ILOperating in Israel
Payroll, accounting, employment, immigration, entity setup, and corporate compliance managed locally through a single international coordination model.
Request a country assessmentThe regulatory landscape
Israel applies a standard 23% corporate income tax rate, but the more consequential feature for technology and R&D-intensive businesses is the tiered "Preferred Enterprise" and "Preferred Technological Enterprise" regime under the Law for the Encouragement of Capital Investments: qualifying companies can pay 16% (7.5% in development zones) as a Preferred Enterprise, 12% (7.5% in development zones) as a Preferred Technological Enterprise, or as low as 6% for technology groups with consolidated global revenue above ILS 10 billion.
Qualification is not a one-time election. A company must demonstrate at least 20% of revenue from intellectual property developed in Israel (or, at group level, that 55% of the group's Israeli revenue is Preferred or Technological Income), and its R&D expenditure claims are reviewed by a Technology Evaluator appointed by the Israel Innovation Authority — a disallowed claim retroactively pushes the company back to a higher tier. From 2026, a new Qualified Domestic Minimum Top-up Tax (QDMTT) additionally sets a 15% effective floor for any entity inside a multinational group with global consolidated revenue above €750 million, meaning the lowest tiers no longer guarantee the nominal rate for large groups.
Official language
Hebrew (Arabic holds special status)
Legal forms
Ltd. (private company) · Public company
Corporate tax rate
23% standard · 16%/12% Preferred & Preferred Technological Enterprise tiers (7.5% in development zones) · 6% for tech groups with consolidated revenue above ILS 10 billion
Currency
ILS (Israeli new shekel)
Employer social security
Bituach Leumi + health: ~6.70% combined up to ILS 6,331/month, ~12.60% on the portion up to the ILS 51,910/month ceiling (2026)
Dividend tax
25% (30% for holders of 10%+ of shares), plus a 2–3% surtax once annual capital income exceeds ILS 721,560 (2026)
Minimum share capital
No statutory minimum (ILS 1 legally sufficient); the four main commercial banks generally expect ILS 10,000+ paid-up before opening a corporate account
VAT
18% standard, no reduced rate; exports and international services zero-rated
Integrated services in Israel
Each service is delivered as part of an integrated service model, coordinated across functions under a single point of accountability. Clients engage one team, not a coordination layer between independent providers.
Accounting & Tax Compliance
Statutory accounts, VAT filings, and corporate tax returns aligned with Israeli GAAP/IFRS, including the revenue-mix documentation that supports Preferred Technological Enterprise status.
Explore Accounting & Tax CompliancePayroll & Workforce Management
Full-cycle Israeli payroll including Bituach Leumi contributions across both salary brackets, pension arrangements, and compliance with Israeli labour law.
Explore Payroll & Workforce ManagementCompany Formation & Entity Setup
Ltd. company incorporation, Registrar of Companies filing, and post-formation compliance setup, including coordination with the Israel Innovation Authority where relevant.
Explore Company Formation & Entity SetupWorkforce Mobility
B-1 Foreign Expert work visa coordination for foreign managers, specialists and key staff relocating to Israel.
Explore Workforce MobilityClient profiles in Israel
HR & Employment Advisory
Multinationals establishing or restructuring Israeli technology operations
Company Formation & Entity Setup
Companies entering Israel for the first time, requiring entity setup and initial compliance infrastructure
Workforce Mobility
Technology companies approaching the R&D-expenditure and IP-sourcing thresholds for Preferred Technological Enterprise status
Payroll & Workforce Management
Companies already operating in Israel consolidating fragmented HR, payroll and accounting providers under a single governance layer
At the center of your HR operations
What clients say about our services in Israel
Our subsidiary had qualified as a Preferred Technological Enterprise for two years on the strength of our R&D ratio. When the Innovation Authority's evaluator disallowed part of one year's claim during review, we found out only when the reassessment arrived that the shortfall pushed us back to a higher tier retroactively. We now track the qualifying ratio quarterly instead of waiting for the annual filing.
Finance Director, Technology Group — Israeli OperationsInsights on Israel
Selected articles on regulatory developments and operational frameworks relevant to companies in Israel.
Preferred Technological Enterprise status is tiered, with rates well below the standard corporate rate. How the tiers are structured and what evidence the Innovation Authority evaluator looks for.
Read articleA 15% domestic minimum top-up tax now interacts with Preferred Technological Enterprise status. Which groups are affected and at what point the preferential rate stops producing a benefit.
Read articleEmployer contributions apply at a lower rate below a salary bracket and a higher rate above it, up to a ceiling. How the 2026 figures affect total employer cost.
Read articleFrequently asked questions
Questions raised most often by companies entering or operating in Israel.
What services does HTLC Network provide in Israel?
HTLC Network provides Payroll & Workforce Management, Accounting & Tax Compliance, HR & Employment Advisory, Company Formation & Entity Setup, and Workforce Mobility services in Israel through a coordinated international service model.
Can a foreign company hire employees in Israel?
Yes, but a company must comply with local payroll, tax, social insurance and employment law obligations before employment begins.
Do foreign employees need work permits in Israel?
In most situations a foreign employee requires appropriate work authorization and immigration approval before performing employment activities.
What should employers know about payroll in Israel?
An employer generally manages income tax withholding, National Insurance obligations, statutory benefits and local reporting requirements.
How does the Preferred Technological Enterprise tax rate actually work?
A company must show at least 20% of revenue from IP developed in Israel (or, at group level, that 55% of Israeli revenue is Preferred or Technological Income) to qualify. Rates then range from 16%/12% depending on enterprise type and zone, down to 6% for technology groups with consolidated global revenue above ILS 10 billion. Qualification is reviewed annually, not granted permanently at setup.
What is the 2026 top-up tax and who does it affect?
From 2026, Israel's Qualified Domestic Minimum Top-up Tax (QDMTT) sets a 15% effective minimum tax rate for any Israeli entity that is part of a multinational group with consolidated global revenue above €750 million. For such groups, a nominal 6% or 12% preferential rate no longer guarantees that effective rate — a top-up tax closes the gap to 15%.
How do Bituach Leumi employer contributions work?
Combined National Insurance and health contributions apply in two brackets: approximately 6.70% on the portion of monthly salary up to ILS 6,331, and approximately 12.60% on the portion between that threshold and the ILS 51,910/month ceiling (2026 figures). Salary above the ceiling is exempt from further contributions.
Is there a minimum share capital to form a company in Israel?
No — the Companies Law sets no statutory minimum, and a nominal ILS 1 is legally sufficient. In practice, the main commercial banks generally expect at least ILS 10,000 in paid-up capital before opening a corporate bank account, and operationally most companies capitalize well above that.
Talk to a Israel expert
For companies structuring a market entry or consolidating an existing Israeli operation under a single governance model.