As of 2026, VAT in Israel is 18% (in effect since 1.1.2025). To add VAT, multiply the price by 1.18; to extract VAT, divide by 1.18: 100 ₪ before VAT = 118 ₪ including VAT, and a VAT-inclusive price of 118 ₪ contains 18 ₪ of VAT.
How is it calculated?
The calculation depends on direction. If you have a pre-VAT price and want the final amount payable, multiply by 1.18 (an 18% markup). If you have a final VAT-inclusive price and want the net price, divide by 1.18 — the VAT component is the difference between the two. Note that extracting VAT is not the same as subtracting 18% from the gross price: 18% of 118 ₪ is 21.24 ₪, but the actual VAT component is only 18 ₪.
Example: a service priced at 100 ₪ before VAT costs the customer 100 × 1.18 = 118 ₪. In the other direction, a receipt for 118 ₪ including VAT reflects a net price of 118 ÷ 1.18 = 100 ₪ and a VAT component of 18 ₪. Keep in mind: the 18% rate has applied to most transactions in Israel since 1.1.2025 (previously 17%), with zero-rated exceptions such as fresh fruits and vegetables and transactions in Eilat, and exempt dealers (osek patur) do not add VAT to their invoices.
Frequently asked questions
Who has to charge VAT in Israel?
A licensed dealer (osek murshe) must charge 18% VAT on transactions and remit it to the Israel Tax Authority, and may deduct input VAT. An exempt dealer (osek patur) — with annual turnover below the Tax Authority's threshold — does not charge VAT to customers and cannot deduct input VAT.
What is exempt from VAT in Israel?
The best-known zero-rated items are fresh fruits and vegetables and transactions in the Eilat free-trade zone. Exports of goods and services are also generally zero-rated. Most other transactions in Israel carry the full 18% rate.
When did Israeli VAT rise to 18%?
On 1.1.2025 the VAT rate in Israel rose from 17% to 18%, and it remains 18% in 2026. In practice, a product priced at 100 ₪ before VAT went from 117 ₪ to 118 ₪ — roughly a 0.85% increase in the final price.
How do I calculate VAT backwards (extract VAT from a total)?
To extract the VAT from a gross amount that already includes it, divide the total by 1.18. For example: 1,180 ₪ ÷ 1.18 = 1,000 ₪ before VAT, and the VAT component is the difference — 180 ₪. This works for any amount that includes VAT at 18%.
How much VAT is there on 1,000 shekels?
On 1,000 ₪ before VAT you add 18%: 1,000 × 18% = 180 ₪ of VAT. The final price including VAT is 1,180 ₪.
Does an osek patur (exempt dealer) charge VAT?
No. An osek patur — a business whose annual turnover does not exceed the threshold (around 120,000 ₪ a year) — does not charge VAT to customers and cannot reclaim input VAT on purchases. An osek murshe (licensed dealer), by contrast, charges 18% VAT and also reclaims input VAT.
This calculation is a general estimate for illustration only. It does not constitute tax, pension, or investment advice, nor a substitute for personal advice from a licensed professional, and should not be relied on for decisions.
