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Freelancing in Israel: Oved Atzmai vs Billing Company

Congrats, you’re considering starting your own full time business.  Or maybe you’re just looking for a little money on the side.  Sooner or later, someone is going to want a cheshbonit mas (tax receipt) and its time to stop working under the table; it’s time to register as a freelancer.

In Israel, you register as a freelancer or Over Atzmai (hereinafter OA) as either an osek patur or osek murshe.  An osek patur earns less than NIS 76,884 and does not charge VAT for his services.  If an OA makes more than NIS 76,884, he or she registers as an osek murshe.  An osek murshe does charge VAT, but can reclaim VAT on business expenses.  You can change from an osek patur to an osek murshe mid-year (when you come close to the 76,884 line you have to change your status) and once you are an osek murshe, you cannot be an osek patur again for at least two years.  Finally, some professions such as accountants, lawyers and doctors may only register as an osek murshe.  Regardless of what you choose, the process is the same: register at the tax authority, then mas hachnasah, and then bituach leumi   Once you are registered, you have to file regular reports, prepay VAT every so often (for an osek murshe) and file an annual report.

Sounds difficult.  Is there an easier way?

I know, the reason you became a freelancer was so you wouldn’t have to leave the couch and put on pants; going to so many government offices seems out of the question.  Fear not, there is an alternative; you can register with a billing company.  A billing company is a company that hires you as a worker.  You work as a freelancer, the company does your billing and the company takes a small cut of your revenue and pays you as a worker.  Since you are working under the guise of another company, you pay both the employer and employee side of all taxes and investments.  Billing company freelancers (hereinafter BF) do not issue personal receipts, but send the money to the billing company and then ask their billing company to issue a receipt.   All that the billing companies ask for in return is a small percentage of your revenue.

So which is right for your?

This is a very complicated question that gets to the heart of a very important matter – tax planning, or more honestly, tax avoidance.  With tax rates as high as they are in Israel, saving money on your taxes can mean a world (or at least a paycheck) of difference.

1) Tax deductible expenses:  Expenses are deductible for both OAs and BFs.  The only difference is that OAs can also deduct some living expenses (a portion of arnona, electricity, water and va’ad bayit).  In addition, OAs who are registered as an osek murshe and BFs can also receive back VAT on most expenses (for some such as a car and cell phone, you only get back 2/3 VAT.  Car rental expenses receive no VAT at all).  Click here for a full list of deductible expenses for an OA including VAT reimbursement rates.

2) Charging VAT:  Despite popular belief, VAT is more of a tax on the seller than on the buyer.  Like all taxes, it leaves a tax incidence, but in a world of many suppliers, VAT is really less of a 16% sales tax on the consumer and more of a ~14% tax on the supplier.  An OA is allowed to not pay this tax as long as he is an osek patur.  One he is an osek murshe, then he is in the same boat as the BF, who always charges VAT.

3) Bituach Leumi.  OAs pay 9.82% on all salary below 60% of the average wage (meaning on the first 5,000 of revenue) and 16.23% on all revenue after that.  BFs pay 3.95 on the first portion of revenue and 17.9% afterwards.  This means that until ~ NIS 14,200 revenue BF’s pay less, but after 14,200 revenue, OAs pay less.  All in all, the difference is not that significant until an OA starts making a lot of money.  Another difference is that OAs pay a minimal amount of Bituach Leumi   (NIS 212) every month, whether they receive income or not.  BFs only pay bituach leumi during months they receive income.

4) Pension:  Both BFs and OAs can put aside money for pensions.  BFs can put aside up to 7.5% from the employee side (which means after tax money, but 35% of the deposit is a tax credit, 7.5% from the employer side (tax and bituach leumi exempt money), and up to 8.33% for pitzuyim (also, tax and bituach leumi exempt money).  Note that the percentages from the employer side turn out to always be a bit less than listed above because these are percentages of your declared salary after you remove the deductible and refundable expenses, including the hishtalmut and pension (there is some complicated math in this).  OAs can also put aside money for a pension, 5% from the employee side and 11% from the employer side (both have the same tax deductible policies mentioned for a BF).

5) Hishtalmut:  One of the best ways to get some money past the tax man is by paying to a keren hsihtalmut.  Typically, a keren hishtalmut, allows a worker to pay in 2.5% of his or her income, which the employer matches with 7.5%.  Since BFs are paying both the employer and employee side, this means that they get to pass the 7.5% through tax free and bituach leumi free (Note: like pensions, percentages are a bit less than 2.5% and 7.5% because these are percentages of your declared salary after you remove the deductible and refundable expenses, including the hishtalmut and pension).  Similarly, an OA may deposit 2.5% from the employee side, but only 4.5% from the employer side. 

