Banking, Money and Taxes in Israel
The currency used in Israel is the New Israeli Shekel (NIS; also just known as the Shekel). There are 100 Agarot (equivalent of cents) to 1 Shekel. The exchange rate fluctuates daily, but generally ranges from NIS3.5:US$1 to NIS4.5:US$1.
All expat workers are able to open a bank account in Israel. Opening a bank account is usually straightforward, requiring specific identification, including your passport. It is also recommended to bring recent bank statements from other accounts in order to expedite the process. It is also possible to open a bank account with the Postal Bank (any post office), without making an initial deposit. In general, your bank account allows for money transfers by employers, insurance companies, etc.
Israeli banks offer several account options including:
Israel’s biggest banks are Bank Hapoalim, Bank Leumi, Bank of Israel and Israel Discount Bank. Major banks have branches throughout the country. Urban branches usually offer more extensive services, while local branches may have limited services and hours of operation. Banks are generally open from 8:30am until 12pm Sunday to Thursday, and between 4 and 6pm on Sunday, Tuesday and Thursday. On Fridays and Jewish holiday eves, banks are open from 8:30am until 12pm. All banks are closed on Shabbat (Saturday).
Most banks offer telephone or Internet banking, with many of these services available in English. The law requires that you save your bank statements for seven years.
In order to be issued with a credit card in Israel, an initial deposit of at least NIS2,500 is required. International credit cards are widely accepted in Israel. There are Israeli credit cards that allow only for purchases in Israel and in local currency, as well as international credit cards that can be used worldwide. ATMs are widespread (always next to a bank), and are accessible 24 hours a day. There are also ATM machines that accept credit cards for cash withdrawals.
Cheques are widely used as a form of payment in Israel. It is possible to order checks with a pre-printed sign which states “only for the beneficiary”, in order to avoid third-party transfers. When depositing checks, a signature and a bank account number is required.
Money transfers in all forms (cheques, cash, money orders) are accepted in most banks in Israel. It is recommended to check the transfer fees. As an alternative to opening a bank account in Israel, clients working or living in Israel have the option of opening an international bank account before moving to Israel. This allows one access to a variety of services, including offshore bank accounts and banking in other currencies.
Israel’s tax is now imposed on a personal basis, in place of its previous territorial basis. All sources of income are taxed in Israel. In 2010, Israel's corporate income tax rate was 25%, and the individual income tax rates were 10%-45%. There are reduced tax rates for passive income. Israel's tax withholding for non-residents is: for dividends, 20-25%, for royalties, 25%, and for interest, 15, 20, or 25%.
A contract exists between Israel and the USA concerning taxation of residents with dual citizenship. If an employee has dual citizenship and is earning money in Israel, their tax obligations are decided upon by authorities in Israel. These obligations are based on one’s individual status in Israel and America (e.g. additional taxes incurred once they have returned to the USA, their tax history in America, their investments, the size of their income, etc.). However, one will not pay double taxes on the same income; an employee won’t be taxed in America for an income earned in Israel.
Each employee must pay social security and health insurance, in the form of a deduction from their salary based on their individual income. Both employee and employer are required to pay social security. The top rates for social security payments are 5.43% for the employer and 12% for the employee, and are subject to a monthly ceiling of NIS76,830.
A non-resident employee in Israel must retain private health insurance for their entire length of stay. Non-residents are entitled to limited services and social security benefits. The social security rate that will be deducted from their salary every month will be the minimum applicable fee.
Banking
All expat workers are able to open a bank account in Israel. Opening a bank account is usually straightforward, requiring specific identification, including your passport. It is also recommended to bring recent bank statements from other accounts in order to expedite the process. It is also possible to open a bank account with the Postal Bank (any post office), without making an initial deposit. In general, your bank account allows for money transfers by employers, insurance companies, etc.Israeli banks offer several account options including:
- Current accounts for everyday banking, offering low interest rates
- Savings accounts for long-term accounts, with restricted short-term access to funds and competitive interest rates (varied or fixed rates)
- Fixed-term accounts offer little or no access to funds, and a defined rate of interest for a fixed term, during which the client can chose to reinvest the capital and interest.
Israel’s biggest banks are Bank Hapoalim, Bank Leumi, Bank of Israel and Israel Discount Bank. Major banks have branches throughout the country. Urban branches usually offer more extensive services, while local branches may have limited services and hours of operation. Banks are generally open from 8:30am until 12pm Sunday to Thursday, and between 4 and 6pm on Sunday, Tuesday and Thursday. On Fridays and Jewish holiday eves, banks are open from 8:30am until 12pm. All banks are closed on Shabbat (Saturday).
Most banks offer telephone or Internet banking, with many of these services available in English. The law requires that you save your bank statements for seven years.
Credit Cards and ATMs
In order to be issued with a credit card in Israel, an initial deposit of at least NIS2,500 is required. International credit cards are widely accepted in Israel. There are Israeli credit cards that allow only for purchases in Israel and in local currency, as well as international credit cards that can be used worldwide. ATMs are widespread (always next to a bank), and are accessible 24 hours a day. There are also ATM machines that accept credit cards for cash withdrawals.
Cheques
Cheques are widely used as a form of payment in Israel. It is possible to order checks with a pre-printed sign which states “only for the beneficiary”, in order to avoid third-party transfers. When depositing checks, a signature and a bank account number is required.
Transfers
Money transfers in all forms (cheques, cash, money orders) are accepted in most banks in Israel. It is recommended to check the transfer fees. As an alternative to opening a bank account in Israel, clients working or living in Israel have the option of opening an international bank account before moving to Israel. This allows one access to a variety of services, including offshore bank accounts and banking in other currencies.
Taxes
Israel’s tax is now imposed on a personal basis, in place of its previous territorial basis. All sources of income are taxed in Israel. In 2010, Israel's corporate income tax rate was 25%, and the individual income tax rates were 10%-45%. There are reduced tax rates for passive income. Israel's tax withholding for non-residents is: for dividends, 20-25%, for royalties, 25%, and for interest, 15, 20, or 25%.
Dual Citizen Taxation
A contract exists between Israel and the USA concerning taxation of residents with dual citizenship. If an employee has dual citizenship and is earning money in Israel, their tax obligations are decided upon by authorities in Israel. These obligations are based on one’s individual status in Israel and America (e.g. additional taxes incurred once they have returned to the USA, their tax history in America, their investments, the size of their income, etc.). However, one will not pay double taxes on the same income; an employee won’t be taxed in America for an income earned in Israel.
Social Security and Medical Insurance
Each employee must pay social security and health insurance, in the form of a deduction from their salary based on their individual income. Both employee and employer are required to pay social security. The top rates for social security payments are 5.43% for the employer and 12% for the employee, and are subject to a monthly ceiling of NIS76,830.
A non-resident employee in Israel must retain private health insurance for their entire length of stay. Non-residents are entitled to limited services and social security benefits. The social security rate that will be deducted from their salary every month will be the minimum applicable fee.
