Doing business in Israel: Israel trade and export guide
Updated 27 May 2015
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1. Israel export overview
Israel is a highly developed western orientated market whose business practice is similar to much of western Europe. Its high gross national product of USD 36,000 per head exceeds those of several European Union (EU) member states.
Contact a Department for International Trade (DIT) Israel export adviser for a free consultation if you’re interested in exporting to Israel.
Contact UK Export Finance (UKEF) about trade finance and insurance cover for UK companies. You can also check the current UKEF cover position for Israel.
UK exports to Israel have grown steadily. It is the UK’s fourth largest market in the Middle East and north Africa region.
Israel is ranked 54 in the World Bank’s 2017 ‘Ease of Doing Business’ report.
HSBC, Barclays, Rolls Royce, GlaxoSmithKline and Unilever have a major presence in the market.
Benefits for UK businesses exporting to Israel include:
- quick adoption of new technologies
- open to new ideas
- English widely spoken and accepted as business language
- Israeli business community familiar with UK business practice
- free trade agreement between the EU and Israel
- similar commercial legal systems to UK
- only 2 hour time difference
- regular flights between UK and Israel
Strengths of the Israeli market include:
- growing economy
- low inflation and unemployment
- Shekel is a freely convertible currency
- reduced government involvement in business
- strong technological knowledge and entrepreneurship
- top market for a number of approved patents per capita
- high density of start-up companies
- major technology companies, such as Google, Microsoft and Motorola, have their Research and Development (R&D) centres in Israel
2. Challenges
Israel does not present major challenges to UK companies wishing to do business.
Read the Foreign & Commonwealth’s (FCO) Overseas Business Risk report for Israel.
3. Growth potential
3.1 Economic growth
Israel has a strong economy with an annual growth of 2 to 3%. This is expected to continue in 2015.
Israel has low unemployment at under 6%.
Natural gas has been discovered off the Israeli coast. The Leviathan and Tamar gas fields will provide Israel’s gas requirements for the next 100 years and still allow Israel to become an energy exporting country.
There is also a very good chance that oil will be discovered under these gas fields. Israel will be looking to foreign companies for the development of this new sector. UK companies are well placed to take advantage with their knowledge and experience.
3.2 Free Trade Agreements (FTA)
Israel has been an associate member of the EU since 1995. It became a full member of the Organisation for Economic Co-operation and Development (OECD) in 2010.
Israel is a member of the World Trade Organization (WTO). It also has free trade agreements with the EU, European Free Trade Association (EFTA) and the USA.
Find out more about Israel’s FTAs.
4. UK and Israel trade
The UK exported £1.3 billion in goods to Israel in 2014. Israel is the UK’s 33rd largest market worldwide. Bilateral trade has exceeded £3 billion in each of the past 4 years.
The top 10 UK exports to Israel make up to 80% of all UK exports to Israel. These include:
- vehicles
- pharmaceuticals
- general machinery
- chemicals and plastics
5. Opportunities for UK businesses in Israel
DIT provides free international export sales leads from its worldwide network. Search for export opportunities.
Israeli companies are always on the lookout for joint venture and collaboration opportunities. There are good opportunities for UK companies with international marketing expertise to become partners with Israeli technological organisations.
5.1 Healthcare
The Israeli healthcare system is highly developed with universal coverage for all citizens, provided by 4 competing Health Maintenance Organisations (HMOs). Israel relies heavily on imported medical equipment. UK companies have an excellent reputation in Israel and local importers are particularly keen to hear from suppliers of innovative high tech medical devices.
There are opportunities to supply medical equipment and over the counter products (OTC) to HMOs and hospitals for use in:
- diagnostics
- gynaecology
- urology
- gastro and bariatric
- cardiology
- opthalmology
- woundcare
Contact Senior Trade Adviser janna.shortt@fco.gov.uk for more information on healthcare opportunities.
5.2 Energy
Israel’s goal for 2020 is to reduce the use of coal in electricity production, substituting it for renewable energies and natural gas.
The recent discoveries of huge offshore gas reserves offer good opportunities for UK companies in this sector.
Contact Senior Trade and Investment Assistant Elaine.avisror@mobile.trade.gov.uk for more information on energy opportunities.
