Israel’s Clearance Regime: Full Steam Ahead Despite Challenges

Israel’s journey towards implementing a comprehensive clearance regime is moving more swiftly than anticipated, with critical milestones already met and others on the horizon. Despite the complexities and challenges inherent in such an ambitious project, the Israeli Tax Authority (ITA) remains committed to its timeline, with businesses in Israel preparing for the upcoming changes.

^{This article was last updated on 18 July 2025 to reflect the recently confirmed accelerated timeline for the rollout.}

‍

Pilot Phase Completed

‍Israel's e-invoicing pilot phase, which commenced in May 2024, was successfully completed. This initial phase targeted invoices exceeding NIS 25,000 (~EUR 6,100) and served as a crucial testing ground for both the ITA and businesses. During this period, the ITA assessed the system’s functionality, gathered feedback from participants, and made any necessary adjustments before the regime's broader application.

‍To comply, businesses were required to ensure that their invoicing systems were capable of generating and transmitting invoice data in real-time. Upon submission, the ITA provides an allocation number which must be included on the final invoice and in the VAT report. Failure to meet these requirements could result in delays or rejection of invoices, impacting cash flow and compliance status.

‍

Technical Updates and Industry Collaboration

‍A key obligation under the new regime is the technical integration of business systems with the ITA’s e-invoicing platform. Businesses must ensure that their accounting software can interface with the ITA’s API to submit invoices in real-time.

‍In response to feedback from software providers and businesses, the ITA has released a number of updates to the "Israel Invoice Model Description - API's" document. These provide clarification on several technical aspects, including data transmission protocols and integration guidelines, aimed at smoothing the implementation process.

‍

Looking Ahead To Full Implementation

‍As the pilot phase progresses, attention is shifting to the broader implementation phases. The ITA remains on track with its e-invoicing journey and has successfully reached the milestone of lowering the invoice value threshold to NIS 20,000 in January 2025.

‍On 17 March 2025, the ITA even announced the approval of the Knesset Finance Committee for further consideration of various tax measures to reduce black money, including proposals to significantly adjust the timing of the invoice value threshold, thereby accelerating the completion of the introduction of e-invoicing. Specifically, following this approval, the threshold will decrease to NIS 10,000 before VAT on 1 January 2026 (instead of the original planned date of 2027), and further decrease to NIS 5,000 before VAT on 1 June 2026 (instead of 2028).

‍This means that more transactions will fall under the mandatory e-invoicing regime sooner than previously anticipated, expanding the scope of compliance. Businesses should monitor these developments closely and start preparing now by reviewing their invoicing systems, ensuring they are scalable and flexible enough to handle the increasing volume of e-invoices.

‍

Distribution and Record-Keeping Responsibilities

‍Once an invoice has been approved and the allocation number has been received, businesses must include this number on the invoice and distribute it to the relevant parties. Even with the shift to a clearance model, the obligation to maintain proper records remains. Invoices must still be distributed in PDF format (with a digital signature) or on paper to ensure that all documentation is compliant with existing regulations.

‍

Stay Informed

‍As Israel moves forward with its clearance regime, we are committed to keeping you informed of any significant developments. We will continue to provide updates on the ITA's progress and offer guidance on how to navigate the changing landscape.

‍For those operating in Israel, now is the time to ensure your business is prepared for the changes ahead. Stay tuned for further updates and insights as we continue to monitor the evolution of Israel’s e-invoicing journey.

‍Subscribe to our Unifiedpost Group e-invoicing monthly newsletter to stay informed about the latest developments from around the globe.