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 to help new US immigrants (Olim), only, avoid double social security contributions on some income (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 5 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 Aliya 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, that will generally be liable 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 applies may eliminate for Israeli national insurance, not US social security.
Israel does have social security totalization treaties with: Argentina, Austria, Belgium, Bulgaria, Canada (except Quebec(, Czech Republic, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Poland, Romania, Russia, Slovakia, Sweden, Switzerland, Uruguay and the UK.
US Olim who made Aliya 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 make an adaptation, or else the individual 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 the exemption from national Insurance Institute and/or amend any standing order charged to their bank, 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 Israeli Tax Authority. 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 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 at his “personal area” (Azor 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 are the directors. 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 5 days to be approved at the ITA.
Second, the big boss or representative specify 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 which communicates electronically with the ITA and obtains an allocation number instantly to insert into each tax invoice to clients.
A business that forgot to request any allocation number or faces a technical difficulty can request an allocation number up to a year retroactively. Alternatively, the customer may be able to self-assess the VAT (“reverse charge”).
Exceptions:
The rules only apply 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 apply, 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.
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© Leon Harris, Sep 11, 2026