Israel's Social Security Totalization Agreements: How Foreign Workers Avoid Double Bituach Leumi

Bituach Leumi is not small change. An employee earning NIS 30,000 a month pays roughly NIS 2,100 in contributions; their employer remits another NIS 2,100 on top. A seconded executive at NIS 60,000 a month can trigger over NIS 90,000 per year in combined employer and employee NII charges. When that person is also paying social security taxes in their home country, they are funding two pension systems while expecting benefits from one.

Totalization agreements solve that problem. They assign social security jurisdiction to one country, so the worker contributes in one place and counts those contributions toward benefits there. For foreign nationals in Israel, knowing which agreements apply, how to activate the exemption before the first payslip arrives, and which errors most often cause overpayment can recover tens of thousands of shekels that would otherwise disappear into two parallel systems.

1. What is a social security totalization agreement?

A totalization agreement (known in Israeli law as a bilateral social security convention, based on Section 369 of the National Insurance Law (Consolidated Version) 5755-1995) is a treaty between two countries that coordinates their social security systems. The core principle is straightforward: a worker should contribute to one country's system, not both, and their contribution history in either country can count toward benefit entitlement in the other.

These agreements typically address three situations:

• Seconded workers: An employee sent by their foreign employer to work in Israel for a defined period (usually up to 24 months, extendable to 60) remains covered by the home country system and is exempt from Israeli Bituach Leumi.
• Local hires: A foreign national hired directly by an Israeli employer is generally covered by the Israeli system and pays Bituach Leumi like any Israeli employee.
• Self-employed workers: A self-employed person operating in Israel from a treaty country may be covered by their home country's system for their first years, depending on the specific treaty's self-employment provisions.

Totalization agreements also contain totalization-of-credits provisions: if you worked five years in Germany and ten years in Israel but neither country alone qualifies you for a pension, your combined 15 years of contributions count toward the threshold in whichever country you apply for benefits.

2. The 21 countries with social security agreements with Israel

As of 2026, Israel has bilateral social security totalization agreements with the following 21 countries (verify the current list with the National Insurance Institute before relying on it, as treaties can be added or modified):

Notable absences from this list include the United States, Australia, India, South Africa, and most of Asia. Workers from those countries have no automatic totalization exemption, though separate legislative relief now exists for American immigrants (see Section 5 below).

3. How the Bituach Leumi exemption works in practice

The exemption is not automatic. A worker or their employer must actively apply to the National Insurance Institute (NII — Hamosad Lebituach Leumi) to have it confirmed in writing. The mechanism has two moving parts: a certificate of coverage from the home country and a formal exemption letter from the NII.

Getting the certificate of coverage

Before the assignment to Israel begins, the employer in the home country must apply to its own national social security authority for a certificate confirming that the worker remains covered under the home country system. The name of this document varies by country:

• EU member states (Germany, France, Belgium, Netherlands, etc.): the A1 certificate issued under EU Regulation 883/2004, which Israel honours under its individual bilateral treaties with those states
• United Kingdom: Form CA3822 (employee) or CA8421 (self-employed), issued by HMRC National Insurance contributions office
• Canada: CPP/OAS coverage certificate, issued by Employment and Social Development Canada
• Switzerland, Norway: country-specific forms under their bilateral treaties

Filing with the NII in Israel

Submit the certificate of coverage to the local NII branch where the employer or worker is registered, together with: a copy of your passport, your Israeli employment or service contract, and a declaration (NII Form 671 or equivalent) confirming you are not simultaneously applying for Israeli Bituach Leumi coverage. The NII typically issues a written exemption confirmation within 30–60 days.

One point that often catches foreign employers: the exemption applies to both the employee's share of Bituach Leumi contributions and the employer's share. Employer Bituach Leumi in Israel runs at 3.55% on the first NIS 7,522 of monthly salary and 7.6% on the amount above that threshold up to the 2026 income ceiling of approximately NIS 49,030 per month. For a seconded executive earning NIS 50,000 a month, the employer's NII savings from a valid totalization exemption are roughly NIS 3,500 per month, over NIS 42,000 per year.

4. The health tax: what totalization does not cover

Foreign workers with a totalization agreement exemption are often surprised to discover they still owe money to the NII. Every bilateral social security agreement Israel has signed covers only the bituach leumi (National Insurance) contribution itself. The Israeli health tax, dmei briut (literally "health fee"), is a legally separate charge collected alongside Bituach Leumi by the NII on behalf of the state health system, and it falls outside every totalization agreement in force.

In 2026, the health tax rates for an employed worker are:

• 3.1% on income up to NIS 7,522 per month
• 5% on income between NIS 7,522 and approximately NIS 49,030 per month

A worker earning NIS 30,000 per month pays roughly NIS 1,360 in health tax each month, even with a full Bituach Leumi exemption under a totalization agreement. That comes to approximately NIS 16,300 per year, and it catches most foreign workers off guard because they assumed "totalization" meant they owed nothing to the NII.

