"Israel Invoices" - Allocation Numbers - חשבוניות ישראל

Dear Clients,

The "Israel Invoices" model has officially come into effect as of May 5, 2024. This model requires businesses to obtain a unique allocation number from the Tax Authority in real time when issuing a tax invoice to their clients. Without this allocation number, the customer will not be entitled to deduct the input VAT from the tax invoice issued by their supplier and will not get the VAT refund.

The allocation number is relevant to the invoice issuer only if the invoice includes a VAT component. If the VAT rate is zero or exempt, this requirement does not apply.

The implementation of this model represents a further step in the Ministry of Finance's ongoing battle, through the Tax Authority, against the phenomenon of fictitious invoices, which increases black capital and underreporting of income.

At this stage, it is important to note that the obligation to obtain an allocation number from the Tax Authority does not apply from the first shekel but only for amounts exceeding NIS 25,000 (excluding VAT). This threshold is expected to decrease annually by NIS 5,000 on January 1st each year until 2028, when it will stand at approximately NIS 5,000 excluding VAT.

Please be attentive when receiving tax invoices from your suppliers and ensure that they include allocation numbers.

We strongly recommend informing all your suppliers that payments will only be made against tax invoices that include allocation numbers.

Important links:

1. VAT formal website on this topic (English) here

2. Q&A - link

3. Supplier invoice details verification based on allocation number - link - This service allows dealers and all those who have received their authorization to verify through an allocation number that the supplier's invoicing data matches the data that the supplier has declared to the tax authorities. link 
   

4. Detailed instructions for implementing the "Israel invoice" can be found in our previous publication (see here in Hebrew)