As a small country in the Middle East with borders on the Mediterranean and Red Seas, Israel is in a great location for expansion. However, if you decide to expand there, you need to prepare to set up your Israel payroll, examine your payroll options, and continue to run your company at home. Globalization Partners can help make expanding easier with Israel payroll outsourcing. We’ll become the Employer of Record and use our existing subsidiary to help you expand faster without the need to set up your own subsidiary or payroll.
Israel’s Taxation Rules
Employees in Israel use a progressive income tax scale for personal income taxes. The rates start at 10% and increase up to 50%, depending on what an employee makes. Employers and employees both have to contribute to the National Insurance and Health Insurance at varying rates. The top rates are 6.75% for employers and 12% for employees.
Various Israel Payroll Options
You don’t have just one Israel payroll option to choose from. Companies can decide between four different payroll types, including:
- Internal: Big companies may want to run their own internal payroll, especially if they plan to work in Israel for years to come. However, creating an internal payroll is usually costly.
- Remote: Parent companies with their own payroll can add all subsidiaries’ employees to that payroll as well. If you choose this option, you’ll need to pay the Israel-based employees remotely and make sure you meet the country’s employment compliance laws.
- Israel payroll processing company: Working with an Israel payroll processing company is a great way to outsource your payroll, but your company will still need to deal with compliance.
- Israel payroll outsourcing: Israel payroll outsourcing with a global PEO such as Globalization Partners is the single way to outsource both your payroll and your compliance. We’ll pay your employees and stay responsible for compliance.
Requirements for Setting up Payroll
Before you set up your Israel payroll, you have to incorporate in the country. Depending on where you are and what type of entity you choose, it could take between a couple of weeks and a couple of months to set your company up fully. Globalization Partners understands how time-consuming this requirement can be, which is why we eliminate it through Israel payroll outsourcing. We’ll hire employees on your behalf and add them to our compliant payroll so that you can focus exclusively on running your business.
Entitlement and Termination Terms to Know
Terminating an employment contract is one of the most difficult tasks during an expansion. It helps to add entitlement and termination terms to your contracts before you hire employees to protect yourself if you need to fire an employee. Israel requires employers to pay severance pay unless the termination is with cause. Both employers and employees need to provide written notice before termination or resignation.
Choose Globalization Partners Today
Globalization Partners is ready to help you expand without the hassle of establishing a subsidiary first. Contact us today to learn more about Israel payroll outsourcing and our suite of global expansion services.