Compendium · Middle-East · Israel
Israel: VAT on digital services
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Not supported by the free-threshold API · Local term: VAT
Last verified: 2026-10-29
As of 2026-10-29 Israel has no enacted dedicated “Netflix Law” first-sale VAT registration regime for foreign digital suppliers selling only to Israeli consumers. A foreign supplier must register as a VAT dealer and appoint an Israeli resident representative within 30 days if it has business activity in Israel (PE, Israeli business apparatus, Israeli representative, or significant economic presence per ITA circular 4/2016). B2B purchases by Israeli businesses are generally reverse-charged (Regulation 6D)
No free-threshold support in the API; registration-from-first-sale or specialist regime
Spot a mistake in Israel’s rules?
Open a public correction issue on Gitea (sign in or create an account). The form is prefilled with this page’s URL and a short template, and asks for the correction label. Accepted corrections become a reviewed diff on the rules dataset — rule fixes belong in botchannels-app, not a silent change on this site.
Threshold and rates (VAT)
- Free threshold?
- No — No free-threshold support in the API; registration-from-first-sale or specialist regime
- Amount / measure
- —
No dedicated remote-seller digital VAT threshold — liability follows PE / significant economic presence / Israeli apparatus tests (ITA Circular 4/2016), not a pure destination B2C registration like the EU OSS - Window
- No threshold window (from the first sale)
- Standard rate
- 17.0%
Standard Israeli VAT 17% when registration/liability applies. No separate digital B2C remote-seller rate until a Netflix-style law is enacted - Who must register
- Foreign entities with Israeli PE / business apparatus / representative / significant economic presence. Pure remote B2C digital suppliers without those nexus factors: no dedicated registration regime enacted as of 2026-10-29
- Evidence of location
- Nexus is PE / apparatus / significant economic presence — not a consumer two-evidence checklist. For B2B reverse charge, Israeli business customer accounts for VAT
- Invoicing
- If VAT-registered in Israel, charge 17% VAT per ordinary dealer rules. Pure remote B2C without nexus: no Israeli VAT registration pathway enacted solely for digital B2C as of 2026-10-29
- Filing
- If registered as Israeli VAT dealer: ordinary Israeli VAT filing cycle. Else N/A for pure remote B2C
- Effective
- ITA Circular 4/2016 (internet activity of foreign corporations). Proposed digital VAT / Netflix legislation not enacted as of 2026-10-29
- Authority
- Israel Tax Authority
What Botchannels returns
- Ruleset version
2026-10-22.v1- Decision summary
- Botchannels does not open free-threshold sales here. Register (or appoint a representative) before selling.
- Product class
- Digital service
- Support status
- Not supported by the free-threshold API — No free-threshold support in the API; registration-from-first-sale or specialist regime
How to register
- Self-register online?
- No — dedicated foreign digital B2C simplified portal as of 2026-10-29. Ordinary VAT dealer registration applies only when Israeli nexus tests are met (PE, apparatus, representative, or significant economic presence per ITA Circular 4/2016)
- Resident representative / fiscal agent
- Mandatory within 30 days when registering as a VAT dealer due to Israeli nexus (Circular 4/2016). Not applicable if no nexus / no registration
- Regime
- Ordinary Israeli VAT dealer registration when nexus tests are met; no dedicated foreign digital B2C simplified scheme enacted as of 2026-10-29
Steps (in order)
- Assess whether you have an Israeli PE, business apparatus, representative, or significant economic presence (ITA Circular 4/2016)
- If nexus applies: register as a VAT dealer with the Israel Tax Authority and appoint an Israeli resident representative within 30 days — https://www.gov.il/en/departments/israel_tax_authority
- Charge 17% VAT and file ordinary returns. If you only supply remote digital B2C with no nexus: do not invent a simplified scheme
- B2B to Israeli businesses: reverse charge by the customer (Reg. 6D) is the usual path
Documents
- VAT dealer registration dossier (when nexus applies) — ITA forms plus company identification
- Israeli resident representative appointment — Within 30 days of registration when nexus applies
- Official processing time
- Not published as a single official English service-level time as of 2026-10-29
- Official fees
- No single published ITA fee schedule summarised in the English materials reviewed; representative fees are commercial
- Portal
- https://www.gov.il/en/departments/israel_tax_authority
- Local bank account
- Pay via ITA channels once registered
- Filing frequency
- Ordinary Israeli VAT return periods after dealer registration
- Payment currency
- ILS
- Input VAT recovery
- Ordinary Israeli VAT rules once registered as a dealer
- Portal language
- Hebrew; some English gov.il pages
- Penalties
- ITA penalties for failure to register when nexus exists
Firms offering this service
Non-exhaustive. Not an endorsement. Links checked live on 2026-10-29; confirm current offerings, licences, and fees directly with each firm before engaging
- KPMG Israel — Member firm
- Deloitte Middle East — Regional member firm
Official sources
ITA Circular 4/2016 (foreign corporations via internet)
Israel registration / authority portal
Last verified: 2026-10-29.
FAQ
- Is there a free VAT/GST threshold for foreign digital sellers?
- No dedicated remote-seller digital threshold — nexus tests apply
- Is a local tax representative mandatory?
- Yes within 30 days if you must register as a VAT dealer due to nexus
- What rate applies?
- 17% when Israeli VAT applies
- Is this tax advice?
- No. This page summarises official VAT/GST rules for foreign digital sellers. It is not tax or legal advice