There are six types of businesses in Israel: company, foreign company, self-employed, partnership, non-profit and corporation.
Companies are the most common types of business in Israel, and you will most likely register as a private or a public company. Private companies must have a director and at least one shareholder. Public companies are registered on the Israeli stock market and must have at least seven shareholders.
If you register as a foreign company in Israel, your company will have the status of a branch or a subsidiary.
Business registration process
In Israel, all businesses register in the same basic format regardless of business category (this includes self-employed businesses and non-profit organisations).
A business must first obtain the necessary registration documents from an attorney. The attorney certifies them for a fee. The forms include:
- Form No. 1 (this is the Registrar's form, and your attorney will get it for you)
- Memorandum of the Association (description of company's objectives and responsibilities of director and shareholders)
- Articles of Association signed by initial shareholders
- Directors' affidavit stating competence to serve
The attorney then submits the documents to the Registrar of Companies. Most documents can be in English, Hebrew, and Arabic, but the Articles of Association must be in Hebrew.
After registering with the Registrar of Companies, you will need to register with two other government departments: the Income Tax Department and the Customs and VAT Department. These are both bodies under the Ministry of Finance, and they charge no registration fees. You will have to bring copies of the registration documents specified above to these departments.
Lastly, you must register your company with the National Insurance Institute (NII). As an employer, you make national insurance and health fund payments to the NII on behalf of your employees. You also deduct income tax payments from your employees' salaries, which you then send to the Income Tax Department.
Business registration must be renewed annually.