In Israel, one who is earning money from any source aside from an Israeli employer is required to declare his or her estimated anticipated income and pay a specified amount to Bituach Leumi each month based on that declaration. This includes freelancers, self-employed workers, and those who work for employers overseas and receive payment that is not registered with the Israel Tax Authority.


The benefits of declaring privately earned income include:

• Paying for and receiving Bituach Leumi benefits, such as maternity leave and workplace disability
• Negative income tax, if age and income level meet requirements
• Having a way to report your income to Arnona and other government offices

To work as an independent in Israel, you must be registered as an atzmai (lit. “independent”). The registration process is somewhat tedious and involves three offices. Many choose to employ an accountant to do the filing for them, though it may be done independently. The following guide on registering as an atzmai has been adapted from the AngloList website. For the most up-to-date information on regulations of becoming an atzmai, we recommend seeking the services of a professional.

Two Types of Atzmai

Osek Patur

The first type of atzmai, an osek patur, has declared earnings of less than 79,482 NIS (as of 1/2015) in any business year and is not required to charge clients ma’am (VAT). An osek patur may not reclaim ma’am on business purchases. You may only issue receipts on payment, you do not invoice for work. If you exceed the amount of 79,482 NIS throughout the business year you must request to change your status to osek morshe the following month. As an osek patur you are required to pay Bituach Leumi contributions once a month (initially based on your estimated income) and submit a tax return to Mas Hachnasa at the end of each year. Note: You cannot revert to being VAT exempt for two years following a change in your status.


Certain professionals, including accountants, doctors and lawyers, are unable to register under osek patur and must register under osek morshe.

Osek Morshe

An osek morshe has declared earnings of more than 79,482 NIS in any business year and is required to charge ma’am (VAT). An osek morshe is entitled to reclaim ma’am on business purchases. You may issue an invoice.


A separate business bank account is not required. The business year in Israel is from January 1 to December 31.

Registering as an Atzmai in Israel

If you are a visa holder, you will legally need to obtain permission to work on your visa before proceeding. See our guide on “Permission to Work on an A-Category Visa.”

Ma’am – Sales Tax

Once you have decided whether you are an osek patur or an osek morshe, you will need to go to your local ma’am office. Here you are required to open a tik (file) with your teudat zehut/passport, after which you are issued a certificate showing your atzmai status.


If you are a foreign citizen, to open a file in Ma’am, one must have an Israeli “representative” who declares responsibility for your dealings as a foreign business holder. You must present VAT form 22, which includes a signed declaration by your Israeli representative. You may need to have the form notarized by an Israeli senior lawyer. This requirement applies even to one who is filing as an osek patur who does not pay VAT.


You will need proof of your bank account with you, in the form of your checkbook or a letter from your bank titled ishur nihul cheshbon. If you have a joint bank account, both account owners will need to be present with their teudot zehut or passports.


It is now time to buy a pinkas kabalot (receipt book) and a stamp with your name and business ID number (for Israeli citizens, identical to your mispar zehut) from a stationery store.

Mas Hachnasa – Income Tax

At Mas Hachnasa, you will need to find the section for oved atzmai. Mas Hachnasa will ask you to present your certificate from ma’am and to complete the necessary forms. Once registered, you are required to complete a tax return each year (you may opt to have an accountant assist with this). If necessary, an account book can be purchased from a stationery store. In the first 12 months of Aliyah, Olim are exempt from income tax on income up to approximately 105,000 NIS. The exemption is calculated on a points-based system and it reduces on a sliding scale up to 3.5 years from the date of Aliyah.


You may also want to speak to an accountant about deductible expenses, especially if you work from home.


Once a year you will be required to file a tax return. Tax forms are usually sent out in February of the following tax year and you will have until 30 April to submit these forms.

Bituach Leumi – National Insurance

Finally, download and complete form 6101 from Bituach Leumi to open a tik for making Bituach Leumi payments. You may have to provide previous pay slips. Also required is confirmation from your bank showing ownership of your bank account. The form can be mailed, faxed or given in person at your local Bituach Leumi office.

You will pay between 6.72–11.23% for Bituach Leumi payments, and between 3.10–5.00% for Mas Briut. Olim are exempt from Bituach Leumi for a period of 12 months, unless income exceeds the set minimum. In a family where both spouses are working, only the spouse with a higher income pays Bituach Leumi off his or her salary. In a family where the husband is a full-time student, his wife pays Bituach Leumi only if she is working in addition to his fixed monthly student fee.

De-Registration

In order to de-register from these statuses, you must complete a form for ma’am and inform Bituach Leumi.

Useful Links

Tax Offices

Ma’am – Form 821: Open a file for VAT

Mas Hachnasa – Form 5329: Open a file for Income Tax as an independent

Bituach Leumi Information for a self-employed person

Bituach Leumi – Form 6101: Open a file for payment of Bituach Leumi