How to register a company in Israel: A guide for employers

Tap into the vast potential of Israel: the world’s innovation powerhouse.

Israel has earned its reputation as the world’s “Startup Nation,” attracting businesses and investors with its thriving tech ecosystem, world-class talent, and strong government support. As a global leader in cybersecurity, AI, fintech, and biotech, this Middle Eastern country offers unparalleled opportunities for companies looking to scale, innovate, and expand in a dynamic market. With business-friendly policies, robust R&D investment, and strategic trade agreements, Israel provides an ideal environment for both startups and multinational corporations.

While registering a company in Israel has advantages, it also involves complex labor laws, tax regulations, and administrative responsibilities. But, registering in Israel is not essential. If you want a fast and flexible market entry, you can use an Employer of Record (EOR) to hire, set up, and grow teams in Israel without setting up a legal entity.

In this article, you will find step-by-step instructions for registering your company in Israel and discover if an EOR is a good alternative for you.

The business benefits of company registration in Israel

Whether you’re looking to establish a long-term presence or hire top talent quickly, Israel offers immense growth potential. With a thriving economy, strong government support, and a strategic location, it offers many advantages for businesses across industries. 

• Access to new markets and global trade opportunities.
  Expanding into Israel opens doors to regional and international markets, supported by trade agreements and strong economic ties with major global economies.
  • Strategic location. Positioned between Europe, the Middle East, and Asia, facilitating global trade and logistics.
  • Free Trade Agreements (FTAs). Israel has FTAs with the U.S., EU, Canada, UK, China, and other major economies, reducing tariffs and increasing trade efficiency.
  • World-class tech and innovation. Israel attracts global investors and Fortune 500 companies, making it easier for businesses to collaborate and scale internationally.
• Favorable tax policies and financial incentives.
  Israel offers competitive tax rates and financial benefits to businesses, especially in high-tech industries.

Tax category	Rate/Benefit
Corporate tax	23% standard rate (in 2025, this has become lower for qualifying businesses)
R&D tax incentives	Up to 50% funding support for research & innovation
Capital gains tax	Lower rates for foreign investors and tech startups
Investment grants	Available for foreign companies establishing operations in Israel

Besides, companies operating in high-tech, fintech, or renewable energy sectors can access exclusive tax benefits and grants from the Israel Innovation Authority (IIA).

• Skilled and multilingual workforce. Israel boasts one of the most educated and innovative talent pools in the world, making it a prime destination for tech, finance, and R&D companies.
  Professionals here exhibit expertise in AI, cybersecurity, fintech, biotech, and software development, and are fluent in English, Hebrew, Russian, Arabic, and other languages.
• Diversified revenue streams and local market trust.
  Building a presence in Israel can help businesses increase credibility, gain market trust, and unlock new revenue opportunities.
  • Strong domestic market: High GDP per capita and consumer spending power in key sectors like technology, retail, and financial services.
  • B2B and enterprise opportunities: Israel is home to thousands of startups, investors, and corporations seeking innovation partnerships.
  • Access to public sector contracts: Government-backed projects and initiatives offer long-term business opportunities.
• Business-friendly regulations and fast setup.
  Registering a company in Israel is efficient and straightforward, with clear regulations and government support for foreign businesses.
  • 100% foreign ownership: No restrictions on foreign businesses or investors.
  • Fast company registration: Set up a business in as little as 2–3 weeks.
  • Strong IP protection: Secure legal frameworks for patents, trademarks, and copyrights.
  • Ease of doing business: Ranked among the top global economies for business transparency and innovation.

Registering a company in Israel means long-term growth opportunities, market trust, and full operational control. However, for businesses looking to hire employees and enter the market quickly, an EOR provides a flexible, cost-effective solution—eliminating the need for entity registration, legal compliance, and administrative burdens.

What is the difference between standard company registration and Employer of Record (EOR) in Israel?

Companies have two primary pathways to establish their presence in Israel, each designed to meet different operational needs and strategic goals: standard company registration and partnering with an Employer of Record (EOR).

