Israel VAT Cross-Border Services Calculator 2026

The Israel VAT cross-border services calculator is a free, browser-based tool that works out Ma'am (VAT) on services bought from or sold to foreign parties. It applies the 18% standard rate, the Section 21A reverse charge for B2B imports, and the zero rate for exports, so you can see who accounts for the tax. Updated 2026-08-04.

Israel's 18% VAT Rate

Israel's standard Ma'am rate is 18%, raised from 17% by Knesset order and in force since 2025 — see the Knesset announcement approving the rise from 17%. It applies to most goods and services. Zero-rated categories include exports of goods, certain exported services, and tourism services to non-residents; residential rentals and some basic items sit outside the standard rate. At 18% Israel now charges more general consumption tax than every OECD member outside the Nordics.

Reverse Charge for B2B Imports

Section 21A of VAT Law: Israeli business buyer of foreign services self-assesses VAT (reverse charge) instead of foreign provider registering. Buyer reports both output and input VAT on same return — cash-neutral for fully-taxable buyers. Provides Israeli tax authority visibility without foreign registration burden.

Digital Services and Foreign Provider Registration

B2C cross-border digital services (streaming, software, e-books, online courses): foreign providers must register with Israeli Tax Authority if Israeli revenue exceeds NIS 100,000 annually. EU OSS-style regime in effect from 2026 — single registration covers all Israeli B2C sales.

When an Exported Service Actually Qualifies for the 0% Rate

The zero rate on exported services is the most commonly over-claimed position in Israeli VAT, because it does not turn on where you invoice — it turns on where the service is consumed. Billing a foreign company is not sufficient on its own. If the real beneficiary of the service is in Israel, or the service relates to Israeli real estate, the supply is treated as domestic and the 18% applies however foreign the customer's letterhead looks. The classic trap is a foreign parent paying for work that in substance benefits its Israeli subsidiary: the invoice goes abroad, the benefit stays in Israel, and the Israel Tax Authority assesses Ma'am on the full amount years later, plus interest.

Because the zero rate is a position you have to defend rather than a box you tick, keep the evidence at the time of supply rather than assembling it at audit: the contract identifying the foreign recipient, proof the recipient is a non-resident without an Israeli permanent establishment, payment received from abroad, and a clear description of where the work was delivered and used. Services with an Israeli-situs connection — real estate, and some transport — follow their own place-of-supply rules rather than the general test, so they should be checked individually before you set the rate to 0% in the tool above. A practitioner-level summary of the Israeli rules is maintained in PwC Worldwide Tax Summaries — Israel. Last reviewed 21 August 2026.

Israel Invoice Allocation Numbers: The NIS 10,000 Threshold in 2026

Getting the VAT figure right is only half the job — from 2026 the invoice itself needs clearing. Under the Israel Invoice (חשבונית ישראל) continuous transaction control system, an Israeli business claiming input VAT on a B2B invoice must first obtain an ITA allocation number for that invoice, and as of January 2026 the threshold has dropped to invoices above NIS 10,000 (before VAT), down from NIS 20,000 during 2025. No allocation number means the input VAT is not deductible, however correct the arithmetic above is. The threshold has stepped down each year since the system began, so re-check it at the start of each tax year rather than assuming last year's figure.

For the Section 21A reverse charge specifically, the Israeli buyer raises a self-invoice in place of the foreign supplier's document and reports the 18% as output VAT and, if fully taxable, reclaims the same amount as input VAT on the same return — so it nets to zero cash. It does not net to zero for a business with exempt turnover, such as a financial institution or a partially-exempt entity: it reclaims only its recoverable proportion, and the balance is a genuine cost that belongs in the project budget. On the other side, a foreign supplier selling B2B into Israel does not charge Ma'am provided the buyer supplies a valid Israeli VAT ID, which the supplier should validate through the ITA's online lookup rather than take on trust. Source: PwC Worldwide Tax Summaries — Israel, other taxes. Updated 2026-08-14.

Source: Israel Tax Authority VAT Law Section 21A, Finance Bill 2025. Updated 2026-08-14.