The advantages of opening a company in Israel

Israel is not the first country you would think of when considering basing a startup, but if you look into the figures, it ranks as having one of the largest startup populations in the world – so much so, it has been dubbed ‘Startup Nation’ by the business community.

Many foreign entrepreneurs had previously steered clear of Israel due to the rocky political climate with neighbouring Arab states, but with the tech industry’s love of Israel’s innovative approach it is now rivalling Silicon Valley as a go-to place for tech startups and investment.

Not only that, but according to the latest report by the Organisation for Economic Co-operation and Development, its import and export industries are together worth over $128 billion which is worth taking into account if you’re a trade entrepreneur with products to buy or sell.

Startup Nation Israel

A little known fact is that some of the biggest American tech companies such as Microsoft, Apple built their first overseas research and development facilities in Israel, and its main tech hub and venture capital industry is called Silicon Wadj in reference to its Californian rival. The business districts in Haifa and Tel Aviv are lively and forward thinking, and perhaps due to the political conflicts and hardships the country has faced, its people have become highly-educated expert problem-solvers and operate with a ‘can-do’ attitude to business – something which is prized among foreign entrepreneurs who come to do business in the country.

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Although Israel is nearly 75% Jewish, large numbers of migrant workers from Africa, Russia, South America, Romania and Asia means a mix of cultures can be found in this small country. Hebrew is the country’s official language, however English – having been one of the country’s previous official languages - is also widely used and taught in schools, with many TV programmes being in English and most road signs translated into both languages. This is a real bonus for English-speaking entrepreneurs who are less likely to come across language barriers, and feel on safer ground being able to negotiate their business dealings in a more familiar language.

Israel’s Import and Export Market

Israel’s main import industries are diamonds ($6.14B), cars ($5.07B), crude petroleum ($1.95B), and refined petroleum ($1.75B). The main export industries are diamonds ($11.2B), packaged medicines ($2.36B), medical instruments ($2.01B) and electronic circuits ($2B). Thanks to Israel signing free trade agreements with the European Union, USA, European Free Trade Association, Turkey, Mexico, Canada, Ukraine, Jordan, Egypt and the Latin-American Mercosur trade bloc, entrepreneurs will find the customs system easy to navigate.

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Israel’s prime location in the Middle East right next to the Mediterranean and Red seas means that shipping is made easy for trade companies. Three modern ports—Haifa and Ashdod on the Mediterranean and Elat on the Red Sea are linked by an excellent road and rail system. Shipping access routes are also available to both the Atlantic and Indian oceans, and the country’s largest airport Ben Gurion in Lod is served by international airlines from around the world, making things smooth-sailing for trade entrepreneurs using merchant and airfreight facilities.

How to open a company in Israel

So if you’re an entrepreneur interested in everything Israel has to offer, then the next step is forming a company and navigating the Israeli business system.

The main advantages are that you don’t need to be an Israeli resident as 100% of the shareholders and directors can be foreign and only one shareholder is needed. There is also the bonus that no capital equity is required to open the Israeli company and the whole set-up can be done entirely remotely.

Israel also has low VAT rate of 17%, and a corporate tax of 23%. In order to obtain a tax identification number and register the company for VAT and corporation tax, a company formation specialist can help you obtain a certificate from the tax authorities so your Israeli company is registered and fully licensed to trade. They can also help you obtain business licenses, find premises and help with leasing agreements, navigate customs issues, register trademarks and help with visas. For corporate bank accounts, the biggest banks in Israel are Hapoalim Bank, Leumi Bank, Discount Bank or Otzar Hahayal Bank. Providing all your documents are in order, the process with a company formation specialist can take as little as under a week.

If you’re interested in the prospect of expanding your markets to Israel and want more information on how to open a company, please contact us on 0033 (0)1 53 57 49 10 or email us through our contact page and our experts will be happy to help.

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