Below is a round-up of important developments regarding social security for new US immigrants and invoices for most businesses in Israel.
US olim social security exemption:
The Israeli National Insurance Law has been amended, which should help new US immigrants (olim) avoid double social security contributions on some income: the National Insurance Law Amendment 262.
The amendment is effective from the beginning of 2026 to the end of 2035, unless extended to 2045.
An Israeli resident individual may enjoy a five-year exemption from paying Israeli national insurance (social security) contributions on employment and self-employment business income, if the individual pays US social security.
This applies to olim who migrated from the US under the Law of Return or who received an aliyah certificate (teudat oleh) from the Immigration Ministry. This exemption will not stop payment of retirement pensions.
If someone has other unearned income, such as passive investment income, it will generally be subject to national insurance.
Comments:
Israel has a tax treaty with the US, but there is no social security “totalization” treaty between the two countries. So the above amendment partially remedies this lack. The remedy is unilateral – it may apply to eliminate Israeli national insurance, not US social security.
Israel does have social security totalization treaties with Argentina, Austria, Belgium, Bulgaria, Canada (except Quebec), the Czech Republic, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Poland, Romania, Russia, Slovakia, Sweden, Switzerland, Uruguay, and the UK.
US olim who made aliyah before 2026 are not covered by the amendment.
Olim from other countries, such as Australia or South Africa, are not covered by the amendment nor any social security treaty.
Note that the amendment makes no mention of employers’ national insurance contributions; they remain payable.
What will be the payroll procedure for US olim employees? The amendment doesn’t say. Payroll software companies will need to adapt, or individuals will need to request a national insurance refund after the year-end.
What will be the procedure for eligible self-employed US olim? They or their accountants will have to request an exemption from the National Insurance Institute and/or amend any standing order charged to their bank account, credit card, or “harshaa” (direct debit) arrangement.
Tax invoice allocation numbers:
On a separate matter, businesses issuing tax invoices on or after June 1, 2026, over NIS 5,000 before VAT must obtain an “Israel Invoice” allocation number (mispar haktsaah) from the Israel Tax Authority (ITA). This is an extra number attached to a tax invoice for VAT purposes.
Previously, the threshold was NIS 10,000 per invoice. Allocation numbers will typically be obtained automatically by approved Israeli accounting software (see below).
The aim is to prevent buyers from claiming VAT on expense invoices unless sellers first obtain an allocation number and pay the VAT on each invoice. This should thwart the use of phony invoices.
Registering for “Israel invoices:”
A freelancer is required to register. As for companies, a hierarchy approach applies.
First, a business registers for online digital services in its “personal area” (ezor ishi). Either the person in overall charge (morshe al in Hebrew, big boss in our slang) registers, or a representative registers armed with a lawyer’s letter confirming who the directors are.
The representative might be a CFO or anyone else, as long as they upload a lawyer’s confirmation that follows a set format. A lawyer’s confirmation may take five days to be approved at the ITA.
Second, the big boss or representative specifies details about the entity, who is authorized, and what they are authorized to do, e.g., request allocated numbers, and for how long – up to a year presently. The big boss and other authorized people may delegate to named “users,” but users cannot delegate further.
How to get an allocation number:
As mentioned, the usual way is to use Israeli-approved software that communicates electronically with the ITA and obtains an allocation number instantly to insert into each tax invoice for clients.
A business that forgot to request an allocation number or faces a technical difficulty can request one retroactively up to a year. Alternatively, the customer may be able to self-assess the VAT (“reverse charge”).
Exceptions:
The rules apply only to B2B (business-to-business), not B2C (business-to-customer). The rules do not apply to imported or exported goods, other transactions where 0% VAT or a VAT exemption applies, credit notes, charities, or where the customer self-assesses the VAT (“reverse charge”). In each of these cases, there should be no risk of input VAT fraud.
As always, consult experienced tax advisors in each country at an early stage in specific cases.
The writer is a certified public accountant and tax specialist at Harris Consulting & Tax Ltd.