In Israel, one who is earning money from any source other than an Israeli employer is required to declare his or her estimated anticipated income and pay taxes based on that declaration. This includes freelancers, self-employed workers, and those who work for employers overseas and receive payment that is not registered with the Israel Tax Authority.
To declare income in Israel, one must be registered as an atzmai (lit. “independent”).
Atzmaim pay for and can receive Bituach Leumi employment benefits such as maternity pay and workplace disability. Additionally they may be eligible for a work grant (ma’anak avoda) if they meet certain age and income requirements.
Below please find an outline of the registration process.
Note
For more information and for assistance with the process, we recommend using the services of a professional accountant.
Two Categories of Atzmai
Osek Patur
An osek patur has declared earnings of less than 120,000 NIS (as of 2024) in any business year and is exempt from charging ma’am (VAT) from clients.
An osek patur may not reclaim VAT (ma’am) on business purchases for which they were charged VAT (ma’am). Additionally an osek patur does not issue invoices, only receipts for payments.
Note
If one earns more than 120,000 NIS throughout the business year, they must change their status to osek morshe (see below) the following month. After changing the status of the business, one cannot revert back to an osek patur (VAT exempt) for two years following the change.
An osek patur is required to pay Bituach Leumi once a month (initially based on their estimated income and then reassessed periodically based on actual income) and file a tax return with Mas Hachnasa at the end of each year.
Note
Certain professionals, such as accountants, doctors and lawyers, cannot register as an osek patur and must register as an osek morshe.
Osek Morshe
An osek morshe has declared earnings of more than 120,000 NIS in any business year and is required to charge ma’am (VAT). Additionally an osek morshe is entitled to reclaim ma’am on business purchases.
An osek morshe may issue invoices.
Tip
The business year in Israel is from January 1 to December 31.
Registering as an Atzmai in Israel
Note
Visa holders will first need to obtain permission to work on their visas before proceeding. See here for information on “Permission to Work on an A-Category Visa.”
Step 1: Ma’am – Sales Tax
After figuring out which kind of business owner one should register as, the first step is to open a file (tik) with the office of VAT (ma’am).
One is required to go down to the ma’am department of their local office of Mas Hachnasa (The Income Tax Bureau).
Note
The Tax Authority grants a number beginning with 66, to foreigners without a teudat zehut. To obtain a 66 number, one must present their passport at the office of Reshut Hamisim/Mas Hachnasa and ask for a “mispar shesh shesh”. For Jerusalem residents, the office is on Kanfei Nesharim 66, floor -1.
Bring along:
- Teudat zehut or foreign passport
- Proof of a bank account in the business owner’s name. (eg: a check or a letter from the bank called ishur nihul cheshbon.) If someone has a joint bank account, both account owners will need to be present with their ID’s.
- Foreign citizens must also present VAT form 22, which includes a signed declaration by an Israeli representative who declares responsibility for their dealings as a foreign business holder. This document may need to be notarized by a senior Israeli lawyer. This requirement applies even to one who is filing as an osek patur and does not pay VAT.
After presenting the above requirements, the business owner will be issued a certificate showing their atzmai status.
Step 2: Mas Hachnasa – Income Tax
The next step in the office of Mas Hachnasa is the department for oved atzmai.
After presenting the certificate from ma’am, one will need to complete the necessary forms.
Tip
It may be worth speaking to an accountant about deductible expenses, especially for someone working from home.
Note
Once a year every business owner is required to file a tax return. Tax forms are usually sent out in February of the following tax year and must be filed by April 30th. Many business owners opt to use the services of an accountant for this. Within the first 12 months of aliyah, Olim are eligible for a reduction on income tax on their monthly income.
Step 3: Bituach Leumi – National Insurance
Finally, download and complete form 6101 from Bituach Leumi to open a file (tik) for making Bituach Leumi payments.
The form can be mailed, faxed, or uploaded here or via one’s online Bituach Leumi account.
Submit the form along with proof of a bank account.
Bituach Leumi may also request prior pay stubs.
Note
Payments are between 7.05–19.60% of one’s earnings for “Bituach Leumi” (pension and benefits) payments, and between 3.10–5.00% for mas briut/ mandatory health insurance. Olim are exempt from paying Bituach Leumi for a period of 12 months, unless their income exceeds the set minimum.
In a family where the husband is a full-time student, if the wife is working, she pays Bituach Leumi in addition to the fixed monthly student fee paid by the husband.
Tip
In order to receive maternity pay, one must have paid monthly Bituach Leumi payments from their income for a minimum of six months prior to the birth. This cannot be updated retroactively.
Step 4: Buying a Receipt Book
An Atzmai must provide a receipt for all payments they receive.
Purchase a pinkas kabalot (receipt book) and a stamp with one’s name and business ID number from a stationery store or online companies such as Green Invoice.
De-Registration
In order to de-register from these statuses, one must complete a form for ma’am as well as inform Bituach Leumi with the 6101 form.
Useful Links
- Tax Offices
- Ma’am – Form 821: Open a file for VAT
- Mas Hachnasa – Form 5329: Open a file for Income Tax as an independent
- Bituach Leumi Information for a self-employed person
- Bituach Leumi – Form 6101: Open a file for payment of Bituach Leumi
Rishut HaMisim – Tax Authority
This office deals with income tax: income tax, VAT, self-employed workers, tax returns and more.
02-565-6400 • *4954
PIN code required to discuss personal matters by phone.
Appointments can be made online on myvisit.com
Jerusalem
Kanfei Nesharim 66 – for Jerusalem residents only, *9848 or 074-761-9848
Monday, Wednesday, Thursday 8:30 am-1:00 pm; Monday and Wednesday 3:00 pm-6:00 pm
Yaffo 236 – for residents of other cities, 074-761-3527
Monday, Wednesday, Thursday 8:30 am-1:00 pm; Monday and Wednesday 3:00 pm-6:00 pm
