 Hi guys, welcome back to my YouTube channel. This is Daniel Rosel here. I want to record this video about how to freelance in Israel or just to give some general tips for specifically non-U.S. citizens. Now I say non-U.S. citizens because firstly I'm not a U.S. citizen. I've moved to Israel from Ireland and secondly, more importantly because of the fact that the U.S. is unique as far as they know among world governments in that it extra-territorially enforces taxation and the IRS. I don't understand it because I don't need to understand it. So just to put that disclaimer out of the way. Secondly, this is not intended as professional advice. I personally have always retained an accountant for freelancing. I highly recommend that anybody does so, at least anyone making it their full-time income. These are just some general tips from one freelancer to another. I've been doing this for more than five years now and just to give a general sketch and I'm literally going to do that, give a sketch of what the relationships are. So bear with me because this is going to be pretty much off the cuff, at least in terms of the diagramming aspect. So this stick represents you, Mr. or Mrs. Freelancer. Let's call this person Freelancer. Now when you open your file and begin your operations as a freelancer in Israel, you're going to need to interface with a few different parties and I'm going to just try to plot them out here. So the first one is going to be the tax authority. I'm going to just depict the relationship between you and the tax authority here. Now, the relationship between you and the tax authority is going to depend. You're going to have to have one because you're going to need to report tax in Israel irrespective of so long as you're in the jurisdiction most of the time and there is a defined number of days that is. You're going to have to report it irrespective of where it was sourced from. But how much income you make, your turnover is going to determine whether you can use the business structure of Osek Batur or Osek Moshe. Now I'm not going to cover corporations or U.S. entities because I'm, again, not familiar with them. So this video is just about those two. So via the tax authority, you're going to have potentially the reporting to ma'am. You're actually going to have that anyway. So I'm going to just put this here and I'm going to just detail the information. So you're going to basically every two months now. I don't use bi-monthly because it's confusing. Some people say, I think it means every two months or twice a month. I mean every two months. So six times per year reports advances, which are called in Hebrew, Meek Damot. So basically, this is how it's been working for me for the past five years. You set a percentage of taxing at source with the tax authority and then six times per year, you tell them how much you made in that two month period. It's through a self-service online system. So that's number one. Now, if you are an Osek Batur with ma'am, you do have to fill out a yearly report. So that's option one. There's going to be two pathways here. If you're an Osek Batur, you're going to have this yearly report attesting that you are under the VAT limit. Now, the limit changes. The last time I kept an eye on it, it was about 100,000 shekels. I passed that threshold a couple of years ago. It's not anywhere near as big as it sounds, especially if it's your main income. Self-employment like it is mine. So you don't need to earn that much. It's only like 8,000 shekels a month to actually legally have to be an Osek Morshe. Furthermore, certain professions in Israel have to be Osek Morshe. I forget the ones that exact. I don't want to. Again, I'm not an accountant, so I'm just going to give a general sketch here. But certain professions, I think that architecture is one. There's a few other ones. Okay, so if you're an Osek Batur, your relationship with tax authority, masach nasa specifically, the income masach nasa, which sits within the tax authority. And Mam is just a department of the tax authority. So it's really part of the same entity here. Just two different divisions, right? Everyone has to pay income tax and only certain people have to submit six times a year VAT report. Now, if you go past the threshold, you're going to be on let's call it this pathway B via V, the tax authority, right? We'll call this pathway B the second line here. And that's going to be, you're also going to six times per year, you're going to be reporting, sorry, well, reconciling Mam. So if you're an Osek Morshe, six times per year, you're going to do this to the masach nasa. And six times per year, you're also going to have to send in reports, reconcilations of your Mam. Now the reconciliation is going to be, if you have Israeli clients, you're going to be collecting Mam from them. And if you have Israeli suppliers, you're going to be paying Mam. And there's rules regarding how much you can deduct from each category of purchase. Okay. So this is why you work with an accountant. You can do your own Mam reports. If you have minimal Israeli clients and minimal Israeli expenses, or you can pay a bookkeeper. So there's a difference typically between a, what they call a US mats, there's a US mats, a bookkeeper, or you can try to do it yourself, various options. So this is, this is your relationship as a freelancer with the tax authority. Now the next entity you're going to be dealing with is Batuach, Naomi, social security. So you're going to need to make payments to them as well. Now, how do you set all this stuff up? Well, there's different forms that you send. Firstly, when I did the setup myself, I don't recommend doing it because I paid an accountant who would have done it for me for no extra money. So there is essentially no point in doing the self-service option. But basically you send a form to Batuach, Naomi, you