IsraelLawCan a foreign employee in Israel be paid their salary in a foreign currency?
Section 5 of the Wage Protection Law 5718-1958 establishes the default rule: wages in Israel must be paid in Israeli currency. However, Bank of Israel foreign currency regulations, as amended, recognize that multinational employment arrangements do not always fit this mold. A foreign national employed by a foreign company that has seconded them to Israel — or a senior foreign executive hired directly by an Israeli company for a fixed-term engagement — may receive salary denominated in US dollars, euros, British pounds, or another major currency if a written agreement between employer and employee so provides. The agreement must not result in the employee receiving below the Israeli statutory minimum wage (NIS 5,880.02 per month in 2026) when the foreign currency amount is converted at the prevailing rate. The Wage Protection Law also requires that wages be paid within 9 days of the end of the payment period, and this rule applies regardless of the currency.
From a tax and social insurance standpoint, foreign currency salary is treated as NIS income for all Israeli purposes. The Israel Tax Authority and National Insurance Institute (Bituach Leumi) convert the foreign currency salary to NIS using the Bank of Israel representative exchange rate on the payment date and apply the standard rates. An employment contract denominates salary in foreign currency but does not exempt the employer from payroll deductions — the employer must calculate and remit Israeli income tax withholding, National Insurance contributions, and pension contributions in NIS. Foreign companies without an Israeli entity that employ workers in Israel should take advice on whether a permanent establishment has been created and whether a local employer-of-record arrangement is needed to comply with the Wage Protection Law's payment timing and payslip requirements. An employment contract that specifies only a dollar amount without an exchange rate mechanism can create disputes about whether the NIS statutory minimum was met in low-exchange-rate months.
- Governing law: Section 5, Wage Protection Law 5718-1958; Bank of Israel foreign currency regulations
- Competent authority: Regional Labor Court (Beit Din Ezorit LaAvoda); Ministry of Labor for payslip and payment timing compliance
- Minimum wage floor (2026): NIS 5,880.02/month — foreign currency salary must meet this when converted at the Bank of Israel representative rate
- Exchange rate: the Bank of Israel representative rate on the payment date is the standard conversion benchmark for tax and NII purposes
- Payslip requirement: even for foreign currency payroll, a detailed Hebrew-compatible payslip is required; the NIS equivalent must be shown for each deduction line
From the full guide: Employment Law in Israel for Foreign Nationals and Expats: A Practical Guide
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