6) Social Security:  This is where the OA’s have it rough.  If you’re an American and registered as an OA. you’ll have to pay 15.3% of your revenue (before taxes, but after deductibles and bituach leumi) to the US government for social security.  This is sometimes a good thing, because if you’re close to having 40 quarters, being an OA can push you over the edge, but it also means you’re going to be paying a lot of extra taxes.  (For those interested, I plan to have a post discussing the social security issue at length in the near future).  Again, this tax does not apply to BFs at all.

7) Billing company fees and accounting fees.  Billing companies charge a certain percentage of your initial revenue as a fee for its services (the fess is paid on revenue after removing VAT, but before removing expenses.)  This fee covers not only billing, but all Israeli accounting expenses you’ll need throughout the year including deductions, refunds and tax planning (fees range from 4% – 7% with a maximum fee per month).  Similarly, an OA requires the services of an accountant.  I know there are many OAs out there who choose to do it alone, this is often a huge mistake.  The major perk in being an atzmai is the ability to utilize tax exemptions and if a worker is not using an accountant he or she risks either not taking advantages of all the tax advantages at his or her disposal or, conversely, committing fraud.  The cost of an accountant is usually between NIS 1000 and 3,000 a year for preparing an annual report.  Obviously this price varies depending on the extent of the time and service you need from your accountant.

Some final thoughts:

There are a variety of billing companies that can offer you their services (Yeul Sachir, Atzmai Sachir, Autotax, Cheshbonit Sachir, Sveram & Taxpay to name a few.)  When choosing a billing company, it is important not only to look at the fee, but the level of customer service offered.  I have heard good reviews from customers from Yeul Sachir.  If you have worked with any of these companies, please share your experience in the comments below.

Many choose to be an OA because issuing a receipt from one’s own company looks more professional.

Despite what many say, and what I have been told in the past, it is not a big deal to close a tik.  Just speak to your accountant and he or she will probably do the paperwork for you for a small fee.

This is the first time I am posting about this topic and I anticipate feedback and corrections.  I’m going to be on vacation next week, so if there is any problem, please e-mail me and I’ll correct it when I come back.  In the meantime, please enter any comments relevant to this topic below.

find a job in your area using

I recently found a great site for job searching. allows users to search for the local industrial zone, find the companies that work there and then apply directly on the website of the individual company.  

For example, if you are looking for work in Netanya, you’d click on שרון and then נתניה to see a list of al the companies that are located in the Netanya area.  Afterwards, you’d look for the places with a דף משרות דרושים, click on the little page icon for the web site of the company and apply for the job.  I am not sure how often the list of companies is updated, but the content I saw looks current.  

Note: The companies listed are high-tech and bio tech companies, but such companies also have all sorts of non-scientific departments (finance, marketing etc) so its still work a look.

you click the picture below for clear instructions on how to use the site


dealing with discrimination

A while ago, I spoke with an olah chadasha in her mid 50’s about her stalling job search.  She expressed her disgust at various firms that did not call her back once they saw how old she was, as she did not include her age on her CV.  When I asked her why she did not simply just tell the potential employer her age in advance by including it on her CV, as it would save her the trip to the discriminatory employer for an interview, she replied that she believes that if she were honest on her CV, no one would call her at all.

Towing the line of discrimination is not easy.  While it would be ideal for all employers to act within the confines of the law, or even act economically rational (workers in their 50’s tend to stay at their jobs longer and take less sick days than their younger counterparts), the sad truth is that the front line in HR is usually filled with discrimination.

Perhaps the answer is simply to avoid anyone that practices any discrimination; after all, no one wants to work for a bigoted boss.  But while this solution may seem right at first glance, it may actually lead to a more frustrating and prolonged job search while not actually avoiding a workplace that practices discrimination.  In many cases, the first person who sees a potential CV, the one who wrongly rejects a CV when he or she sees that the candidate is married and of child bearing age or is in his or her 50’s, is not the person who would be supervising this women were she to have gotten the job.  Certainly this is the case of manpower agencies and companies with large distinct HR departments, but surprisingly, this is the case for many smaller companies as well.  Alternatively, the person who looks at the CV first may not be the type to discriminate, but the potential supervisor may do so once you meet him or her in the second round of interviews.  

