Israel introduces B2B e-Invoicing as of 2024: CTC clearance model
The implementation of e-invoicing in Israel for invoices above 25,000 Shekels (approx. 6,100 €) will start on May 5, 2024.
The ITA has decided to postpone the implementation of e-Invoicing in Israel for invoices above 25,000 Shekels (approximately €6,100), from January until May 5th, 2024.
During this period, all invoices above 25,000 Shekels will still be able to claim VAT tax without the need for an allocation number. However, companies will still be able to apply for an allocation number on a voluntary basis from January. Those who have completed the development and opt to receive an allocation number from January will receive an acceleration in the processing of VAT refunds by the ITA.
Israel proposes a model for sending invoices in electronic format and in real-time to the tax authority, known as CTC. The tax authority will validate the received invoices before they can be sent to the final recipient. This validation model is very similar to that of other countries such as Mexico or China.
The Ministry of Finance has established a phased implementation schedule based on the value of the invoice:
- January 1st, 2024: Voluntary phase
- May 5th, 2024: All invoices with a value of over NIS 25,000
- January 1st, 2025: All invoices with a value of over 20,000 NIS
- January 1st, 2026: All invoices with a value of over 15,000 NIS
- January 1st, 2027: All invoices with a value of over 10,000 NIS
- January 1st, 2028: All invoices with a value of over 5,000 NIS
How does B2B electronic invoicing work in Israel?
Under the Israeli real-time validation model, it is mandatory to obtain a unique identifier provided by the tax authority, as an invoice without validation by the tax authority will not be deductible. This allocation number needs to be integrated into the electronic invoice before it is delivered to the buyer.
How does the pre-clearance model work?
- Invoices must be communicated to and approved by the Israeli Tax Agency in real-time. The Tax Authority will assign a unique identifier (allocation number) and verify the data to approve or reject the invoice.
- The transaction date, invoice number, company information of the issuer and recipient, and the invoice amount excluding VAT must be shared with the Tax Authority.
- Once validated by the tax authority, it will be returned to the seller so that they can deliver it to the buyer.
- The implementation of an e-Invoicing solution will allow the recipient to verify the received invoice data to ensure the authenticity of the document.
- Electronic invoices must be archived for 7 years.
