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Corporate Law

How does a foreign company close its registered branch office in Israel?

A registered foreign company that stops trading in Israel has to deregister rather than simply go quiet. Under Sections 346 to 349 of the Companies Law 5759-1999 the company files notice with the Registrar of Companies that it has ceased activity in Israel. Before that notice will be accepted, the branch normally has to close its income tax, withholding and VAT files with the Israel Tax Authority, terminate its Israeli employees with full statutory payments, and close its employer file at the National Insurance Institute. Annual Registrar fees continue to accrue until the deregistration is recorded.

A branch is not a separate legal person. It is the foreign company operating through a registered presence, which is why the parent remains directly liable for branch obligations and why deregistration wipes out no existing claim. The Registrar’s file records the company’s Israeli address for service and the representative appointed at registration, and both stay on the record until the closure filing is processed. Israeli law treats the branch’s exit as an administrative event rather than a liquidation: there is no winding-up procedure, no liquidator, and no distribution of a residual estate. What replaces those steps is the tax and employment clearance the authorities require before they release the files.

Sequence matters more than speed. Deal with employees first, giving statutory notice, paying severance and unused leave, and issuing release letters for any Section 14 pension arrangement, because employment claims are the liability most often left behind. Close the withholding file only after the final payroll month is reported, then the VAT file, then income tax, then the bank account, and file with the Registrar last. Keep the branch’s books for the statutory retention period, since a closed file does not prevent a later audit. Our guide to the foreign branch office in Israel compares this with the subsidiary route.

⚖ In Practice
  • Governing law: Sections 346 to 349, Companies Law 5759-1999
  • Competent authority: Registrar of Companies (Rasham HaChevrot), Corporations Authority; Israel Tax Authority; National Insurance Institute
  • Fees: the annual Registrar fee for a registered foreign company runs to approximately NIS 1,500 (2026) and keeps accruing until deregistration is recorded
  • Timeline: closing tax and VAT files commonly takes 3 to 6 months; severance and final wages must be paid within 15 days of the end of employment
  • Common trap: an unclosed VAT file continues to generate periodic reporting duties and late-filing fines even on zero turnover

From the full guide: Foreign Branch Office in Israel: Registration Requirements, Tax Rules, and the Branch vs. Subsidiary Decision

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Get a Free Consultation with Adv. Eli ShimonyPrepared under the direction of Adv. Eli Shimony, Eli Shimony Law Office · Editorial policy

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