Osek Mursheh (Licensed Dealer)

How to open an Osek Mursheh, authority registration, VAT obligations, bi-monthly reporting, and tax planning.

An Osek Mursheh (licensed dealer) is the standard business registration for self-employed individuals and companies in Israel. Unlike the Osek Patur, a licensed dealer charges VAT, files regular VAT returns, and can deduct input VAT on business expenses.

What Is Osek Mursheh Status?

When your business revenue exceeds the Osek Patur threshold — or if you choose to register as one from the start — you become an Osek Mursheh. You are required to add 17% VAT (Ma'am) to every invoice, collect it from your clients, and remit it to the Tax Authority. You file VAT returns either monthly or bimonthly depending on your revenue.

The VAT Cycle

Here is how it works: you charge 17% VAT on your services (output VAT), and you pay 17% VAT on your business purchases (input VAT). At reporting time, you subtract the input VAT from the output VAT and pay the difference to the Tax Authority. If your input VAT exceeds your output VAT, you receive a refund.

Advantages Over Osek Patur

You can deduct VAT on all business expenses — office rent, equipment, software, professional services, and more. This can save significant money if you have substantial business costs. Many large clients and corporations prefer working with an Osek Mursheh because they can reclaim the VAT on your invoices.

Bookkeeping Requirements

As an Osek Mursheh, you must maintain detailed financial records, issue proper VAT invoices, file bimonthly or monthly VAT reports, and submit an annual income tax return. Most licensed dealers work with an accountant (Roeh Cheshbon) who handles these obligations and ensures compliance with Israeli tax law.

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The information on this page is for educational purposes. Please consult a professional before making financial decisions.

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Frequently asked

+−What is the main obligation of an Osek Mursheh?

You must charge 17% VAT on all invoices, collect it from clients, file bimonthly or monthly VAT returns, and remit the difference between output VAT collected and input VAT paid to the Tax Authority.

+−Can I deduct VAT on business expenses as Osek Mursheh?

Yes, this is a major advantage. You can deduct VAT on office rent, equipment, software, professional services, and other business costs. This saves significant money if you have substantial business expenses.

+−Do I need an accountant as Osek Mursheh?

While not legally required, most licensed dealers work with an accountant (Roeh Cheshbon) who handles VAT reports, annual tax returns, and ensures compliance with Israeli tax law. The complexity makes professional help highly advisable.

+−What bookkeeping obligations does an Osek Mursheh have?

You must maintain organized records of all income and expenses, keep receipts for at least seven years, issue sequential invoices, and file VAT returns on schedule. Many use accounting software to automate these requirements.

+−How do I register as Osek Mursheh?

Visit the local VAT office (Misrad HaMaam) with your ID, business details, and proof of address. You can also start the process online through the Tax Authority website. Registration typically takes a few days to process.

+−What advance tax payments (Mikdamot) does an Osek Mursheh make?

The Tax Authority sets bimonthly advance income tax payments based on your estimated annual income. If your actual income differs significantly, you can request an adjustment to avoid overpaying or underpaying.

+−Can an Osek Mursheh work with international clients?

Yes, and services exported to clients outside Israel are generally zero-rated for VAT purposes, meaning you do not charge VAT but can still deduct input VAT on your business expenses. Consult your accountant for proper documentation.