Banking, Money and Taxes in Israel
Expats should have little difficulty managing their money in Israel, as the country has a highly developed banking system that is both accessible and reliable.
Money in Israel
The official currency of Israel is the Israeli new shekel, commonly referred to simply as the shekel. The ISO code for the shekel is ILS, but it is commonly abbreviated as NIS.
There are 100 agorot (equivalent of cents) to one shekel.
Notes: ILS 20, 50, 100 and 200
Coins: ILS 1, 2, 5 and 10, and 10 and 50 agorot
Banking in Israel
All expat workers are able to open a bank account in Israel. Opening a bank account is usually fairly straightforward and usually requires one’s passport. Expats are advised to prepare 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. Generally speaking, a bank account allows for money transfers by employers and insurance companies.
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)
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 choose to reinvest the capital and interest
Depending on their banking needs, it is possible for expats in Israel to have different accounts for different currencies. However, banks in Israel charge service fees per transaction and a monthly fixed fee according to the terms of the account.
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, whereas rural branches may have limited services and hours of operation. Banks are generally open from 8:30am until 12pm, Sunday to Thursday, and between 4pm 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 bank statements be saved for seven years.
Credit cards and ATMs
Expats applying for a credit card in Israel will need to make an initial deposit of approximately ILS 2,500 (USD 700). International credit cards are widely accepted in Israel. Israeli credit cards are available that allow only for purchases in Israel and in local currency, as well as international credit cards that can be used worldwide. ATMs in Israel are widespread and accessible 24 hours a day. Some ATMs in Israel 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 and money orders) are accepted in most banks in Israel. As an alternative to opening a bank account in Israel, clients working or living in Israel have the option to open an international bank account before moving to Israel. This allows access to a variety of services, including offshore bank accounts and banking in other currencies.
Taxes in Israel
Israel’s tax is now imposed on a personal basis, as opposed to its previous territorial basis. All sources of income are taxed in Israel.
Dual citizen taxation
A contract exists between Israel and the USA concerning the 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 the person’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, expats will not pay double taxes on the same income, that is, an employee won’t be taxed in America for an income earned in Israel.
Social security and medical Insurance
Each employee in Israel 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.
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.