1. Standard company registration: Registering a company in Israel provides full operational control, allowing businesses to establish a legal entity, hire employees directly, and engage in long-term growth. However, this approach requires navigating local tax laws, labor regulations, payroll management, and compliance requirements—which can be time-consuming and costly.
2. Employer of Record (EOR): On the other hand, an Employer of Record (EOR) allows businesses to hire employees and operate in Israel without setting up a local entity. The EOR takes care of legal compliance, payroll, taxes, and HR management, enabling companies to expand quickly and flexibly while minimizing risk. This is especially useful for businesses that want to test the market, scale up or down fast, or avoid the administrative burden of company registration.

Aspect	Standard company registration	Employer of Record (EOR)
Purpose	Establish a legal business entity in Israel for long-term operations.	Hire employees and operate in Israel without forming a legal entity.
Control	Full control over business operations, hiring, and decision-making.	Limited control—EOR handles legal employment, payroll, and compliance, while the company manages employees’ work and tasks.
Cost	Higher upfront costs (registration fees, legal setup, accounting, payroll, and taxes).	Lower costs—fixed monthly fee per employee covers payroll, taxes, and compliance.
Compliance	Must comply with Israeli tax laws, labor regulations, and reporting requirements.	EOR ensures full legal and tax compliance while reducing administrative risks.
Setup time	2–3 weeks or more, depending on business structure and paperwork.	A few days—EOR enables immediate market entry.
Scalability	Requires entity registration for each location; exiting the market can be complex.	Highly flexible—easily hire, expand, or exit without legal complications.

Which expansion strategy is right for your business?

• Choose standard company registration if you want full operational control, a long-term presence, and plan to scale significantly within Israel.
• For fully remote or digital-first businesses, e-residency programs such as those offered by Estonia, can provide another way to run a company internationally, though they may not offer full legal or hiring capabilities in Israel.
• Opt for an EOR if you need fast, risk-free market entry, want to hire employees quickly, and prefer to avoid legal and administrative complexities.

How an EOR simplifies company registration

An Employer of Record (EOR) offers a simplified, cost-effective alternative to standard company registration by hiring employees on your behalf, managing payroll, and handling tax compliance.

Here’s how an EOR makes it easier to expand into Israel:

• Fast and hassle-free market entry: You expand into Israel without entity registration and start operations within days instead of weeks or months.
• Effortless payroll and tax management: Ensure accurate salary processing, tax deductions, and social security contributions in full compliance with Israeli regulations.
• Full compliance with local labor laws: Avoid legal pitfalls by adhering to Israel’s employment laws, tax codes, and labor protections without internal HR complexities.
• Significant cost savings: Eliminate the high upfront costs of company registration, legal fees, payroll administration, and ongoing compliance.
• Workforce scalability and flexibility: Easily hire, expand, or downsize without the commitment and liabilities of a full legal entity.
• Seamless talent acquisition: Gain access to Israel’s highly skilled workforce, particularly in tech, cybersecurity, fintech, and biotech, with locally compliant employment contracts.
• Risk mitigation and legal protection: Reduce compliance risks, employee disputes, and penalties by ensuring proper employment classification and tax filings.

For businesses wanting to hire teams in Israel quickly, an EOR offers a streamlined, all-inclusive solution.

But for those who need to register a company in Israel, let’s break down the process systematically.

A step-by-step guide to company registration in Israel

While the Israeli company registration process is relatively straightforward, businesses must navigate legal requirements, tax obligations, and compliance standards.

Step 1: Choose your business structure

Before registering, determine the most suitable legal entity based on your business goals and size:

• Private Limited Company (Ltd.): The most common entity requires at least one shareholder and one director.
  Best for: Startups, SMEs, and international investors.
• Public Limited Company: Can raise funds from the public and trade shares on the stock market.
  Best for: Large corporations and publicly traded companies.
• Foreign branch office: Operates as an extension of a parent company abroad.
  Best for: Companies expanding their existing operations.
• Sole proprietorship: A business owned and managed by one person.
  Best for: Freelancers and small businesses.

