Fiscal Representative vs. Register A Company
Your foreign company or business entity, about to start business activity in Israel? The facts you should know, and the options available for you.
Whether you think of partnership, JV, establishment of a branch or a full company, you have two basic options for registering activity in Israel.
What are the options?
• To Register as an Israeli company
• Establishment of a fiscal representative - a branch
The Local Law Requirements
The Israeli law requires every company conducting business activity in Israel to register with the Israeli Registrar of Companies and declare the execution of business activity in Israel within 30 days. However, it is not the only choice you have. In case you are about to base your activity in Israel, register as an Israeli company is the choice for you.
To establish a foreign company with a local permanent office that functions as an independent unit, to work freely; without the limitations and the need for approvals from the head office located overseas.
The Local Law Optional Solution
A foreign business entity which decides to act in Israel must appoint a fiscal representative to conduct its business in Israel.
According to Israel’s Value Added Tax (VAT) Law.
Responsibilities Of A Fiscal Representative
A fiscal representative has personal liability to government authorities for all the tax and legal obligations of the foreign parent company operating in Israel, including income tax, VAT, social security, etc.
That is why the fiscal representative must be an Israeli resident and\or corporation registered in Israel.
Permanent Establishment
There are two options:
1. The scope of the business activities in Israel is sufficient to create a permanent establishment.
In these cases, the fiscal representative should manage the foreign company’s monthly and annual obligations, including reports and adjustments in accordance with any applicable double taxation treaty.
2. The scope of the business activities in Israel is not sufficient to reach the level of a permanent establishment.
In these cases, the fiscal representative should obtain an exemption from the withholding tax from the Israeli Income Tax Authorities.
In both cases, the fiscal representative should do its best so the company will pay the minimum taxes requirements to the Tax Authorities.
Proper Tax Planning
A fiscal representative should search for the optimal tax planning possible in Israel, and between the countries of your business activity. Manage your business with a fiscal representative, in most cases, can save your company up to 30% on dividend tax in Israel.
Added Value
Assistance your foreign company with local matters: operational, logistical, and etc. Issues such as selecting service providers, relocating employees to Israel, supporting operational and logistical issues, and more. Your company fiscal representative will manage nonresidents’ funds according to the laws of Israel and submit tax reports to the relevant tax authorities for your company.
We at Auren Israel familiar with the local requirements and market in Israel.
Whether you are about to register a company or establish a branch with a fiscal representative. Auren Israel can act as your fiscal representative as it does for many foreign companies, to guide and assist you with all the forms and document filing required by the local authorities, so your business will start its business activity smoothly.
Auren Israel, The Israeli office of Auren international, one of the leading consulting firms in the world.
Contact Information: tlv.office@auren.co.il
