How Foreign Companies Can Start Business Activity in Israel

Israel is an attractive market for international companies — whether you are expanding from the US, Europe, or elsewhere. Starting business activity here means access to a skilled workforce, a robust tech ecosystem, and strong trade relationships. But entering the Israeli market requires going through specific legal and administrative steps, and the right structure depends heavily on your goals. This guide outlines the main routes and what to expect.

Define What “Business Activity” Means for Your Company

Before choosing a structure, it is important to understand what kind of activity you plan to conduct in Israel. Some activities — such as employing Israeli-based staff, signing contracts under an Israeli legal entity, or holding an Israeli corporate bank account — require a formally registered entity in Israel.

Other activities may be possible without registration, but the threshold for what constitutes a “permanent establishment” (with associated tax implications) is narrower than many companies assume. If your company has a physical presence, regularly concludes contracts through agents in Israel, or has employees working here on an ongoing basis, you are likely required to register. We strongly recommend obtaining professional advice before assuming no registration is needed.

Choose Your Entry Structure

Israeli Subsidiary: A new company incorporated in Israel, typically as a private limited company. The subsidiary is a separate legal entity, which means the parent company’s liability is generally limited to its investment. This is the most common structure for companies planning ongoing operations, hiring employees, or seeking Israeli business relationships. Learn more about Israeli subsidiary registration.

Foreign Company Branch: A registered extension of the parent company operating under Israeli law. The branch is not a separate legal entity — it is the foreign company operating directly in Israel. This means the parent company bears unlimited liability for branch activities. Learn more about branch registration for foreign companies in Israel.

Representative or Liaison Office: In limited cases, a company may establish a representative office focused purely on market research or liaison activities — without conducting active business or generating revenue. This is a narrow category and requires careful scoping to avoid inadvertently crossing into taxable activity.

Register With the Israeli Registrar

Both subsidiaries and branches must be formally registered with the Israeli Registrar of Companies. The registration process involves submitting the required documentation, paying registration fees, and obtaining a company registration number. For a new Israeli company, the process typically takes approximately 7–14 business days once all documents are prepared and submitted.

Learn more about the company registration process in Israel.

Set Up Your Operational Infrastructure

Registered address: All Israeli companies and branches are required to have a registered address in Israel. Learn about registered office address options in Israel.

Local contact person: Foreign company branches are required to designate a local contact person in Israel. For subsidiaries without a local director, having a reliable local contact is strongly recommended. Learn more about local contact person services in Israel.

Tax and Compliance Basics

After incorporation or branch registration, your company must complete a number of tax and compliance steps before commencing operations. This includes tax registration with the Israeli Tax Authority, VAT registration where applicable, and employer registration if you plan to hire. Learn more about tax registration for new companies in Israel and corporate compliance in Israel.

Tax rules in Israel are complex and change over time. This overview is intended as a general orientation only — we strongly recommend consulting with a qualified adviser for your specific situation.

Opening a Business Bank Account

A business bank account is essential for operating in Israel. However, Israeli banks apply rigorous due diligence requirements for new corporate accounts, particularly for foreign-owned companies. The process can take time and is not guaranteed. Our team provides bank account opening assistance in Israel to help navigate this process.