Most foreign businesses opt for a Private Limited Company (Ltd.) due to its flexibility, limited liability, and ability to operate independently.

Step 2: Reserve a business name

• Check name availability through the Israeli Corporations Authority.
• Ensure the name is unique and compliant with local regulations.
• If approved, the name is reserved for 90 days while registration is completed.

Step 3: Prepare and submit required documents

To officially register your company, you’ll need to submit the following documents:

• Articles of Association: Outlines company objectives, shareholder details, and governance rules.
• Identification documents: Passport or ID copies for directors and shareholders.
• Registered business address: Proof of a local business address in Israel.
• Declaration of shareholders and directors: Signed statements confirming roles and responsibilities.
• Bank certification (if applicable): Proof of minimum share capital deposit (for public companies).

You can register online through the Israeli Corporations Authority or in person with a legal representative.

Step 4: Obtain a Company Registration Certificate

• Once approved, the Israeli Corporations Authority issues a Certificate of Incorporation and a Company Registration Number.
• This confirms that your business is legally recognized and can operate in Israel.

Step 5: Register for taxes and social security

To comply with Israeli tax laws, companies must register with the Israel Tax Authority and National Insurance Institute (Bituach Leumi).

• Tax Identification Number (TIN): Issued upon registration.
• VAT Registration: Required if annual revenue exceeds NIS 102,292 (approx. $27,000 USD).
• Corporate tax compliance: Businesses must file annual corporate tax (23%) and report earnings.
• Social security contributions: Employers must withhold and pay social security and health insurance for employees.

Alternatively, you can use a global payroll solution like Multiplier can simplify tax compliance and employee payroll processing.

Step 6: Open a business bank account

• Choose an Israeli bank or digital banking provider to manage company finances.
• Provide your Company Registration Certificate, TIN, and ID documents.
• Some recommended banks include Bank Leumi, Bank Hapoalim, and Israel Discount Bank.
• Some digital banks like Mercury and Revolut Business may also offer solutions for international businesses operating in Israel.

Step 7: Apply for business licenses and permits (if required)

Depending on your industry, you may need additional permits or approvals:

• Tech & R&D incentives: Apply for government grants from the Israel Innovation Authority.
• Industry-specific licenses: Sectors like finance, healthcare, and construction require special permits.
• Import/export licenses: Required for international trade activities.

Step 8: Set up payroll and HR compliance

Hiring employees in Israel requires strict compliance with labor laws. Businesses must:

• Draft legally compliant employment contracts in Hebrew or English.
• Ensure minimum wage compliance (NIS 5,571/month or approx. $1,500 USD).
• Provide mandatory benefits (pension, severance pay, health insurance).
• Adhere to work hour limits (42 hours per week) and employee rights.

Alternatively, you can use a global payroll solution like Multiplier to take control of every payment cycle with the leading payroll management system for teams of every size. If you are registering in Israel solely for hiring people here

The next crucial step is to evaluate the costs involved. Let’s break down the expenses associated with registering a company in Israel.

The real cost of registering a business in Israel

While Israel provides strong investment incentives and a business-friendly environment, registering a legal entity comes with one-time setup expenses, ongoing maintenance costs, and compliance fees.

Registration and initial setup costs

These are the mandatory fees required to establish a company in Israel officially.

• Company registration fee: ApNIS 2,614 ($700 USD) one-time fee paid to the Israeli Corporations Authority.
• Notary fees: NIS 500–NIS 2,000 ($135–$550 USD) for document certification and translations (if applicable).
• Legal services: NIS 5,000–NIS 20,000+ ($1,350–$5,400 USD) if hiring a business consultant or lawyer for incorporation.
• Company stamp and seal: NIS 200–NIS 500 ($55–$135 USD) for official company documentation.
  
