Accountant for an Israeli Company (Ltd): Tax, Audit and Annual Duties (2026)

How an Israeli company is taxed in 2026

Profit left in the company bears only the 23%. The second layer arrives when you take it out as a dividend, which is why planning focuses on what you withdraw and when.

Salary or dividend? Usually a mix

Salary is a deductible expense for the company but is taxed on your side at the individual brackets (in 2026 the 20% bracket ends at ₪228,000, 31% applies up to ₪301,200 and 35% up to ₪560,280) plus National Insurance. Dividends come out of profit already taxed at 23%. The usual logic is to pay salary up to the level where its marginal cost approaches the combined dividend burden, and take the rest as dividends or leave it in the company. Salary also allows pension deposits and credit points. Professional publications note that the 2025 "trapped profits" legislation can affect companies that accumulate profits, so I check it before you leave large sums inside.

When a company is worth it

As a rule of thumb, not a law, professional publications place the break-even at around ₪300,000–400,000 of annual profit, and usually not below ₪300,000. If you need to withdraw all the profit to live on, the advantage mostly disappears. Non-tax reasons also matter: limited liability, bringing in partners or investors, and working with large clients.

What the company must do every year

• Audited financial statements, signed by an external CPA.
• An annual corporate tax return. Per professional publications, under the representatives' extension arrangement for 2025, companies could file until 31.3.2027; this changes yearly.
• An annual fee to the Registrar of Companies (check the current amount on the Registrar's site) and updates when shareholders, directors or the address change.
• VAT reports, bi-monthly up to ₪1,775,000 of turnover (2026) or monthly above, plus tax advances and payroll reporting.

If you are the controlling shareholder

You must file a personal annual return even if your only income is your salary from the company, and you are likely to be asked for a capital declaration (120 days to file from the request). Money taken out of the company that is neither salary nor dividend may be treated as your income, so every withdrawal should be documented and planned.

1. 1
   Year-end close

   All banks, suppliers, customers and payroll recorded.
2. 2
   Audit work

   Planning, reconciliations, third-party confirmations and focused questions.
3. 3
   Draft and meeting

   I walk you through the statements in English and discuss dividends and next year.
4. 4
   Sign and file

   Signed statements, corporate return and your personal return filed.