Expanding to Israel can open the door to new business relationships, talented employees, and promising markets. But it can also be full of difficulties when you have to learn how to set up an Israel subsidiary, deal with the country’s subsidiary laws, and operate both company locations.
G-P understands these challenges, which is why we offer a solution. Instead of incorporating your own entity, you can leverage our subsidiary in Israel to start working in days instead of months. We’ll also manage all matters of compliance as the Employer of Record (EOR), allowing you to run your company without the risk.
How to set up an Israel subsidiary
The process for setting up your Israel subsidiary will depend on a variety of factors, such as where you’re incorporating and what type of entity you choose. Israel has tried to make it easier for international companies to establish an entity in the country by reducing the time it takes to register a subsidiary with the Income Tax Department and the National Insurance Institute. The Israeli government will also provide research and development grants from 20-50% of total approved expenditures to encourage new entrepreneurs in the area.
You should start the Israel subsidiary setup process by finding the right location for your company. Different regions and cities can have their own Israel subsidiary laws that impact how much you have to pay and how long it will take. We also recommend researching which entity would work best for your business goals, since each option will affect what you can and cannot do. You can incorporate as a limited liability company (LLC), public company, or foreign company.
The steps to set up your company as an LLC include:
- Obtaining company registration documents certified by an attorney
- Filing documents with the registrar of companies within the Ministry of Justice
- Registering for taxes at the Ministry of Finance’s Income Tax Department
- Registering for VAT at the Ministry of Finance’s Customs and VAT Department
- Registering with the National Insurance Institute
Israel subsidiary laws
After you set up your entity, it’s important to learn the set of Israel subsidiary laws that apply to LLCs. For example, Israel subsidiary laws require that LLCs have a different name from the parent company, then get that name approved by the Registrar of Companies. You also need to appoint 1 or more directors. Your directors do not have to be citizens of Israel, but you need at least 1 representative that is an Israeli resident.
All Israel subsidiaries have to maintain a registered office in the country. This office is also where you should keep all your required documents. Since subsidiaries are treated as resident companies, you’re eligible for tax exemptions and incentives that are also available to local companies.
Benefits of setting up an Israel subsidiary
Once you set up your Israel subsidiary, you’re ready to start working in the country. If you incorporated as an LLC, you could also benefit from that structure. LLCs give subsidiaries some independence from the parent company while also protecting the parent company in case of any litigation or other issues.
Other important considerations
If you still decide to set up your Israel subsidiary on your own, we recommend planning ahead to make sure you have enough time and money for the entire process. Work with your accounting department to see how much each step of the process will cost. You can also use this time to work with an expert in Israel subsidiary laws to help you succeed.
Enter new markets with G-P — no new entities required.
Beat the competition and enter new markets in minutes, not months, with G-P. We’ve paired our industry-leading team of in-region HR and legal experts with our #1 global employment platform to help you hire compliantly in 180+ countries, eliminating the need to set up local entities or subsidiaries.
Get in touch today to learn more about how we can streamline the global growth process.