Car Purchase

Purchasing A New Car

Purchasing a car in Israel can be expensive due to the high rate of taxation. 

Permanent residents pay nearly 100% tax on new vehicles. Olim and non-permanent residents holding an A/2 student visa are eligible for reduced tax rates.

Reduced Tax for Olim

Olim are eligible for a reduced tax rate when buying a new car within three years of making Aliyah. After five years, no repayment of the reduced taxes is required. However, if the car is sold before five years have passed, the amount saved through the reduction must be repaid.

Reduced Tax for Non-Permanent Residents

Holders of an A/2 student visa are exempt from paying import tax at the time of purchase. Instead, they may defer this payment until the car is sold or scrapped.

Since import tax is calculated based on the car’s current value, delaying payment can result in significant savings due to depreciation. 

To qualify, the buyer’s visa must be valid for at least one year from the time of purchase.

Additionally, to qualify for this exemption, the buyer must have exited the country at least once within the 3 months prior to the purchase. 

The Process 

Here is an overview of the process, with details provided below:

1. 89 number / Israeli license number
2. Down payment
3. Meches (Customs)
4. Arvut Bankait (bank guarantee)
5. Releasing the Car

1. Obtain an 89 Number 

If the buyer does not hold an Israeli license, they need to obtain an 89 number in order to place an order (hazmanah) for the car. 

The 89 number is a temporary ID number issued by Misrad Harishui (the Licensing Bureau). It can also be used to obtain an Israeli driver’s license.

No appointment is required to obtain an 89 number.

Bring the following documents with copies:

• Foreign passport and visa 
• Foreign license (copy of the front and back)

2. Down Payment 

Purchasing a car requires a sizable down payment. Once paid, the dealer will prepare documents indicating the car’s value and the amount of taxes owed.

3. Meches (customs) 

The car must be “released” from Meches (customs).  This involves leaving 30% of the vehicles’ tax value in escrow (arvut).

The buyer must bring the following to the Meches office in Givat Shaul (Kanfei Nesharim 66, Jerusalem):

• Documents from the dealer
• Passport with a visa valid for more than one year

The Meches agent responsible for vehicle tax exemptions will file the documents and calculate the required arvut. 

The registration will indicate that only the car owner and their spouse may drive the vehicle. It also includes a towing and repossessing clause, which lowers car insurance costs by several hundred shekel per year.

4. Arvut Bankait (Bank Guarantee) 

An arvut bankait, or bank guarantee, ensures that the car will not be exported or sold without taxes being paid. After meeting with the Meches agent, the buyer must arrange the arvut at their bank.

Bring the papers from Meches to the bank. The bank will then send the necessary forms directly back to Meches.

5. Releasing the Car 

Bring the Meches certification and proof of the arvut bankait to the dealership to finalize the car purchase.

The dealership will send original documents – including the buyer’s passport and driver’s license (foreign and/or Israeli) – to the border to retrieve the car from Meches. These documents will be returned with the car approximately two weeks later.

Both the arvut and Meches certification must be renewed annually. 

Purchasing a Used Car 

If both the buyer and seller are Israeli

Ownership can be transferred at some large car dealerships or at the post office.

Required documents:

• Car registration
• Teudot zehut and driver’s licenses for both parties

A small fee is required.

If one or both parties are not Israeli

Both parties must go to the Misrad Harishui to transfer ownership.

Bring:

• Teudot zehut/passport with valid visas for both parties
• Car registration
• 89 number for the visa holder

An Israeli citizen may sign a power of attorney instead of appearing in person.   The non-Israeli should bring:

• The signed power of attorney
  
• The Israeli’s original teudat zehut
  
• Their own passport
  
• The car registration

An appointmentMake an appointment by calling *5678 or at govisit.gov.il with משרד התחבורה (the Ministry of Transportation) is required to transfer ownership.   

Please note: The power of attorney can be used whether the Israeli citizen is the buyer or the seller.

The buyer must pay for the transfer at a post office after the paperwork is processed at Misrad Harishui.

There are two branches of Misrad Harishui in Jerusalem:

Talpiot branch

HaUman 10, Binyan Kaduri
Hours: Sun–Thurs 8:00 am–1:00 pm
Tues:  also 3:30 pm–5:30 pm

Binyan Klal branch

Car Registration and Inspection

All vehicles in Israel must have a valid rishayon rechev (vehicle registration), which must be renewed annually. Renewal requires both a payment and a car inspection. 

It is the owner’s responsibility to ensure the registration is renewed before expiration. 

Both teudat zehut holders and visa holders can pay via Israeli credit card on the Misrad Hatachbura website. Proof of payment will be emailed and should be printed for the inspection (test).

If you do not have an Israeli credit card: Schedule an appointment at Misrad Harishui to obtain a pay slip, then pay at any post office. Bring the proof of payment to the inspection.

Renewing Registration for Tax-Free Cars

If a tax-free car is due for registration renewal, permission must first be obtained from the Tax Authority.

Email the Meches agent at tourist@taxes.gov.il.  Include the following documents:

• Passport
• Valid student visa
• Arvut from the bank
• Current car registration

Include a short explanation, requesting the release of your car from Meches.

Once you receive confirmation, you may pay the registration fee and proceed with inspection.