EMPLOYMENT IN ISRAEL - SALARY PACKAGE

Base salary שכר יסוד, - negotiable

Travel allowance נסיעות, (required by law)- minimum is 244 NIS/ month, maximum 45.4 NIS/ daily.

Annual Vacation Leave ימי חופשה, (required by law) - fixed by seniority (starting at 2 weeks).

Sick leave מחלה, (required by law) - 18 days per year up to 90 days cumulative.

Religious holidays חגים, (required by law) - 10 days plus half day for the day before each holiday (7 half-days).

Vacation subsidy דמי הבראה, (required by law) - about 1700 NIS/year, increases for seniority

Severance pay פיצויים, (required by law) - one month's salary for each year worked but only liable if you terminate the employment or change the working conditions such that it is tantamount to firing. Starting from 2008, even if a worker quits he is entitled to minimum severance pay. For 2010, it is 2.5% of monthly base salary; it increases by 0.83% each year until 2012.

Pension קופת גמל, -starting with 2008 employers are required to fund a pension with equal contributions from the employer and employee. For 2010 it is 2.5% of base salary each; the required contribution increases similarly by 0.83% until 2012. However, a voluntary benefit is to fund a pension up to 7.5% (including disability insurance) by the employer and up to 7% by the employee.

Training Fund קרן השתלמות,- voluntary benefit: the employer contributes 7.5% of the base salary while the employee contributes 2.5% of base salary (upto a maximum monthly base salary of 15,712 NIS). The employer's contribution is not taxable to the employee and the fund is not taxed on any income generated. After 3 years the employee can withdraw all the contributions tax free if used for professional education. After 6 years, the contributions can be withdrawn tax free and used for anything (purchase car, house, wedding, etc). Any profits earned in the fund are taxed to the employee.

Car רכב,- it is not unusual for large companies to provide cars to certain management positions. Hi Tech companies do likewise for technicians. The company purchases or leases the car and pays all expenses, including gas and maintenance. It can deduct 45% of the expenses and claim back ²/₃rds of the VAT. The employee is required to pay tax on the "benefit" "שווי רכב". The "benefit" is a fixed monthly amount based on the size of the car for old cars. For cars purchased from 2010 and on, calculated as a percentage and price of the car.

Shai L'Chag שי לחג, - most employers give workers small gifts before Rosh Hashana (Jewish New Year) and Passover. Typically, it is wine, candy, vouchers for use in local stores or cash.

מס הכנסה		ביטוח לאומי
Income Tax rates on annual work		Bituach Leumi monthly rates
Income:	Tax Rate:	Income:	Employee:	Employer:
Up to 57,240 NIS	10%	Up to 4,809 NIS	3.5%	3.85%
From 57,241 to 101,640 NIS	14%	From 4,809 to 79,750 NIS	12%	5.43%
From 101,641 to 152,640 NIS	23%
From 152,641 to 219,001 NIS	30%
From 219,001 to 472,080 NIS	33%
Every additional Shekel	45%

Tax Credits:זיכויים
A tax credit is a direct decrease of the calculated tax due.
Credit Points נקודות זיכוי,

a) Each resident is entitled to credit points (2¼ for a male; 2¾ for a female).
Each credit point is 2,460 NIS.

b) Child credit - a female taxpayer is allowed 1 credit point per child under 18 years (half point in year of birth and year turned 18 years old).

c) Oleh chadash allowed as follows:: 3 credit points for end 18 months from date of aliyah.; 2 credit points for the next 12 months.; 1 credit point for the next 12 months.

d) Other points for post-graduation, single mother, disabled child or single parent, etc.

Charitable Contributions: תרומות
Tax credit of 35% of the amount paid, to a recognized Israeli if total contributions exceed 300 NIS for the year. Maximum contribution is the lesser of 30% of taxable income or 7,500,000 NIS.

Two jobs: תאום מס
If one is working for two employers, he is required by law to receive confirmation from the Tax Authorities regarding the amount of tax to be deducted on the additional salary.

Who is required to file a tax return?
According to the law, employees are not required to file a tax return, unless their salary is above 577,000 shekels annually.