Foreign Worker Wages — How to Report and What Are the Tax Obligations?

Why is it important to report foreign worker wages correctly?

A foreign worker in Israel is not treated differently from an Israeli worker in terms of tax and reporting obligations. This is a point many employers overlook, and it's an expensive mistake.

When you pay wages to a foreign worker, you are required to withhold income tax, national insurance, and continuing education fund just as with any other employee. If you have not done so, the tax authority may impose substantial financial penalties on you — and the employee may also file a claim if they did not receive all the rights entitled to them.

In short: it does not matter whether the worker holds a work permit or another type of visa; the obligations are identical. The earlier you arrange this, the simpler the reporting becomes and the lower the risk of penalties.

This guide covers everything you need to know: who is required to report, how to do it, and which mistakes you should avoid.

What is Foreign Worker Salary Reporting and Who Needs It?

When we talk about "foreign worker salary," we mean the complete process of tax collection, reporting to authorities, and salary slips (payslips) for the employee. This is not just "tax deduction"—it is a complete system of obligations.

Who needs to handle this? Essentially, anyone employing a foreign worker in Israel:

• Self-employed persons and business operators (exempt or licensed) — if they have one or more foreign workers.
• Limited company owners and corporations — of any business size.
• Associations and public entities — they are also required to report fully.
• Employees who employ a worker themselves — for example, someone who employs a domestic aide or guard without consent from their primary employer (rare situation, but it exists).

What is important to remember: the employee's legal status (work permit file, extended tourist visa, etc.) does not change your obligations. If they work in Israel, you must report.