5. US workers and Amendment 262: the 2026 legislative change

The United States and Israel do not have a totalization agreement. This created a genuine problem for American immigrants and US-company employees in Israel: they paid U.S. Social Security taxes (FICA at 15.3% for self-employed, or 7.65% each for employee and employer) and Israeli Bituach Leumi simultaneously, with no coordination between the two systems. For a self-employed American in Israel earning NIS 25,000 per month, the combined social insurance burden could approach 30–35% of income before income tax.

On 25 February 2026, the Knesset enacted Amendment No. 262 to the National Insurance Law (Consolidated Version) 5755-1995. The amendment adds a new exemption category specifically for new immigrants from the United States:

• A new oleh who immigrated from the United States is exempt from Bituach Leumi contributions (but not from the health tax) on employment and self-employment income for which U.S. Social Security taxes (FICA or SECA) are actually assessed and paid.
• The exemption runs for five years from the date of aliyah.
• It is personal: it does not extend to the oleh's Israeli-citizen spouse, to their Israeli employer, or to income that is not subject to U.S. social security taxes (e.g., rental income, Israeli-source passive income).
• An American self-employed oleh claiming the U.S. foreign-earned-income exclusion on all of their income is not eligible, because the FEIE reduces the SECA base to zero.

American olim who work for a U.S. employer on a W-2 or as a 1099 contractor and who can document that their employer is remitting FICA on their wages — or that they are paying SECA on their net self-employment income — should qualify cleanly. Those whose employment structure is complicated (U.S. holding company, Israeli operating company, profit-sharing arrangements) should obtain specific advice before filing, because the NII has indicated it will scrutinise arrangements that appear designed to create paper FICA liability on income not genuinely subject to U.S. social security taxation.

6. Employer obligations: what foreign companies posting workers to Israel must do

A foreign company that seconds employees to Israel without a local Israeli legal entity is a foreign employer for Bituach Leumi purposes. Under Section 371 of the National Insurance Law, the Israeli Ministry of Finance can designate a foreign employer's local representative as the person responsible for NII registration and contributions. In practice, many foreign employers register directly with the NII as an "employer without a permanent place of business in Israel."

Where a valid totalization agreement exemption exists, the foreign employer is still required to:

• Register with the NII if employing anyone in Israel, even an exempt worker
• Submit the certificate of coverage for each exempt employee before their first working day in Israel
• Continue deducting and remitting the Israeli health tax on exempt employees' salaries
• File annual NII payroll reports (doch shnati) even for employees whose Bituach Leumi contributions are zero because of the exemption

7. Retroactive refund claims for overpaid Bituach Leumi

Foreign workers who paid Bituach Leumi contributions they should have been exempt from can claim a refund, but the window is narrow. Under Section 360 of the National Insurance Law, refund claims for overpaid contributions must be submitted within 12 months of the date each contribution was made. Contributions paid more than 12 months before the claim date are generally not recoverable.

The claim process:

1. Gather payslips showing NII deductions for each month in question.
2. Obtain the certificate of coverage (or proof of FICA/SECA liability for US Amendment 262 claims) covering the relevant period.
3. Submit NII Form 671 (or the current equivalent) to the NII branch where the employer is registered.
4. The NII audits the claim and issues a refund within 60–90 days. Where the employer remitted the contributions, the refund goes to the employer, who is then required to reimburse the employee.
5. If the employer does not forward the refund, the employee can file a complaint with the NII's enforcement unit, which can order the employer to pay directly.

One complication: the 12-month limitation period runs from the date of each monthly contribution, not from when you discovered you were exempt. A worker on secondment for 24 months who learned about the totalization exemption only at the end of the posting will typically recover only the final 12 months of contributions. Claiming the exemption at the start of the assignment is the only way to protect the full amount.

8. Common mistakes that cost foreign workers money

Most overpayments trace back to one of five recurring errors.

Not applying before the assignment starts

The NII exemption is not automatic. Without a filed certificate of coverage, the employer must deduct Bituach Leumi from the first payslip. Retroactive refunds are available but subject to the 12-month cap, so every month of delay costs money.

Assuming "totalization" covers the health tax

The health tax is always owed, treaty or no treaty. When payroll stops all NII-line deductions on receiving the exemption confirmation, the unpaid health tax accrues interest under Section 357 of the National Insurance Law from the date each payment was due.

Using an EU A1 certificate for a non-EU country

An A1 certificate issued under EU Regulation 883/2004 is valid for EU member states. For the UK (post-Brexit), Canada, Switzerland, or any other non-EU treaty country, you need a country-specific certificate. Some HR departments submit an A1 to the NII for a UK employee and then cannot understand why it is rejected.

Missing the 60-month ceiling

A worker on secondment for more than five years generally cannot extend the totalization exemption further. At that point the worker either returns to the home country, converts to a local hire arrangement, or starts paying full Bituach Leumi contributions. Planning for this transition is far easier if it happens before the deadline, not after.

US workers dismissing Amendment 262 because "the US has no treaty"

That used to be true; it is no longer the whole picture. US olim who qualify under Amendment 262 and do not file a claim in their first months in Israel permanently lose part of their five-year exemption window. The clock runs from the date of aliyah; the NII does not backdate the exemption beyond the date the claim was filed.

Frequently Asked Questions