Opening a Tax-Exempt Business File
Opening a tax-exempt business file is another service offered by our firm, which proudly supports small and medium-sized businesses. When an individual considers starting a small independent business, they often face the decision of whether to register as a tax-exempt business or as a VAT-registered business. If the business owner decides to open a tax-exempt business file, they must meet several conditions, as explained below. On the surface, it may seem preferable to be tax-exempt (who wouldn’t want an exemption?), but that is not always the case. It is important to carefully consider what is allowed under the law and regulations, and which status is more appropriate based on the business’s expected activity, revenue, and investment needs
A key requirement for opening a tax-exempt business file is compliance with the annual revenue threshold. In 2024, businesses with annual revenue up to 120,000 ILS may qualify for tax-exempt status (in 2023, the threshold was 107,692 ILS)
Additionally, certain professions and fields are not eligible for tax-exempt status, even if their revenue is below the threshold, including freelance professionals such as architects, engineers, technicians, psychologists, lawyers, certified public accountants, religious advocates, bookkeepers, and others. Medical professionals, including psychologists, dentists, veterinarians, and physiotherapists, are also excluded, as are driving school operators, real estate traders or brokers, car dealers, and limited liability companies (Ltd.)
Therefore, small business owners expecting revenue above the threshold or those in the listed professions must register as a VAT-registered business, regardless of their projected income
Given the complexities, the final decision on the appropriate legal structure and VAT registration method depends on a variety of factors. The recommendation suitable for one business may differ completely from that for another
At Michael Weizman & Co. we are here to help you organize these matters and offer no-obligation advice regarding the opening of either a tax-exempt or VAT-registered business file. There is no need to visit the VAT, Income Tax, or National Insurance offices. Our firm is connected online with these institutions and has the necessary authorizations to open business files independently, ensuring you won’t need to visit the tax offices, and your file will be opened immediately
An accountant from our firm will be happy to assist you with this service. Contact us today for a no-obligation consultation
