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 hiring options, and continue to run your company at home.
G-P can help make expanding easier. As a global Employer of Record (EOR), we’ll 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 1 Israel payroll option to choose from. Companies can decide between 3 different payroll types, including:
- Internal: Large 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 and requires a large HR team.
- 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.
- G-P: The easiest way to run payroll in Israel and stay compliant is partnering with an Employer of Record (EOR) like G-P. With us, you can rest assured that all employees will be paid on time and compliantly, freeing you to focus on other important aspects of your business.
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. As a global EOR, we’ll hire employees on your behalf and streamline 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 both parties.
Israel requires employers to pay severance unless the termination is with cause. Both employers and employees need to provide written notice before termination or resignation.
Streamline global payroll management with G-P.
G-P streamlines each step of the payroll management process with our market-leading global employment platform. Pay your team with confidence anywhere in the world in 150 currencies with our 99% on-time automated payroll system — all with just a few clicks. Our products also integrate with leading HCM solutions, syncing employee payroll data across platforms automatically to create one reliable, convenient source of truth for HR teams.
Contact us to learn more about how we can support you.