Electronic invoicing and e-Reporting in Israel

Mandatory Use

The adoption of e-invoicing with tax validation in Israel is mandatory according to a gradual schedule based on the invoice amount (excluding VAT). The Tax Authority has set a series of decreasing thresholds above which it is mandatory to request an assignment number for each invoice. The current phased implementation schedule is as follows:

• May 5, 2024: Mandatory for invoices with a value above 25,000 NIS (New Israeli Shekel).
• January 1, 2025: Mandatory for invoices with a value above 20,000 NIS.
• January 1, 2026: Mandatory for invoices with a value above 10,000 NIS.
• June 1, 2026: Mandatory for invoices with a value above 5,000 NIS.

Although the law requires only invoices above these limits to be submitted, any company may voluntarily use the e-invoicing system for lower amounts.

Invoice Format

The structured format defined for exchanging e-invoice data with the authority in Israel is JSON (JavaScript Object Notation). This means that key invoice information (fields such as date, invoice number, amounts, tax identifiers, etc.) is sent to the ITA platform in JSON messages according to the established schema.

Electronic Signature

Unlike practices in other countries with e-invoicing, Israel does not require a digital electronic signature on invoices to give them legal validity under the new scheme. Israeli regulations rely on the ITA’s centralized control (assignment number) as the authenticity mechanism, so each e-invoice is not required to carry the issuer’s digital signature.

Invoice Archiving

Companies using e-invoicing must ensure that documents are archived in digital format for at least 7 years, maintaining their readability, security, and integrity for the entire period.

Fiscal Control

Tax control in Israel’s e-invoicing system is preventive and automated through the authorization process for each invoice. By adopting a Continuous Transaction Control (CTC) model, the tax authority gains real-time visibility into reported economic transactions. Each invoice sent to the system undergoes immediate basic verifications.

Invoice Workflow

The operational flow of e-invoicing in Israel, from issuance by the supplier to receipt by the customer, can be described in the following general steps:

1. Invoice issuance and submission to the tax authority: When an issuer generates a B2B invoice, they must transmit the key data to the Israel Tax Authority in real time.
2. Validation and assignment number by the ITA: The ITA platform receives the information and automatically verifies the submitted data. If correct, the authority assigns a unique identifier to the invoice.
3. Receipt of approval: Once validated, the invoice with its assignment number is returned electronically to the issuer.
4. Generation of the final document and delivery to the customer: With the assignment number, the issuer incorporates it into the invoice that will be sent to the buyer. The supplier then transmits the invoice to the customer, ensuring that it contains the authorization code granting its validity.
5. Verification by the recipient: Upon receiving the invoice, the buyer can verify its authenticity and validity by checking the assignment number.
6. Retention and recordkeeping: Finally, both the issuer and the recipient must retain the invoice in their respective accounting records for the legally established period.