Israel — Business: Sole Proprietorship

Key facts

• Small businesses that qualify as VAT-exempt dealers can open a combined VAT and income tax file online if expected annual turnover does not exceed the fixed amount, NIS 122,833 in 2026.
• Professions covered by Regulation 13 of the VAT Registration Regulations, such as lawyers and accountants, must open an authorised dealer file instead.
• A new exempt dealer is treated as a small business owner for income tax unless they opt out, and may file a shortened report; from the 2025 tax year Form 137 is no longer required.
• Anyone not yet self-employed can open a Tax Authority file and a National Insurance file in one digital procedure.
• Employers and landlords must also open a deductions file.

Steps

1. Determining Business Name and Registration — The exact process for registering a business name and obtaining a Unique Identification Number (BIN) is unclear and may require consulting a lawyer or tax professional.
2. VAT Registration — The process for registering for VAT as a sole-proprietorship is not well-documented and may require consulting a lawyer or tax professional.
3. Tax Obligations — Sole-proprietorships in Israel are subject to various tax obligations, including income tax, VAT, and other levies, but the specifics of these obligations are unclear and may require consulting a lawyer or tax professional.