In brief
Setting up a company abroad is assessed by the total cost of the profit until it reaches Israel: corporate tax in the country, withholding tax on dividends under domestic law or the treaty, and tax in Israel with a credit. In 2026 corporate tax ranges from 10% in Bulgaria to 24% in Italy (plus IRAP), and in the USA 21% federal plus state tax. Seven of the eight countries have a tax treaty with Israel; Cyprus does not. All the countries are parties to the New York Convention, so an arbitral award is relatively easy to enforce across borders.
Key takeaways
- 1Corporate tax 2026: Bulgaria 10%, Cyprus 15%, Romania 16%, Ukraine 18%, Portugal 19%, USA 21% federal, Greece 22%, Italy 24% plus IRAP of 3.9%.
- 2Withholding on dividends to Israel: none in Cyprus for non-residents, 5% in Greece and Bulgaria, and under the treaty up to 15% in Romania, 5%-15% in Portugal, Italy and Ukraine, and 12.5%-25% in the USA.
- 3Cyprus has no tax treaty with Israel; the other seven countries do.
- 4In Israel: an individual pays 25% on a dividend from a foreign company (30% for a substantial shareholder), an Israeli company 23%, with a credit for the foreign tax.
- 5Corporate tax of 15% or less combined with passive income may trigger the controlled foreign company rules in Israel.
- 6All eight countries and Israel are parties to the New York Convention on the enforcement of arbitral awards.
An Israeli who wants to set up a company abroad usually asks first where tax is low. In practice the decision rests on several questions together: what structure local law allows, how much tax is paid in the country, how much is withheld when the profit moves to Israel, whether there is a tax treaty, and what happens on the day a dispute breaks out.
This guide brings together the main data for the eight countries covered by the guides on this site, as of November 2026. Each country has four detailed guides, and the links to them appear at the end.
How do you compare countries for setting up a company?
Compare the total cost of the profit until it reaches the owner in Israel, not only the corporate tax rate. The profit passes through three layers: corporate tax in the country, withholding tax on the dividend, and tax in Israel with a credit for the foreign tax. Added to this are fixed costs: local bookkeeping, annual financial statements and VAT.
- Structure: which company form is suitable, and what the minimum capital is.
- Tax in the country: corporate tax and special regimes for small businesses.
- The route to Israel: withholding tax on dividends, under domestic law or under the treaty.
- The Israeli side: tax on the dividend, credit, reporting and the controlled foreign company rules.
- Ongoing: VAT, bookkeeping, employees and a local representative.
- Disputes: courts, arbitration and enforcement of judgments.
What are corporate tax and VAT in each country in 2026?
According to PwC, as of November 2026, corporate tax in the eight countries ranges from 10% in Bulgaria to 24% in Italy (IRES, plus IRAP), and standard VAT ranges from 19% in Cyprus to 24% in Greece; the US has no federal VAT. The table brings together the data from the guides for each country. The rates were checked against PwC's tax summaries and official sources, and are correct as of the date of the guide. Treaty withholding rates are shown as found in the sources, and the full conditions are set out in each country's guide.
| Country | Common form | Minimum capital | Corporate tax 2026 | Withholding on dividends to Israel | Tax treaty with Israel | Standard VAT |
|---|---|---|---|---|---|---|
| Romania | Limited liability company (S.R.L.) | 500 lei | 16%; micro-enterprise regime of 1% of income up to 100,000 euros | 16% under domestic law, up to 15% under the treaty | Yes | 21% |
| Greece | IKE or AE | IKE: no significant requirement; AE: 25,000 euros | 22% | 5% (the treaty does not reduce it) | Yes | 24% |
| Cyprus | Private company (Ltd) | See the guide | 15% (from 1.1.2026) | No withholding for non-residents, except for exceptions for related companies | No | 19% |
| Bulgaria | EOOD or OOD | 1 euro | 10% | 5% for a non-EU shareholder | Yes | 20% |
| Italy | S.R.L. | 1 euro (below 10,000 euros, in cash only) | IRES 24% plus IRAP of 3.9% | 10% for a company holding 25% or more, 15% in other cases | Yes | 22% |
| Portugal | Lda | 1 euro per quota | 19%; 15% on the first 50,000 euros for a small or medium-sized enterprise; additional surcharges | 5% for a company directly holding 25% or more, 15% in other cases | Yes | 23% |
| Ukraine | Limited liability company (TOV) | None | 18% | 5% or 15% under the treaty; transfer abroad is subject to currency restrictions | Yes | 20% |
| USA | LLC or Corporation | Under state law | 21% federal plus state tax | 25%, or 12.5% for a company holding 10% of the voting shares, subject to conditions | Yes | No federal VAT; state sales tax |
When corporate tax in the country is 15% or less and the company's income is mainly passive, Israel's controlled foreign company rules may make the shareholders liable to tax in Israel even before distribution. In Bulgaria (10%) and Cyprus (15%) this is a question to check before formation.