  Please note that these costs are approximate and can vary based on specific service providers and individual company requirements.
• Minimum share capital requirements

While some businesses require an initial capital deposit, most Israeli companies have no mandatory minimum share capital. However:

• Private Limited Company (Ltd.): No fixed minimum capital, but NIS 50,000–NIS 100,000+ ($13,500–$27,000 USD) is often recommended for operational funding.
• Public Limited Company (Ltd.): Requires at least NIS 1,000,000 ($270,000 USD) in share capital.
• Annual maintenance and compliance costs

Once registered, businesses must maintain legal, tax, and operational compliance with recurring annual costs.

• Annual business license renewal: NIS 1,500–NIS 5,000 ($400–$1,350 USD) depending on the industry.
• Registered business address: NIS 5,000–NIS 15,000 ($1,350–$4,000 USD) per year for virtual or physical office space.
• Annual corporate tax filing: NIS 3,000–NIS 10,000 ($800–$2,700 USD) for tax reporting services.
• Accounting and bookkeeping services: NIS 1,000–NIS 5,000 ($270–$1,350 USD) per month, depending on transaction volume.
• VAT compliance and filings: NIS 2,500–NIS 8,000 ($675–$2,200 USD) per year for businesses required to register for VAT (standard rate 17%).

1. Payroll, taxes, and social contributions

If you hire employees in Israel, you must comply with payroll laws, income tax regulations, and social security contributions.

• Corporate tax: 23% on net profits, with potential reductions for high-tech and R&D companies.
• Value-Added Tax (VAT): As of 2025, a standard VAT of 18% applies to most businesses.
• Employer social contributions including
  • National Insurance (Bituach Leumi). 4.51% onwards for resident employees and 0.75% onwards for non-resident employees
  • Pension contributions.
  • Severance pay
  • Health insurance
• Payroll processing fees: Costs for outsourcing payroll processing vary depending on the service provider and the number of employees.

Businesses that want to test the market or hire employees quickly in Israel can avoid these costs by opting to partner with an EOR.

Comparing costs: Legal entity registration vs. Employer of Record (EOR)

Below is a side-by-side cost comparison of standard company registration versus EOR.

Cost category	Standard company registration	Employer of Record (EOR)
Initial setup fees	NIS 10,000–NIS 30,000+ ($2,700–$8,100)	NIS 0 (No registration needed)
Annual compliance costs	NIS 10,000–NIS 50,000+ ($2,700–$13,500)	Included in EOR service
Payroll and tax management	NIS 250–NIS 1,000 per employee/month	Included in EOR service
Corporate tax (23%)	Must be filed and paid	Handled by EOR provider
VAT registration and filing	Required for most businesses	Not required for EOR users
Legal and accounting fees	NIS 3,000–NIS 10,000+ per year	Included in EOR service
Total cost (first year)	NIS 30,000–NIS 100,000+ ($8,100–$27,000)	Fixed monthly fee per employee

For businesses that don’t need a full legal entity in Israel, an Employer of Record (EOR) like Multiplier offers a low-risk, cost-efficient way to expand.

Choose Multiplier for your Israel expansion

With Multiplier’s Employer of Record (EOR) solution, you can hire top talent, manage payroll, and stay compliant—without the hassle of setting up a legal entity in Israel.

It offers:

• Local hiring expertise: Easily hire top talent in Israel with fully compliant employment contracts, local tax filings, and smooth onboarding processes.
• Effortless payroll management: Ensure accurate, on-time salary payments, automated tax deductions, and social security contributions while staying 100% compliant with Israeli payroll laws.
• Comprehensive HR solutions: Manage onboarding, expense tracking, and time-off requests, and employee benefits all in one user-friendly platform.
• Assured compliance: Navigate Israel’s complex labor laws, tax codes, and social security regulations with ease, avoiding penalties and administrative burdens.
• Attractive benefits packages: Offer locally tailored healthcare, pension plans, and perks to attract and retain top talent in Israel.
• Reliable support: Get 24/7 expert customer support and enjoy the security of ISO-certified compliance and enterprise-grade data protection.

Multiplier streamlines global expansion, so you can focus on growing your business while we handle the rest. Book a demo to learn more about how Multiplier can simplify your hiring and workforce management in Israel.