International companies setting up a subsidiary overseas face a potentially time-consuming and costly exercise. In Israel, foreign companies can establish a corporate subsidiary or a branch under the Companies Law, which enables them to trade in the country. But first comes the hassle of registration and incorporation.
It’s a big move and if the venture fails your company faces extra expenditure and the stress of closing the company, selling property and laying off staff. It is easy to fall between two objectives – advancing your company at home while moving into a new territory.
The sensible alternative is to use a Professional Employer Organization (PEO) and Employer of Record (EOR) to find top talent and administer payroll in Israel … speedily and risk free.
Setting up a Subsidiary in Israel
First, decide on the location. Different regions and cities can apply subsidiary regulations independently. Options for incorporation include limited liability, public company or foreign subsidiary company. Opening a branch or representative office are other possibilities.
The following documents must be deposited with the Registrar of Companies:
• Application form
• Copy of the Articles of Association
• Declaration of initial shareholders and directors
• Registration fee
All documents must be certified, as follows:
• In Israel, documents must be signed and confirmed in the presence of an Israeli attorney
• Outside Israel, documents must be signed in the presence of an Israeli consul or a notary public
Israel’s Corporations Authority have taken steps to simplify the process. Some law offices can incorporate subsidiaries ‘in trust’ as the initial shareholder, with shares transferred to the appointed directors after incorporation.
The subsidiary must register with the income tax and VAT departments of the Income Tax Authority and National Insurance Institute to become a legal Israeli employer.
What you need to set up an Israeli Subsidiary
• Proof of registration with the Registrar of Companies
• List of company directors with passport numbers or Israeli ID
• Power of attorney giving an Israeli citizen responsibility for representing the company and receiving legal documents, with their full address and ID
• Certificate of Incorporation from home country and that it is registered with that country’s Registrar of Companies
• Certificate of Incorporation with notarized Hebrew translation
• Proof of payment of registration fee of ILS2,614 (US$800)
Benefits of setting up an Israeli Subsidiary
A subsidiary incorporated in Israel is a separate legal entity and any debts or liabilities are not the responsibility of the parent company. The subsidiary has the same tax status as a local company, with the same access to exemptions and incentives.
Subsidiaries enable foreign companies to explore their potential in Israel without the major commitment of capital investment, while increasing their international credibility and profile.
Israel Subsidiary Laws
Subsidiaries are governed by Israel’s Companies Law, which stipulates that a foreign company can undertake business in the country if it is registered as a foreign company with the Registrar of Companies. This allows the subsidiary to act as an independent legal entity and follow its own business practices without the parent company bearing any responsibility for debts or liabilities beyond its investment in setting up the subsidiary.
Take a faster route into Israel
The cost-effective and time-saving alternative to the lengthy process of establishing a foreign-owned subsidiary in Israel is to work alongside an Employer of Record (EOR) such as Bradford Jacobs.
Our in-country specialists steer you through the complexities of setting up operations by onboarding new employees, then ensuring compliance with all employment, taxation and social security regulations. You retain day-to-day control of your employees – who are in place and operational within days rather than the months it could take to incorporate an entity. There is no reason for international borders to stand in the way of your international expansion. Call us.