5.3 Homeland security
Israel has an excellent reputation in the development of new technologies. However, opportunities exist for UK manufacturers of cutting edge equipment and components that can be integrated in Israeli systems.
The market offers good opportunities for:
- sophisticated detection material
- CCTV
- sensors
- biometric solutions
- X-ray
- defence systems
Contact Export Control Joint Unit (ECJU) to check your goods you are meeting legal requirements for export.
Contact Senior Trade and Investment Assistant margaret.henderson@fco.gov.uk for more information in opportunities in the homeland security sector.
6. Start-up considerations
British companies should appoint a local agent or distributor, rather than attempt to sell direct.
Israel is geographically small with short distances between the main population centres. One agent is usually able to cover the whole market.
UK companies can also:
- establish a joint venture partner
- set up a company
- acquire an Israeli company
The success of this form of relationship will very much depend on the nature of the product or service and the level of domestic competition.
It is not difficult to open a company in Israel. However, you should get legal and accounting advice.
7. Legal considerations
Israel’s commercial law is based on English law.
Companies are advised to seek legal and taxation advice when doing business in Israel.
Contact the DIT team in Israel to help find tax and legal advisers before entering into agreements.
7.1 Standards and technical regulations
The Standards Institution of Israel (SII) has responsibility for standards, testing and certification.
Israel has strict marking and labelling requirements that frequently differ from those of other countries. Exporters should consult with their Israeli importer prior to shipping any product that will be offered to the local market.
All imports into Israel must have a label indicating:
- country of origin
- name and address of the producer
- name and address of the Israeli importer
- contents
- weight or volume in metric units
Hebrew must be used in all labelling. English may be added provided the printed letters are no larger than the Hebrew.
Israel’s environmental protection ministry passed a packaging law in 2011. It adopted the guidelines and targets of the European Directive on packaging and packaging waste. The law aims to:
- minimise environmental impact
- transform waste into a resource
- prevent pollution of land resources
The law is based on the principle of manufacturer responsibility. The manufacturer or importer is therefore responsible for the collection and recycling of packaging produced, or imported for sale in Israel.
7.2 Intellectual property (IP)
Intellectual property, designs, trademarks, patents and copyright are strongly protected by the Israeli legal system.
The Ministry of Justice has responsibility for IP in Israel.
Read the FCO’s Overseas Business Risk report for more information on intellectual property protection in Israel.
8. Tax and customs considerations
Israel has signed a double taxation treaty with the UK.
8.1 Value Added Tax (VAT)
VAT is currently charged at 17%. It is based on the duty paid value plus any other taxes and charges applied to imports.
Some goods are liable for other taxes. This includes:
- Tama, a general ‘up lift’ tax designed to artificially raise the value of imported goods
- purchase tax which is charged on the higher Tama value
8.2 Company / corporate tax
Foreign companies can hold a bank account in Israel with freely transferable currency. Other taxes levied include:
- income tax based on worldwide income
- national insurance paid by both employees and employers (and which includes compulsory health insurance)
- municipal taxes
- 5% acquisition tax on purchase of real estate
There are no obstacles to capital coming into the country. There are no restraints on the repatriation of profits, dividends or capital by non-residents.
8.3 Income tax
Personal income tax before allowances varies from 10% to the marginal tax of 48%, depending on income.
Israel has no inheritance or gift tax.
8.4 Customs
Additional dues and charges are also levied for services rendered in Israeli ports.
Israel’s free trade agreement with the EU has resulted in a gradual reduction in import duties for UK products. However, in order to be eligible for exemption products must meet certain ‘rules of origin’.
8.5 Documentation
All transport related documents for exports to Israel such as bills of lading, waybills and import manifests must include:
- full name and VAT registration number of the importer
- full name and VAT registration number of UK supplier
- clear description of imported goods, including first 4 digits of the goods’ harmonized system classification number
You should obtain an EUR1 Movement Certificate to support your claim for preferential rates of duty.
9. Entry requirements
There are no visa requirements for British passport holders to enter Israel.
9.1 Travel advice
If you are travelling to Israel and for business, check the FCO travel advice beforehand.
9.2 Contact us
Contact the DIT team in Israel for more information and advice on opportunities for doing business in Israel.