So how can a potential candidate minimize the effects of discrimination?  I would not sugest withholding information, since is usually comes back to bite the candidate, nor to simply suck it up and play the victim.  I believe that the solution is to call out the elephant in the room and sell it.  If you’re in you’re 50’s, sell your CV on your experience.  List specific goals that you reached in your lifetime, the type that some 25 year old pisher could only dream of accomplishing.  If you’re a married woman, you should mention that you’re looking for a long term job and use the term stability more than once.  Let the person reading your CV come to the conclusion that losing you for 3 months of maternity leave is worth it in order to have a stable worker for 7 years.  If you’re single and afraid that the company wants someone more stable, mention your flexibility.

Once you get your foot in the door, past the first person reading your CV and finally to the level of the interview when you meet your supervisor, then you can see if he or she indeed discriminates.  At this point, it’s okay to not get hired; you don’t want to work for a bigot anyway.  But at least you know that you’re avoiding a job with a terrible boss and not missing out on a really good job with a great boss because of a bigot in HR.

Updated financial tools – Israeli Tax Calculator & Job Payoff Index

Below are updated versions of two financial tools I try to update every once in a while.  The files below are updated using the new tax information for the new year.

1 – The Israeli tax calculator – This tool allows you to check your paycheck and see that the correct taxes were deducted correctly.  If too much money is being taken out for taxes or insurance, then you should demand back your money through a tax alignment (תאום מס) or an insurance alignment (תאום ביטוח לאומי).  If you need to get money back through an alignment see this post for more details.

New in this version:  In addition to updating the tax brackets and the average wage, I also enterd a line on the bottom for deductions from your paycheck (for example, if you pay for lunch or insurance and the money comes out of your paycheck).

Download the Israeli Tax Calculator here (

Note:  While the amount for insurance should match your paycheck perfectly, the amount you pay for taxes may not.  There are other factors besides the ones mentioned in this spreadsheet that can affect the amount of taxes you pay (how much you got paid over the past 6 years, how often you get paid.)

Use the guide as follows:

If you are paying less in taxes than what is calculated on the sheet:  Find out what kind of benefits you are receiving and how to continue receiving them

If you are paying more in taxes than what is calculated on the sheet:  Odds are you need to do a tax alignment.  Speak to your HR person and fix up your tax record and then file the appropriate paperwork at מס הכנסה.

2 – The Job Payoff Index – This tool allows you to see the net payoff of any job including social benefits.  If you are offered a high-tech job with great pay and no benefits or a low paying job with government with benefits up the wazoo, you can check and see which is really paying you more (in after tax shekels).

Download the Job Payoff Index here (

I want to thank those who gave suggestions for improving these sheets, including those who found some bugs and those who sent me e-mails thanking me.  Your support is greatly appreciated.

As always, if you find any flaws in these excel sheets or have any ideas for improving them, please feel free to contact me.

Are there any financial tools you would like to see?  Please feel free to either leave some ideas in the comments below or e-mail me at

job interviews – what really makes a difference


During each of my last two job searches, I was in contact with two different organizations aimed at helping people learn how to find a job.  In addition to the networking and resume writing workshops that were offered, I took part in a job interview session, where different people in the group performed mock interviews in front of the class to be critiqued and analyzed.  The analysis was always the same: advising whoever was just interviewed to imitate the interviewer’s body language, appear unanimated and professional, have a good handshake and develop the interview and build it up as it goes along.  At the same time, an old myth, really a mantra generally inconsistent with what we were learning, was often repeated: you only have half a second to make an impression that will determine everything.

Recently, a post on Pop Economics discussed this issue from an economic perspective, basing it’s guidance on research and numbers, instead of an HR guru’s gut feeling.

In short:

You really do only have a tenth of a second to make a good impression.

And if that wasn’t tough enough…

  • Matching tone and body posture does not help
  • You can’t fake a firm handshake
  • You can’t train for most of the things that will determine your good first impression
  • Attractive people have a better shot at making a first good impression

Sounds pretty pessimistic.  In fact, this post paints a pretty bleak picture for balding overweight men like yours truly.   But there are some things you can do to help yourself:

  • Show emotion – any emotion, good or bad, builds rapport
  • Finding something in common, or more precisely, anything in common, helps leave a good impression

Finally, the author leaves with some sound advice:  Next time you’re in an interview, take it easy:  You can’t control most of what will happen anyways, so just act naturally and throw the dice.

What has your experience taught you about job interviews?

7 Israeli job search sites


Happy choref!  If you’re a job hunter, this is your time.