register with Masak Nassat, you register with Mam. And that's it. I haven't yet canceled anything because I've been freelancing, having my teak open for the past five or six years. But you just do the process in reverse, you cancel with Batuach, Naomi, you cancel your file, you close your file with Masak Nassat, etc. Okay. So that's the second entity is Batuach, Naomi, I pay my Batuach Naomi by direct debit. Now the reason it's great to work with an accountant, if we kind of imagine there being an accountant here. Well, the accountant would be really in the diagram, it would be freelancer and accountant. Accountants like the intermediate. Okay. So the accountant can deal with all these bodies. Instead of you having to deal with them directly, your accountant can deal with these matters, including actually with Batuach, Naomi. So I'm going to just add the accountant to this diagram, because I think it's a good idea to use one, right? So you talk to your accountant, and your accountant can make upgrades to how much you pay Batuach, Naomi, what your deduction percentages are from Masak Nassat. But you would then, and paying man if you want to do that, but you also have a direct pathway to them if you want to do it yourself. And likewise, you have a direct pathway if you want to do this yourself. So this is becoming a little bit more complicated, but at least I'm showing all the different things you can do, right? And final one, we're almost there. Final body is your pension. Now regarding your pension, it's become mandated that every at my has to have I'm going to actually go to full screen on my diagram here. It's become mandated for many years that every freelancer in Israel has to have a pension so it's no longer an option. So again, we have two distinct ways to do this. Option A is to hire a pension agent. So I'm going to actually going to go full out on this diagramming here. I'm going to give a yellow fill to accountant and a yellow fill to pension agent because these are the these are the kind of intermediaries, right? So freelancer, let's put you, let's put us as green or well, orange. So a pension agent is another optional. So what's yellow is optional, you can technically work without an accountant and deal with tax, ma'am and particularly me yourself as well as pension, or you can do this by a pension agent. A pension agent can invest for you in these different in these different funds, or there's a couple of options that you can use directly as a freelancer. One of them is called mate have dash. And there is another one whose name evades me. But these are pension plans that you as a freelancer, if I can get one more arrow out of the sky, I will there we go. I just need to bring it in a little bit. I'll just move it here. There we go. So you can contribute directly to mate have dash or you can go through a pension agent who can put you into different pensions. And I believe they also can manage your mate have dash so it can also go like this. There we go. So I think that's pretty much the entire freelance ecosystem in Israel plotted. It's not as complicated as it looks. Just go over it. You are the freelancer. You can choose to retain an accountant's highly recommended. The bodies you will have relationships with are they're going to give these a this this color coding, the tax authority, the mass hack the sad department to you will coordinate with them how much you're going to make and your accountant can do this on your behalf, which is super useful. How much you expect to make and what your tax at source percentage will be. You're going to be sending into mass hack the sad six reports per year. If you go through the threshold or you're a certain type of business, you've no choice but to be an OSEC Moshe, then you need to liaise with the man, the tax authority, six reports per year. And if you're going through the mass, the OSEC by tour pathway, you just do an annual report. But to my is your social security. I'm going to give them the red shade as well. I'm going to save this on my computer. As I've gone to all the trouble of making it. And you need to pay them a amount and there's going to be annual reconciliations for but to my and for mass hack the sad. So you can base on what you earn. You should be setting aside an amount for both of these institutions. And you'll do your annual report yearly. And you'll find that you owe or or or are owed by the tax authority and but to acclome me and there's interest either way. So that's important. So that's another reason I'm not hiring going to be hiring a bookkeeper. Because now that I've been doing it for a while, I want someone to say, Okay, you need to set aside 1200 check of this month for but to acclome me, let's pay them that much. We need to set aside this much for the tax authority. So you don't end up with any nasty surprises. Finally, they'll also an accountant will be able also able to tell you your pension contributions. You can hire a pension agent who'll be able to put you into different pension plans. Or there's also a direct service account. And I'm going to put the pension in the same shade actually because nowadays it's not a statutory body rather it's a group of pension funds, but it is now mandatory that you should contribute to them. But you can choose to retain a pension agent or go directly. And there's one one of those options is made of that there might be other ones. I hope this little schematic here has been useful this explanation. It does take a while to get used to all the different forms and reporting procedures. But it's not insurmountable bureaucracy. And if you do have an accountant as your central point of contact for managing relationships with all these authorities, it definitely makes life so much easier. Thanks for watching this video. I'm going to get more videos from me. Feel free to subscribe to this YouTube channel.