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Payroll in IlIsrael.






Country Capital



New shekel (₪) (ILS)

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. G-P 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.

Taxation Rules in Israel

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, based on income and residency.

Israel Payroll Options for Companies

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 G-P is the single way to outsource both your payroll and your compliance. We’ll pay your employees and stay responsible for compliance.

How to Set Up a Payroll in Israel

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. G-P 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/Termination Terms

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.

Payroll Processing Company in Israel

G-P 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.


THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). G-P does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. G-P makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.

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