD jurisdictions — but the Preferred Technology Enterprise (PTE) and Special PTE regimes deliver some of the most competitive effective rates in the developed world for qualifying R&D, software, and biotech businesses. Combined with up to 50% R&D grants from the Israel Innovation Authority and one of the world’s most extensive tax-treaty networks, this is the structural reason Israel remains the global non-US tech hub.
Other notable items: Dividend WHT 25%–30% for general shareholders, 30%–35% for 10%+ shareholders, generally reduced under treaty. PTE dividends taxed at 20%, reducible to 4% with 90%+ foreign holding. Capital gains on PTE IP sale to a related foreign company at 12% (or 6% under SPTE). QDMTT (Pillar Two) applies for tax years starting after 31 December 2025 for MNEs with global revenue ≥ €750m. No wealth tax. No inheritance tax. No stamp tax. From January 2026 a major reform applies: the long-standing 10-year exemption from reporting foreign income/assets for new immigrants has been cancelled; mandatory digital tax reporting via API begins April 2026.
Nine reasons businesses choose Israel.
The world’s densest technology ecosystem by per-capita measure — more startups, more VC funding, and more Nasdaq listings per head than anywhere except possibly Silicon Valley. Plus an OECD-grade regulatory and tax framework with deep treaty access.
Startup Nation ecosystem
~9,000 active startups, 400+ R&D centres of multinationals (Intel, Google, Microsoft, Apple, Nvidia, Amazon, Meta), and over USD 10bn in annual venture funding. Deep specialisation in cybersecurity, AI, semiconductors, biotech, agritech and fintech.
PTE / SPTE tax regimes
The Preferred Technology Enterprise regime delivers 7.5%–16% CIT on qualifying tech income; SPTE delivers 6% for large groups. Combined with capital-gains relief on IP transfers and reduced dividend WHT for foreign holders, this is the developed-world’s most generous tech regime.
Israel Innovation Authority grants
The IIA (formerly Office of the Chief Scientist) offers non-dilutive R&D grants of 20%–50%, rising to 100% in technology incubators. Repayable via 3%–5% royalties on revenue if and when commercialisation succeeds — a structurally favourable funding mechanism for early-stage tech.
OECD member since 2010
Full OECD member. BEPS Inclusive Framework participant. CRS reporting. MLI signatory. FATCA IGA with the US. A regulatory and reporting framework Western counterparties recognise without explanation.
60 tax treaties
One of the most extensive treaty networks in the Middle East — including the US, UK, Germany, France, Australia, Canada, India, China, South Africa, UAE, and most major EU jurisdictions. Substantial WHT relief on dividends, interest and royalties for treaty residents.
First-ever US Free Trade Agreement
Israel signed the United States’ first-ever Free Trade Agreement in 1985 — before any other country. The agreement covers goods, services and investment. Israel also has FTAs with Canada, Mexico, the EU, EFTA, and the Abraham Accords trade frameworks with the UAE and Bahrain.
R&D talent density
Highest R&D spending as a share of GDP in the world (~5.6%). More engineers per capita than any other country. Significant pipeline of technical talent from leading universities (Technion, Hebrew University, Tel Aviv University, Weizmann) and from the IDF’s elite technology units.
Capital markets & M&A access
Tel Aviv Stock Exchange (TASE) for local listings; deep cross-listing relationship with Nasdaq for tech companies. The world’s densest M&A market for technology acquirers — consistent multi-billion-dollar exit cadence to US, European and Asian acquirers.
No wealth, inheritance or stamp tax
No wealth tax. No inheritance tax. No stamp duty on commercial documents. Combined with the PTE/SPTE regimes and treaty network, Israel is structurally attractive for both holding-company location and operating-substance location in the right structure.
Seven legal structures — one usually fits.
For most foreign investors and founders, the Private Limited Company (Ltd) is the practical default. The Public Limited Company is used for listed or larger entities. Branch and Representative Office are foreign-presence forms with specific restrictions.
Private Limited Company
The standard structure for trading, holding and tech businesses. Separate legal entity, limited liability. 1 to 50 shareholders. No minimum share capital. Can be 100% foreign-owned. The vehicle of choice for nearly every Israeli startup and tech company.
Public Limited Company
Public company — shares can be offered to the public and listed on the Tel Aviv Stock Exchange (TASE) or dual-listed on Nasdaq under the Israeli regulatory framework. Heavier disclosure, governance and audit requirements. Required for financial institutions and certain other regulated activities.
Authorised Dealer
Self-employed individual registered as an authorised VAT dealer. Unlimited personal liability. No minimum capital. Used for freelancers, consultants and small-scale trading. Foreign nationals may register subject to residency and visa conditions.
Exempt Dealer
Small-scale self-employed status (below the VAT threshold — NIS 122,833 in 2026). Issues receipts not tax invoices. Cannot recover input VAT. Used for very small businesses and side activities. Foreign nationals rarely use this route.
General Partnership
Two or more partners with unlimited joint and several liability. No minimum capital. Tax-transparent. Used in some professional services contexts (law firms, accountants). Governed by the Partnership Ordinance.
Limited Partnership
General partner with unlimited liability and limited partner(s) with liability capped at their contribution. Tax-transparent. Used in some Israeli venture-capital fund structures and joint ventures.
Branch
An operating branch of a foreign company. Can conduct commercial activities. Parent retains full liability. Must register with the Registrar of Companies as a foreign company. Branch profits taxed at 23% (or PTE rates if qualifying). Less common than the subsidiary route.
Representative Office
Liaison office of a foreign company — limited to representational, marketing and research activities. Cannot conduct commercial transactions or generate revenue in Israel. Useful for market exploration before fuller commitment.
