1. Income Tax Benefits for New Olim

• Tax Exemptions: New olim qualify for progressive income tax reductions for 3.5 years. For the first 18 months, a 90% exemption on income tax is applied, then 80% for the next 12 months, and 70% for the remaining six months. This is available only on income earned in Israel.

• Consulting a Tax Advisor: Due to the complexities of Israeli tax law, consider working with a tax advisor, especially if you’re self-employed or have investments.

2. National Insurance (Bituach Leumi)

• Coverage Overview: Bituach Leumi is Israel’s social security, providing health insurance, pensions, unemployment, and disability coverage.

• Employee Registration: If employed, contributions to Bituach Leumi are automatically deducted by your employer.

• Self-Employed Registration: Self-employed individuals must register directly with Bituach Leumi and calculate monthly payments based on income. Contributions include a base percentage for health insurance and additional social security payments.

3. Self-Employment and Business Registration

• Opening a Tik: For freelancers or business owners, opening a “tik” (file) with Mas Hachnasa (Income Tax Authority) and, if applicable, with the VAT Authority is essential. You will need your Teudat Zehut and possibly documents verifying income or business structure.

• VAT Registration: If your annual revenue exceeds the threshold for VAT (Value Added Tax), you must register as a “Mosseh Meches” (VAT collector). This applies to most services and goods providers, but professionals like teachers and some artists may be exempt.

4. Income Reporting and Filing Requirements

• Filing an Annual Tax Return: Individuals, particularly self-employed olim, must file an annual tax return. This report includes all income, both local and international (if applicable), to determine final taxes owed or refunded.

• Deductible Expenses: Business owners can claim deductions for relevant expenses, such as office rent, travel expenses, and utilities. It’s important to keep all receipts and document business expenses thoroughly.

• National Insurance Payments: These are deductible on tax returns, so be sure to report contributions accurately.

5. Special Employment Programs for Olim

• Employment Grants for Employers: To support the employment of new olim, employers may qualify for government grants if they hire new immigrants. This helps reduce initial employment costs and can assist olim in finding work.

• Ulpan and Career Training Programs: Certain Ulpan programs (such as Ulpan La’Avoda) teach Hebrew with a focus on workplace vocabulary, which is beneficial for job seekers needing sector-specific Hebrew.

6. Additional Tax Considerations for Olim

• Overseas Income and Aliyah Tax Benefits: Olim are often exempt from paying Israeli taxes on foreign income, capital gains, and other overseas assets for the first 10 years. However, this exemption does not apply if you bring the income into Israel (e.g., through an Israeli bank).

• Dual Taxation Agreements: Israel has tax treaties with many countries, including the United States, to avoid double taxation. Ensure you report foreign earnings correctly to maximize benefits and avoid penalties.

Useful Links and Contact Information

1. Income Tax Authority: Information on filing, deductible expenses, and tax benefits.

   • Website: taxes.gov.il

2. National Insurance Institute (Bituach Leumi): Resources on healthcare, unemployment, pensions, and payments.

   • Website: btl.gov.il

   • Phone: 6050

3. Ministry of Aliyah and Integration: Aliyah-related tax benefits, career services, and additional resources.

   • Website: gov.il

   • Phone: 03-973-3333

Summary

Being informed about these tax and employment requirements helps new olim optimize benefits, ensure compliance, and maximize available incentives in Israel. Start by consulting with Misrad HaKlita or a professional tax advisor to tailor your approach based on your work and financial situation.

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