Last year I spoke at length about finding a job in Israel in the posts below:

Part 1:  Cold and Warm Job Searches

Part 2:  Sharpening Skills & Expanding Horizons

Part 3:  Heating Up the Job Search & The Interview

In the first post listed above, I discussed the cold and warm approaches to a job.  In summary, the cold search entails applying for jobs en masse, with no cover letter (or just one standard one).  You will typically respond to about 2,000 of ads every week, knowing that hundreds of these jobs are either not available or that many are for the same jobs.

In contrast, the warm job search, is the one where you decide what you want to do, where you want to work, and then network yourself into a job.  I hope to discuss more on this topic in some of my upcoming posts.

In this post, I’d like to discuss the different websites available for your cold job search:

1) Job City (  This past year Walla jobs and yad 2 joined forces (are they the same company?) to bring a first class job search site to Israel.  It’s a lot of stuff to fill out, but the site does a good job ranking how well each job matches your profile.  The site is a bit heavy on the browser, but it has a lot of quality jobs and, in my opinion, should be part of your job search

Language: Hebrew

Cost: free

User friendly: site is easy to use, but takes too much time to load between pages

Overall rating: 6

2) Job Master (  Probably the easiest to use, most popular site for finding a job in Israel.  Most of the jobs I see posted seem to be for headhunters, but I guess that is common for many sites.

Language: Hebrew

Cost: free

User friendly: very

Overall rating: 8

3) Israemploy (  The little yahoo group that could, Israemploy evolved from a long e-mail list to a fully searchable site.  The site costs ₪ 30 a month with discounts for buying subscriptions for longer time periods.  If you’re an Anglo who cannot speak Hebrew and use this site as your basic job search site, it is well worth it.  If you are looking for a job where you will work in Hebrew, you may want to use one of the other sites as well.

Language: English

Cost: ₪ 30 for one month, ₪ 70 for 3, ₪ 120 for 6 and ₪ 180 for a year

User friendly: more than any other site on this list

Overall rating: 8

4) Jobnet (  The AACI’s jobsearch website is a place where you’ll find a plethora of jobs.  Unlike Israemploy, businesses have to pay money to post on jobnet, so you’re not going to find many smaller businesses positing jobs on this site the way you’ll find on more American sites.

Language: Hebrew.  Yes I know it says it is in English, but the overwhelming majority of the job descriptions are in Hebrew, so if you don’t know Hebrew, you’ll probably have to skip this site.

Cost: free

User friendly: mostly.  The technology is not as good as jobmaster and jobcity where the site matches jobs to your profile.  In this site you have to do a search.

Overall rating: 6

5) Alljobs ( ):  Once upon a time, I would have sung the praises of alljobs, what used to be Israel #1 site for finding a job.  Now the site has turned into a labarynth of traps and links trying to get you to buy a subscription that costs more than any other site.  If you’re going to pay, great, but if not, don’t waste your time

Language:  Hebrew

Cost: ₪ 44 a month

User friendly: if you pay, great.  If not, no

Overall rating: 2

6)  Portal Drushim ( A decent job search site.  The site doesn’t match jobs to your profile, but it is very easy to use and moves very quickly.

Language:  Hebrew

Cost: free

User friendly: not as great as some others, but still very good

Overall rating: 5

7)  Janglo (  While Janglo is not typically a job hunting site, it is a great place to find a job.  The jobs listed here are from Olim posing a job for their company or small business, not large companies or manpower groups.  Unlike the other sites, you should probably send a cover letter of personal e-mail when applying for a job via Janglo.  In short, Janglo is a great resource, but should be complemented by at least one of the sites above:

Language:  Hebrew

Cost: free

User friendly: more like a message board than a typical job hunting site

Overall rating: 5

What sites do you use for job hunting?  What do you suggest?

Introducing the Job Payoff Index

A long time ago, I discussed the need for a singular method to measure how much one receives from a job, including all tannaim (benefits).

Such a unit of measurement would allow the public to understand the true payoff of a particular job in order to compare possible job offers, serve as a basis for contract negotiations and even, if you look at the bigger picture, serve as a more reliable unit of measurement for a progressive tax system.

I have released a first draft of this creation, which I call the Job Payoff Index, at jobmob for their summer guest blogging contest.

Click here to see the full article and download the first draft of the JPI.

I am aware that while the measurement I propose is a good place to start valuing a potential job, it is far from perfect. It cannot measure important factors in determining your job such as potential for growth, how nice your coworkers are, nor how interesting your job is.  But while you decide if you enjoy your job or not, it can tell you, honestly, how much you are making
 If you have any corrections or comments, I’d be glad to hear it.  My hope is that with the input of users, I will be able to create an updated version 3 or 4 times a year.