Switching from Osek Patur to Osek Murshe in Israel
You must switch from osek patur to osek murshe when your annual turnover passes the ceiling set by law, and you can also switch earlier by choice. As an osek murshe you add VAT to your invoices, file periodic VAT reports and can reclaim VAT on business expenses. We handle the switch in English, so nothing falls between the cracks.
When do I have to switch to osek murshe?
When your annual turnover passes the osek patur ceiling, or when your profession is one that cannot register as osek patur at all. It is worth tracking turnover during the year, not only at year end, so that you switch on time.
What changes after the switch?
You issue tax invoices that include VAT instead of receipts, file periodic VAT reports, and keep records that support the VAT you reclaim. Depending on the size of your deals, invoice allocation numbers may also apply.
Can I go back from osek murshe to osek patur?
In some cases, yes: when turnover falls below the ceiling, and subject to Tax Authority rules that include settling the VAT you claimed on equipment. Check this with an accountant before you apply.
From when can I claim VAT on expenses?
From the date you register as osek murshe. VAT paid on expenses before registration is usually not claimable, so do not delay the switch once it is required.
| Osek patur | Osek murshe | |
|---|---|---|
| VAT on invoices | No VAT charged | VAT added to the price |
| Periodic VAT reports | No | Yes |
| Reclaiming VAT on expenses | No | Yes |
| Document given to clients | Receipt | Tax invoice |
| Annual income tax return | Yes | Yes |
Who this is for
- Self-employed English speakers who have crossed, or are about to cross, the osek patur ceiling
- Freelancers who want to switch to osek murshe by choice, for example to work with business clients
- Anyone unsure which status applies to them or what it requires
What we do
- Checking your current position and the right timing for the switch
- Updating your status with the tax authorities
- Explaining in English what changes in your invoices and reports
- Ongoing accounting, VAT reporting and the annual return
What is the difference between osek patur and osek murshe?
An osek patur does not charge VAT and does not file periodic VAT reports, so it cannot reclaim VAT on expenses. An osek murshe adds VAT to invoices, reports to the VAT authority regularly and can reclaim the VAT it pays on business expenses. Both file an annual income tax return.
What happens if I crossed the ceiling and did not switch?
The position needs to be put right with the authorities as soon as possible. The earlier it is handled, the simpler it is. This is a situation we deal with regularly.
Will switching mean I pay more tax?
Not necessarily. VAT is collected from your clients and passed on to the authority, and you can reclaim VAT on your business expenses. Your income tax is calculated on profit in both statuses.
Official sources
Related services
- English-Speaking Accountant & CPA in Israel
- From Osek Murshe to a Limited Company in Israel
- Opening a Company in Israel: CPA Support in English