Expats and Locals
Here is what you need to know about employing foreign expats in Israel:
With respect to non-Israeli personnel or investment income that is earned by an expat, this income would be considered outside the scope of Israeli taxation.
That being said, under Israeli sourcing rules, employment income is regarded as being sourced at the place where the related work is performed.
Accordingly, any expat’s employment income relating to their work in Israel is subject to Israeli taxation, unless an exemption is made available in accordance with the relevant double taxation treaty.
Under local laws, income tax liability that arises for the expatriate employee is the same, irrespective of:
- The employer being a foreign entity/ branch/ local subsidiary.
- Whether the salary is paid in Israel or elsewhere.
- Whether the salary being paid in foreign or local currency; or where the expatriate employee signs the employment contract.
The liability for employee taxes is therefore the responsibility of the Company and not the employee and should be taken into account when computing the Israeli income tax and social taxes due.
To navigate this complex issue in accordance with regulations and without unnecessary double taxing, we operate a highly knowledgeable payroll department that provides a full scope of payroll solutions for expats and local employees.
Our services are delivered and managed with confidence and accuracy and are specifically tailored to the needs of our clients and their employees.