new fiscal year updates 2024
In honor of the new fiscal year, we have put together a number of important updates for you. We wish everyone a peaceful and successful new year and we pray for the safe return of our hostages and soldiers to their homes.
VAT reporting for an exempt dealer (Osek Patur)
Exempt dealers must report their transaction turnover (without expenses) to the VAT authority, for the year 2023 by January 31, 2024, in order to verify that they are still entitled to continue operating under the definition of an exempt dealer.
The turnover ceiling for an exempt dealer for 2023 was NIS 107,692.
If you have not yet reported, you can report on the blue form you received in the mail (or will receive later). Alternatively, you can report easily and quickly on the
The turnover ceiling for an exempt dealer for 2023 was NIS 107,692.
If you have not yet reported, you can report on the blue form you received in the mail (or will receive later). Alternatively, you can report easily and quickly on the
(If you encounter any difficulty, please send us a request by email to the following address: Sari.w@aboulafia.co.il. Please type the following topic in the subject of the email: “Assistance in reporting income for an exempt deal”. Please include your ID number and the amount in the email and we will assist you with the reporting obligation).
If you have exceeded the income ceiling, you should contact our offices as soon as possible so that we can assist you in taking the appropriate actions.
Please note that the income ceiling for an exempt trader for the year 2024 will be NIS 120,000.
A Small Dealer (Osek Za’ir)
As of 2024, the concept of "small dealer" comes into legislation. The concept applies to the Income Tax Authority only (while in VAT, the concepts of exempt dealer and registered corporation – “osek morshe” – remain unchanged).
A small dealer is a business owner whose transaction turnover (as reported to the VAT) is below the turnover ceiling for an exempt dealer, i.e., NIS 120,000 for the year 2024. It should be noted that a licensed dealer with a transaction turnover below the ceiling can also be considered a small dealer.
Several conditions must be met in order to benefit from the status of a small dealer – mainly that the dealer is not an employer, that there is no income from an existing employer, that no more than 25% of the turnover of the business is received from a relative and/or a previous employer (up to 3 years), and that you did not give up the status in 3 recent years.
A small dealer is entitled to deduct expenses from his business turnover at a fixed rate of 30% of the turnover, without the need for proof of actual expenses at all. It should be noted that the 30% includes the deductions that the dealer usually receives for Bituach Leumi payments and deductions for pension premium payments, etc. At this stage, it is not clear how the status affects the obligatory Bituach Leumi payments (including the health insurance component).
In addition, a small dealer will be exempt from submitting a full annual report to the tax authorities, assuming that he has no additional reason that requires him to submit a report.
No clear guidelines have yet been published regarding the actual implementation and the reporting method. Therefore, at this stage, we recommend that dealers continue to keep proof of expenses for 2024.
When we have more information, we will provide an update.
A small dealer is a business owner whose transaction turnover (as reported to the VAT) is below the turnover ceiling for an exempt dealer, i.e., NIS 120,000 for the year 2024. It should be noted that a licensed dealer with a transaction turnover below the ceiling can also be considered a small dealer.
Several conditions must be met in order to benefit from the status of a small dealer – mainly that the dealer is not an employer, that there is no income from an existing employer, that no more than 25% of the turnover of the business is received from a relative and/or a previous employer (up to 3 years), and that you did not give up the status in 3 recent years.
A small dealer is entitled to deduct expenses from his business turnover at a fixed rate of 30% of the turnover, without the need for proof of actual expenses at all. It should be noted that the 30% includes the deductions that the dealer usually receives for Bituach Leumi payments and deductions for pension premium payments, etc. At this stage, it is not clear how the status affects the obligatory Bituach Leumi payments (including the health insurance component).
In addition, a small dealer will be exempt from submitting a full annual report to the tax authorities, assuming that he has no additional reason that requires him to submit a report.
No clear guidelines have yet been published regarding the actual implementation and the reporting method. Therefore, at this stage, we recommend that dealers continue to keep proof of expenses for 2024.
When we have more information, we will provide an update.
* Important clarification: American citizens who have businesses in Israel will be required to declare the actual expenses for tax reporting purposes in the US, and cannot use the automatic deduction that Israel grants
Israel invoices
As a follow up from our last newsletter, on the topic of Israeli invoices,
Israeli invoices, as of January 1, 2024 an allocation number will be required from the Tax Authority for the production of tax invoices. Obtaining the allocation number will be done automatically directly from the software with which invoices are generated. To use the automatic system, each company / corporation must designate an authorized representative. This link takes you to the instructions for granting permissions to the users.
Tax payments on rental income
If you have income from renting out a residential apartment in Israel, you can pay a reduced tax payment in advance at a rate of 10%. The discounted rate for 2023 will be given until January 30, 2024 and will be accepted as long as the apartment is used for residential purposes (that is, the income from the rent is not considered as income from a business). For payments and more information.
Exemption from rent for a single apartment
Starting in 2023, when owners of one apartment (only) rent it out, and at the same time rent an apartment in Israel for their residence (or make payments to a nursing home for their residence), the amount of rent paid can be deducted from the rent received, up to a ceiling of NIS 90,000 per year.
Payment of income tax advances
You can pay income tax advances for the tax year 2023. Payment ahead of time entitles you to an exemption from linkage differences and interest charges. The payment should be made on the Tax Authority website and will be entitled to a discount rate according to the following specifications:
- A payment received by January 31, 2024 will be considered a timely report and will be exempt from the full linkage differences and interest.
- A payment received during the month of February 2024 will receive a discount of 50% of the linkage differences and interest.
- A payment received during the month of March 2024 will receive a discount of 25% of the linkage differences and interest.
Reduced fee payment for companies and partnershipsYou can pay the annual fee for 2024 at a reduced rate,
For more details and payment, go to the Corporations Authority website.
Companies can pay a reduced fee of NIS 1,262 until 31.3.2024.
As of April 1, 2024, the rate will be updated to the regular rate of NIS 1,675. |
Partnerships can pay a reduced fee of NIS 1,257 until 31.3.2024.
As of April 1, 2024, the rate will be updated to the regular rate of NIS 1,670.
Reduced fee payment for non-profits
Non-profits with a turnover exceeding NIS 300,000, please note: You can pay the annual fee for 2023 at a reduced rate of NIS 1,262 until 31.3.2024. As of 1.4.2024 the rate will increase to NIS 1,675. The payment can be transferred on the
Corporations Authority website or at a post office by presenting the number of the non-profit.
- Associations that are in the first two years of their activity and whose financial turnover is less than NIS 300,000 are entitled to pay a discounted annual fee amounting to NIS 166, in accordance with the Authority's guidelines..For more details click here.
- • Associations whose annual budget was less than NIS 300,000 between 2017-2019 and do not employ workers may apply for exemption from the payment of the fee, in accordance with the Authority's guidelines.For more details click here.
