Business Overview
An Exempt Dealer (Osek Patur) is the simplest form of business registration in Israel, exempt from charging VAT with income limited to 120,000 NIS annually.
Registration Time
2-3 business days
Income Limit
Up to 120,000 NIS/year
Documents
ID only
Liability
Personal (unlimited)
Advantages
- No VAT collection or reporting required
- Simplest and fastest registration process
- Minimal bookkeeping requirements
- Lower accounting costs
- Easy to upgrade to Licensed Dealer later
Disadvantages
- Income limited to 120,000 NIS per year
- Cannot claim VAT refunds on purchases
- Personal liability for business debts
- Less professional image for some clients
Who Is It For?
Perfect for those starting out or running a small side business with limited income expectations.
Frequently Asked Questions
Common questions about registering as an Exempt Dealer in Israel
What is the income limit for Osek Patur?
The current income limit for Osek Patur is 120,000 NIS per year. If your income exceeds this threshold, you must upgrade to Osek Murshe (Licensed Dealer) and start charging VAT.
Do I need to charge VAT as an Exempt Dealer?
No, as an Osek Patur you are exempt from charging VAT on your services or products. This can make your prices more competitive for individual customers who cannot claim VAT back.
Can I have multiple clients as an Exempt Dealer?
Yes, you can work with as many clients as you want. The only limitation is your total annual income, which cannot exceed 120,000 NIS. There are no restrictions on the number of clients or projects.
What expenses can I deduct?
You can deduct legitimate business expenses from your taxable income, including equipment, software, office supplies, professional development, and work-related travel. However, you cannot claim VAT refunds on these purchases.
How do I report my income?
Osek Patur files an annual income tax return. You should keep records of all income and expenses throughout the year. Many choose to work with an accountant, though it's not mandatory for this simple business structure.
Can I upgrade to Osek Murshe later?
Yes, you can voluntarily upgrade to Osek Murshe at any time, or you'll be required to upgrade when your income exceeds 120,000 NIS. The upgrade process is straightforward and we can assist you with the transition.