Starting a business in
🇮🇱Israel
Checked November 9, 2026 · How we score
Corporate tax
23%
Top income tax
50%
Setup from
$1,500
all-in, first year
Time to form
14 days
visit usually needed
What is the corporate tax rate in Israel?
The headline corporate tax rate in Israel is 23% in 2026, and individuals pay up to 50%. Standard 23% corporate tax. Preferred Technological Enterprises pay 12% (7.5% in development zone A) and approved enterprises 16%; an IP regime reaches 6% for large multinationals. Dividends are taxed at 25% (30% for substantial shareholders), plus a 2% surtax on high capital income.
| Corporate income tax | 23% Standard 23% corporate tax. Preferred Technological Enterprises pay 12% (7.5% in development zone A) and approved enterprises 16%; an IP regime reaches 6% for large multinationals. Dividends are taxed at 25% (30% for substantial shareholders), plus a 2% surtax on high capital income. |
|---|---|
| Personal income tax (top) | 50% Progressive rates reach 47% plus a 3% surtax on taxable income above ILS 721,560 (2026), for a 50% maximum. An extra 2% surtax applies to capital income above the same threshold. Social security and health tax apply to wages. |
| Tax system | Worldwide income |
| Capital gains tax | 25%25% on real capital gains for individuals (30% for substantial shareholders), plus the 2% capital-income surtax above ILS 721,560. Home-sale exemptions apply. |
| Dividend withholding (non-residents) | 25% |
| VAT / GST | 18% |
| Social security | National Insurance and health tax apply to wages up to a cap; employers pay roughly 7.6% on wages. VAT is 18% since January 2025. |
Forming a company in Israel
| Usual entity | Ltd (private company) |
|---|---|
| Minimum capital | None |
| Setup cost (all-in) | $1,500–$4,000 |
| Annual running cost | $4,000–$12k |
| Time to incorporate | 14 days |
| Form remotely as a foreigner | No |
| Local director required | No |
| Local address required | Yes |
| Owners on public register | Yes |
| Statutory audit for small companies | Yes |
| Business banking for non-residents | Hard |
Residency and visas
Jews, their children and grandchildren, and their spouses can immigrate under the Law of Return and receive citizenship and tax benefits. Other founders need a work or investor-type visa.
| Digital nomad visa | Digital nomad visa (B-2 up to one year) |
|---|---|
| Golden visa | No |
| Ease of residency for founders | 3/5 (1 = easiest) |
Taxes for individuals living in Israel
Tax residents are taxed on worldwide income, but new immigrants and returning residents (after 10+ years abroad) are exempt on foreign-source income and gains for 10 years. A temporary exemption on Israeli-source earned income may apply to recent arrivals; check with the Israel Tax Authority.
| Foreign income of residents | Partly taxed |
|---|---|
| Income tax structure | Progressive rates |
| Inheritance / estate tax | 0%Israel has no inheritance or gift tax; heirs inherit the original cost basis for later capital gains. |
| Wealth tax | No |
| Annual property tax on your home | Yes |
| Exit tax when you leave | Yes: Ceasing to be an Israeli resident triggers a deemed disposal of assets, with tax on gains accrued while resident that can be deferred until actual sale. |
| When you become tax resident | Resident if you spend 183+ days in Israel in the tax year, or 30+ days and 425+ days over the current and two prior years, or if your centre of life is in Israel. |
Special tax regimes
10-year exemption for new immigrants and returning residents
Foreign-source income and gains are exempt from Israeli tax for 10 years, and foreign reporting duties were waived for earlier arrivals; reporting relief ends for people who became resident from 2026.
Preferred Technological Enterprise
12% corporate tax (7.5% in zone A) and reduced dividend tax for qualifying R&D companies.
Angel tax deduction
Investors in qualifying early-stage Israeli tech companies can deduct the investment from taxable income.
Pros and cons
Why founders pick Israel
- World-leading startup and VC ecosystem
- 10-year exemption on foreign income for new immigrants
- No inheritance or wealth tax
- Low 12% rate for Preferred Technological Enterprises
Watch out for
- Top personal rate reaches 50%, plus surtax on capital income
- Audited accounts required for companies
- Geopolitical and banking-compliance friction for non-residents
- High cost of living
Best for: Tech and cyber startups · Jewish diaspora considering aliyah · R&D-intensive companies using the Technological Enterprise regime
Israel: common questions
Is Israel a tax haven?
No. Israel is a normal-tax country: companies pay 23% corporate tax and the top personal income tax rate is 50%. It does offer special regimes for some newcomers, such as 10-year exemption for new immigrants and returning residents.
What is the corporate tax rate in Israel?
The corporate tax rate in Israel is 23%. Qualifying technology companies can pay 12% (7.5% in development zone A), and dividends to individuals are taxed at 25–30% plus a surtax on high capital income.
How much does it cost to register a company in Israel?
Expect USD 1,500–4,000 in the first year, covering the Companies Registrar fee, a lawyer or accountant and a registered address. Registration takes about 1–2 weeks, and non-resident owners should expect KYC-heavy banking.
Does Israel tax foreign income?
Residents are taxed on worldwide income. New immigrants and veteran returning residents get a 10-year exemption on foreign-source income and gains, which is Israel's main tax-planning draw for relocating individuals.
What is the top income tax rate in Israel?
The top marginal rate is 47% plus a 3% surtax on taxable income above ILS 721,560 in 2026, a 50% maximum. An additional 2% surtax applies to capital income above that threshold.
Does Israel have an exit tax?
Yes. Ceasing Israeli residency triggers a deemed sale of assets, taxing gains accrued during residency. You can usually defer the tax until the assets are actually sold.
Sources
Similar countries
Not tax or legal advice. Rates and rules change; we check official sources and update every page, but verify with a licensed adviser in the country before acting. Spotted something out of date? Use the correction form below.