Is 18% VAT charged as part of the employer burden in Israel?

Yes, an 18% Value-Added Tax (VAT) is charged as part of the employer burden for all hires working in Israel, regardless of their scope of work or employment arrangement.

Who Does This Apply To?

This VAT charge applies to all employees working within Israel, including those engaged through Horizons’ Employer of Record (EOR) services or hired directly by the company. There are no exemptions based on employment type, job scope, or nationality.

Why Is VAT Charged as Part of the Employer Burden?

In Israel, services rendered within the country, including employment services, are subject to VAT. When Horizons provides EOR services in Israel, the 18% VAT is applied to the full invoice, including employer costs such as:

• Gross salary

• Statutory benefits

• Social security contributions

• Management fees

This VAT is mandated by Israeli tax authorities and must be paid by the employer as part of the total cost of employment.

Key Points

• VAT Rate: 18%

• Applies To: All hires working in Israel

• Charged On: Total invoice amount, including salary and statutory contributions

• Responsibility: Paid by the employer; not deducted from the employee’s salary

Horizons includes the 18% VAT in all invoices for employees based in Israel, ensuring full compliance with local tax regulations. This VAT is accounted for as part of the overall employer burden and is not passed on to employees.