Opening an Israeli company bank account is more complicated than ever, particularly for companies owned by foreign nationals. The process grows exceptionally complicated when those foreign owners are US citizens.

One might think that Israeli banks would be happy to open a company account with a high cash-flow. However, this is usually not the case. The problem lies in the additional reporting obligations imposed on Israeli banks over the last decade. Due to concerns about money laundering on the one hand, and about lack of income reports by US citizens on the other hand, banks are required to submit reports to many entities regarding simple account operations, particularly regarding company accounts. Banks are extremely concerned about possible penalties and onerous paperwork when it comes to foreign companies and citizens, especially US citizens.

Attorney Michael Decker, from the law firm Cohen, Decker, Pex & Brosh, will explain how to open an Israeli company bank account. What are the possible complications, which documents are required, and can the bank simply refuse to register an account?

Banks must report financial transactions:

פתיחת חשבון בנק לחברה בישראלIn recent years, several Israeli and US laws and regulations aimed at fighting money laundering and tax evasion have been enacted. The most important as far as bank activity is concerned was the Foreign Account Tax Compliance Act (FATCA). This law requires all financial institutions worldwide to report to the US tax authorities any transactions carried out by a US citizen. This report is necessary even if the US citizen permanently resides and works abroad, and even if he is only one of the owners of the account. An institution that fails to make such report is subject to heavy fines on any business deals within the US.

Due to this legislation, banks are careful when foreign citizens or companies open new bank accounts. The suspicion is that much heavier, when the representatives or owners of the company are American. The lack of cooperation is naturally frustrating, but the banks have their reasons. These policies attempt to avoid the complicated international reporting necessary for even perfectly innocent and inactive accounts.

Opening an Israeli company bank account – the next step after company registration

Usually, immediately after registration of a foreign company in Israel or the establishment of a local company owned by foreign nationals, it is necessary to open a dedicated company bank account. Sole proprietors (Osek Morshe in Hebrew) whose financial turnover is small may use their personal bank account to manage the business. But to manage company bank accounts, no matter how large or small, a separate bank account is necessary. The account should be transparent to members of management for monitoring purposes.

Where should an Israeli company bank account be registered?

To reiterate, the separation between personal and business accounts is highly important. Sometimes it’s worth opening an account at a branch close to the owners residence, because they know and get along with the managers there. But there are bank branches that specialize in business services, especially for high-tech companies or start-ups with variable turnover and many business transactions with foreign entities. Consult experts in order to find the right bank and branch for your company.

What documents are required to open a bank account for a company in Israel?

It is worth noting that each bank, or even different branches of the same bank, can request slightly different documents to register an account. The documents also depend on the type of company, the type of account, and the extent to which the bank’s stakeholders are interested in facilitating the opening of the account.

However, it is very likely that you will be asked to provide the following documents:

Company board decision to open an account                                                                                        Registration documents and bylaws of the company                                                                                    List of authorized signatories, including photocopies of their IDs / foreign passports
Financial statements (If the Company already has a financial turnover)
FATCA Statement
Israeli attorney letter of approval for expected actions in the account

Contact our Israeli corporate law professionals – CDPB Law firm

Whether you need to register a company in Israel, open a company bank account for a company / amuta, or require legal representation, our experts will be happy to help you. Contact our law office in Jerusalem and Petah Tikva, Cohen, Decker, Pex, Brosh for advice and assistance.

Israeli company bank accountייעוץ משפטי http://lawoffice.org.il/: 03-3724722, 055-9781688 

רחוב עמל 37 פתח תקווה 4951337 ישראל, http://lawoffice.org.il/office@lawoffice.org.il