Talk to us first
Ltd is the workhorse for nearly every founder and foreign investor. PTE qualification needs early structuring (R&D substance, IP ownership). Closely held tax planning matters from day one. A 25-minute call usually settles it.
Book a call →From decision to live entity.
The end-to-end registration sequence for an Israeli Private Limited Company — coordinated by Grant & Graham through senior Israeli legal and accounting counsel.
Structure & PTE eligibility scoping
Before incorporation, scope whether the business qualifies (or will qualify) for the Preferred Technology Enterprise regime — this materially affects share structure, IP ownership planning, and which entity should own the IP from day one. Also: holding-company location (Israel direct, or via treaty jurisdiction), closely held company status, and director residency.
Company name reservation
Submit the proposed company name to the Registrar of Companies for approval. Names must be in Hebrew (an English version may also be registered). Must not conflict with existing companies or trademarks. Approval typically within 3 to 5 working days.
Articles of Association & founder documentation
Draft the Articles of Association (Takanon) under the Companies Law (1999). Define shareholders, share classes, board composition, signatory authority, and dispute resolution. For foreign corporate shareholders: apostilled good-standing certificate, board resolution, and constitutional documents.
Notarisation & Registrar filing
Articles and shareholder/director declarations are signed before an Israeli notary (or apostilled abroad for foreign founders). Submit the incorporation application to the Israeli Registrar of Companies at the Ministry of Justice. Registration typically completes within 2 to 5 working days of submission.
Registrar of Companies →Israel Tax Authority registration
Register with the Israel Tax Authority for the corporate tax file and obtain a Tax Identification Number (TIN). Register for VAT — requires at least one Israeli resident director or an appointed fiscal representative. The VAT registration is what triggers the right to invoice customers in Israel.
Israel Tax Authority →Bank account opening
Open the operating bank account at an Israeli bank (Bank Hapoalim, Bank Leumi, Discount Bank, Mizrahi-Tefahot, FIBI, or international banks with Israeli operations). VAT registration cannot complete without an Israeli business bank account. KYC for foreign-owned companies is thorough — allow 3 to 6 weeks; UBO and source-of-funds documentation prepared in advance speeds the process materially.
National Insurance Institute (NII) registration
Register with Bituach Leumi (NII) as an employer. Required before paying salaries. Triggers mandatory pension and severance fund contributions after 3 to 6 months of service (pension minimum 18.5% of gross salary — typically 6.5% employer pension + 6% employer severance + 6% employee pension).
Israel Innovation Authority engagement (if applicable)
For R&D-intensive businesses, engage with the Israel Innovation Authority early to scope grant eligibility, R&D programme approval, and Preferred Technology Enterprise certification. Grants of 20%–50% (up to 100% in incubators), repaid via 3%–5% royalties on resulting revenue. A genuine structural advantage.
Ongoing compliance
Monthly or bi-monthly VAT returns. Quarterly CIT advance payments (Mikdamot). Monthly NII and payroll filings. Annual financial statements in line with Israeli accounting standards (IFRS or Israeli GAAP). Annual CIT return. From April 2026: mandatory full digital reporting of invoices, advances and salaries via direct API connections to the Israel Tax Authority. Statutory audit required for nearly all companies.
What it costs to incorporate & run.
All figures are indicative for a standard Private Limited Company with one or two foreign shareholders. Israel is mid-priced for setup — cheaper than UAE mainland but more expensive than most of Europe due to mandatory audit, the fiscal representative requirement, and Israeli notarial fees.
One-time setup
PTE structuring, Israel Innovation Authority grant applications, and complex share-class drafting are scoped separately. The fiscal representative requirement applies where no founder is Israeli-resident; can be replaced by appointing an Israeli-resident director.
Ongoing monthly / annual
Audit is mandatory for nearly all Israeli companies regardless of size — budget for this from day one. Digital reporting integration via API is a one-time 2026 cost as the new ITA platform requirements come into effect from April 2026.
The legal framework to know.
A summary of the core legislation governing companies in Israel — substantive work is delivered through senior Israeli counsel.
Corporate Law
- Companies Law (1999)
- Securities Law (1968)
- Partnership Ordinance
Tax Law
- Income Tax Ordinance
- VAT Law (1975)
- Encouragement of Capital Investments Law
Employment Law
- Hours of Work and Rest Law
- National Insurance Law
- Mandatory Pension Order
Data Protection
- Protection of Privacy Law (1981, as amended)
- Privacy Protection Authority
- EU GDPR adequacy decision
Innovation Framework
- Encouragement of Industrial R&D Law (1984)
- Israel Innovation Authority Law (2015)
- Angels Law (R&D tax credit for investors)
Intellectual Property
- Patents Law (1967)
- Trademarks Ordinance
- Copyright Law (2007)
Israel, answered.
Four steps from enquiry to live entity.
Discovery call
30-minute conversation to understand your business, R&D profile, PTE eligibility, shareholder structure, IP plans and what you actually need from the Israeli entity.
Recommendation
Senior advisory on the right structure (Ltd, Branch, holding location), PTE/SPTE qualification pathway, banking partner, Israeli-resident director or fiscal representative, and Innovation Authority engagement. Fixed quote in EUR or ILS.
End-to-end formation
Registrar filing, ITA tax and VAT registration, fiscal representative appointment, NII employer setup, banking introductions, digital reporting integration, and IIA engagement where relevant.
Ongoing support
Retained accounting, VAT and digital reporting compliance, payroll, mandatory audit coordination, annual CIT return, PTE/SPTE annual confirmation, and structural changes as you scale.
Ready to incorporate in Israel?
Tell us in 25 minutes what you need. We’ll tell you honestly whether Israel is the right jurisdiction — particularly the PTE qualification question — and if it is, we’ll handle the setup end-to-end through senior Israeli counsel.