VAT (Value Added Tax) is the equivalent of a sales tax in many countries. On October 2015, Israeli VAT was reduced to 17%. VAT is added to all sales and services and is generally included in the price. In some cases tourists are exempt from VAT and in other cases, tourists to Israel need to apply for a VAT Refund.
Please Note: Israel SIM cards and phone rentals, are NOT exempt from VAT for tourists. Most companies providing such services tend to hide that in the fine print. However, NES Mobile, known for its integrity and quality service, clearly displays that you must add VAT to SIM and pocket wifi rentals.
Tourists are exempt from VAT payments for the following services:
- Accommodations and lodging – in hotel, hostels, field schools, campgrounds and/or accompanying services.
- Organized tours.
- Car rentals (with or without a driver/guide).
- Flights provided by local airlines.
- Meals – provided by tour operators during organized tours or meals served in hotel restaurants (which are included in the price of the hotel).
- Conventions with the participation of 50 tourists or more and accompanying services.
- All goods and services that tourists purchase in Eilat are exempt from VAT.
VAT goods refund:
Who is eligible for a VAT refund?
Any visitor to Israel with a tourist visa, and does not have an Israeli passport. Tourists who do not want to stamp their passports at the entrance to Israel for security reasons, must use the appendix entry permit to Israel issued by border control (“Form 17”) or sign a declaration form with the service provider.
Which products qualify for VAT refund?
Most goods bought for personal, non-commercial use qualify for a VAT refund. The arrangement does not apply to purchases of tobacco products, food and beverages. However, you can get a VAT refund at wineries and wine shops.
Personal, non-commercial purchases qualify for a VAT refund, for example:
1. Purchases of up to 10 identical items, when the price of the item does not exceed 4,000 ₪ – including VAT, shall be considered non-commercial.
2. For items whose prices are 4,000 ₪ or more, including VAT per item: The purchase of up to five items is considered non-commercial.
3. The restrictions listed above do not apply to clothing and footwear.
4. Items considered as souvenirs such as key chains, maps, postcards, etc.: Up to 50 identical items valued at a total of 6,500 ₪ including VAT can be purchased.
5. Minimum purchase amount for a VAT refund is 400 ₪ including VAT, purchased at one time in one business transaction.
Where can I buy VAT refundable products?
Only certain businesses have been authorized and approved for VAT (Tourist) Refunds. You are only eligible for a refund if you make your purchases at those businesses.
- Businesses who provide VAT refund have a window sticker that looks like the image on the right.
- At the time of purchase, please indicate to the shopkeeper that you wish to receive a VAT refund. The shop will then check your passport to verify that you qualify (according to the criteria stated above).
- The business owner will charge the full amount of VAT and transfer the tax to the authorities. He will pack the purchased product in a bag with the store logo along with the original invoice. The bag must remain closed and sealed for the period of your stay in Israel.
- Before departing Israel, you should go to the VAT Refund location at the airport with the sealed goods and invoice.
- VAT refunds for purchases exceeding 400 ₪ are approved for payment by the foreman of the concessionaire at the airport.
- VAT refunds for purchases exceeding 20,000 ₪ will be wired to your bank account after approval.
Please note that VAT refunds will be given only when displaying the goods purchased, together with the original invoices.
DISCLAIMER: The information provided here is intended for general information only. It is not intended as legal advice. You should not rely on any information gathered here as a substitute for consultation with relevant professionals. Updated information can be seen on the relevant Israeli government sites.