How much tax is paid in Israel on a dividend from a company abroad?
According to PwC, as of November 2026, an individual resident in Israel usually pays 25% on a dividend from a foreign company, or 30% as a substantial shareholder (10% or more). Above income of 721,560 ILS in 2026, the Israeli surtax is added. An Israeli company receiving a dividend from a foreign company usually pays 23%. In all cases a credit is given for the tax withheld abroad, up to the amount of the Israeli tax, under the rules.
The credit is why withholding tax matters: what is withheld abroad reduces the tax in Israel, but only up to its amount. A country with low withholding is therefore not always cheaper in the final calculation. The calculation depends on the structure, and it is recommended to do it in advance with an Israeli accountant.
Holders of a foreign company report to the Israel Tax Authority, among other things on Form 150 on a holding in a non-resident body of persons. Details of Israeli taxation are also in the guide tax for an Israeli investor in a foreign project company and the guide Israel's tax treaties.
Which country has no tax treaty with Israel?
Of the eight countries, Cyprus has no tax treaty with Israel, as of November 2026. This means there are no tie-breaker rules for dual residence and no treaty limit on withholding rates. Double taxation is relieved under Israeli law alone. The other seven countries have a treaty.
Subsidiary or branch: what suits an Israeli company?
For ongoing activity a subsidiary, which limits liability to its own assets, is usually suitable, and for focused activity in the name of the Israeli company - a branch. A subsidiary is a separate entity, and its liability is limited to its assets. A branch is part of the Israeli company, so the company in Israel is directly liable for its debts. In all the countries in this guide it is possible to operate in either way, but the practical differences concern registration, reporting and tax.
- Subsidiary: suitable for ongoing activity, local partners and fundraising. Local financial statements and corporate tax.
- Branch: suitable for focused activity in the name of the Israeli company. In most countries it is registered in the local register. In the USA a branch profits tax also applies, which the treaty limits to 12.5%.
- Representative office: suitable for marketing and coordination only, without sales. In Romania, for example, a representative office pays a fixed annual tax of 18,000 lei.
Even without a registered company or branch, permanent activity in a country may create a permanent establishment and trigger local tax. Details for each country are in the “Israeli company operating in” guides.
What happens in a commercial dispute in each country?
All eight countries, and Israel too, are parties to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. An arbitral award is therefore usually the tool that is easier to enforce across borders. A judgment of an Israeli court requires recognition proceedings in the other country, and vice versa: a foreign judgment is enforced in Israel under Israel's Foreign Judgments Enforcement Law, 1958, on conditions that include reciprocity.
| Country | New York Convention | Main note from the guide |
|---|---|---|
| Romania | Party since 1961 | The court of first instance hears claims up to 200,000 lei; general limitation period of 3 years |
| Greece | Party | New dispute resolution code (Law 5344/2026): arbitration from 1.1.2027, mandatory pre-action stage from 1.3.2027 |
| Cyprus | Party since 1981 | Contractual limitation period of 6 years |
| Bulgaria | Party since 1962 | An Israeli judgment is recognised by the Sofia City Court, without a re-hearing of the cause of action |
| Italy | Party since 1969 | Mandatory mediation for certain types of contracts; general limitation period of 10 years |
| Portugal | Party since 1995 | Recognition of a foreign judgment under the conditions of Article 980 of the Code of Civil Procedure |
| Ukraine | Party since 1960 | The wartime suspension of limitation ended on 4.9.2025; a new arbitration law from 21.5.2026 |
| USA | Party since 1970 | Enforcement of a foreign judgment under state law; confirmation of an arbitral award within 3 years |
The governing law, the forum and arbitration are set in the contract, according to where the other party's assets are located. See also a dispute with a developer abroad: arbitration or court.
Can a company abroad be set up from Israel?
In most countries yes, through an attorney-in-fact or online filing, with Israeli documents translated and apostilled. In Portugal, the Empresa na Hora route requires all partners to be present at the counter, and on the online route registration is done by a holder of a Portuguese digital identity or a lawyer. In Greece every founder and director needs a Greek tax number even before formation. Opening the bank account is the stage at which personal presence is sometimes required.
Where are the detailed guides for each country?
