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  • Writer's pictureשוהם שאוליאן, רו״ח (עו״ד)

Israel Invoice Model - Allocation of VAT Invoice Numbers

Artistic representation of a VAT invoice from Israel featuring a 3D pop-up skyline of famous Israeli landmarks and the national emblem. The invoice is detailed with entries and a signature, illuminated by a small desk lamp, casting soft shadows on a light background. This creative display combines financial documentation with iconic architectural elements, symbolizing the blend of commerce and culture in Israel.

Starting January 1, 2024, Israel is implementing new regulations for handling Value-Added Tax (VAT) invoices, a move expected to bring significant changes for businesses across the country - the Israel Invoice Model. Here's what you need to know about these changes, aimed at making tax reporting more efficient and transparent.


First, any VAT invoice exceeding 25,000 NIS will now require a special allocation number to be valid for VAT deduction. This is a significant step towards maintaining clear and simple tax records. To obtain these numbers, businesses must register in the tax authority's digital system, launching in November 2023. This can be done through a dedicated software or a specific internet application.


Eligibility for receiving an allocation number depends on several factors. The invoice must be more than 25,000 NIS, include VAT (except for transactions rated at zero or exempt), and be related to a business registered for VAT.

 

The process to apply for these numbers is quite complex. Businesses will need to register digitally, appoint representatives, and use the tax authority's online services. It's important for both the issuer and the recipient of the invoice to ensure the allocation number is correct and follows the rules.


There are also special and exceptional cases to consider, showing that the authorities understand that one size does not fit all. To maintain relevance, additional guidelines for 2025 and beyond will be released in 2024.


Indeed, this transition towards a more digital and regulated VAT invoice process highlights the importance of businesses adapting to new technologies and compliance requirements. By familiarizing themselves with these changes and preparing in advance, businesses can ensure a smoother transition to this new era of tax reporting in Israel.


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