- Romania: Setting up a company · Corporate tax and profits to Israel · An Israeli company operating there · Commercial disputes
- Greece: Setting up a company · Corporate tax and profits to Israel · An Israeli company operating there · Commercial disputes
- Cyprus: Setting up a company · Corporate tax and profits to Israel · An Israeli company operating there · Commercial disputes
- Bulgaria: Setting up a company · Corporate tax and profits to Israel · An Israeli company operating there · Commercial disputes
- Italy: Setting up a company · Corporate tax and profits to Israel · An Israeli company operating there · Commercial disputes
- Portugal: Setting up a company · Corporate tax and profits to Israel · An Israeli company operating there · Commercial disputes
- Ukraine: Setting up a company · Corporate tax and profits to Israel · An Israeli company operating there · Commercial disputes
- USA: Setting up a company · Corporate tax and profits to Israel · An Israeli company operating there · Commercial disputes
This guide presents general information correct as of the date of update, and does not replace a review of the specific structure with a lawyer and an accountant.
Frequently asked questions
Which country has the lowest corporate tax in 2026?
Of the countries in this guide, Bulgaria, a flat 10% in 2026. It is followed by Cyprus, which raised the rate to 15% from 1 January 2026, and Romania at 16%. Romania also has a micro-enterprise regime of 1% of income for small companies, subject to conditions.
Is it worth setting up a company in Cyprus because there is no dividend withholding there?
Not necessarily. Cyprus has no tax treaty with Israel, and its corporate tax is 15%, exactly at the threshold of Israel's controlled foreign company rules. A company with mainly passive income may be taxed in Israel even before distribution. The calculation is made on the basis of the full structure.
How much tax is paid in Israel on a dividend from a company abroad?
An individual usually pays 25%, or 30% as a substantial shareholder, plus the Israeli surtax above 721,560 ILS in 2026. An Israeli company usually pays 23%. In all cases a credit is given for the tax withheld abroad, up to the amount of the Israeli tax.
Which countries have a tax treaty with Israel?
Of the eight countries in this guide, Romania, Greece, Bulgaria, Italy, Portugal, Ukraine and the US have a tax treaty with Israel, as of November 2026. Cyprus does not, so double taxation relief in relation to it is given under Israeli law only.
How much capital do you need to open a company abroad?
According to the table in this guide: in Bulgaria and Italy 1 euro (in Italy, below 10,000 euros the capital must be paid in cash only), in Portugal 1 euro per quota, in Romania 500 lei, in Greece no significant requirement for an IKE and 25,000 euros for an AE, and in Ukraine no minimum capital. In the US it depends on state law.
What is the difference between corporate tax and withholding tax on dividends?
Corporate tax is paid on the company's profit in the country where it operates. Withholding tax is an additional tax the country collects when the company distributes the profit to shareholders abroad. A tax treaty usually limits the withholding, but not the corporate tax.
Is an Israeli judgment enforceable abroad?
Only after recognition proceedings in the other country, under its law. In Bulgaria, for example, the proceedings are conducted at the Sofia City Court. An arbitral award is enforceable in all eight countries under the New York Convention, so contracts with a foreign party often consider an arbitration clause.
Can you open a company abroad remotely, without travelling?
In most countries yes, through an attorney-in-fact or by online filing, with Israeli documents translated and apostilled. There are exceptions: in Portugal, the Empresa na Hora route requires all partners to be present. Opening the bank account sometimes requires personal presence.
Read next · 10 min readPermanent Establishment and a Remote Employee Abroad: When an Israeli Company Is Taxable in the Employee's Country, and What About Payroll and Social SecurityAn employee working from home abroad may create a permanent establishment for an Israeli company. Fixed place, dependent agent, building site, OECD 2025 home office update, payroll.Read the guideSources
- PwC Worldwide Tax Summaries - Romania, Taxes on corporate income
- PwC Worldwide Tax Summaries - Greece, Taxes on corporate income
- PwC Worldwide Tax Summaries - Cyprus, Taxes on corporate income
- PwC Worldwide Tax Summaries - Bulgaria, Taxes on corporate income
- PwC Worldwide Tax Summaries - Italy, Taxes on corporate income
- PwC Worldwide Tax Summaries - Portugal, Taxes on corporate income
- PwC Worldwide Tax Summaries - Ukraine, Taxes on corporate income
- PwC Worldwide Tax Summaries - Israel, Income determination
- UNCITRAL - Status of the New York Convention (1958)
- Israel Tax Authority - Form 150, declaration of a holding in a non-resident body of persons
