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Calculator - Employee Vs. Independent Contractor
Employment Type Calculator - Israel 2025
Compare different employment types: Employee vs. Licensed Business vs. Small Business vs. Exempt Business
Calculate Employment Types →Opens in new window
The answer depends on several personal factors. Generally, at low to medium incomes (up to about 15,000 ILS per month), employees tend to enjoy higher net income thanks to lower national insurance and health insurance rates and the fact that part of the payments are covered by the employer. At higher incomes, self-employed individuals can earn more net if they have significant business expenses that can be deducted from taxable income.
Our calculator allows you to enter your personal data and receive an accurate comparison tailored to your specific situation.
The main differences between a Registered Contractor (עוסק מורשה) and an Unregistered Contractor (עוסק פטור) are:
- VAT Reporting and Payment Obligation: Registered Contractors must report and pay VAT, while Unregistered Contractors are exempt from this.
- Input VAT Offset: Registered Contractors can offset input VAT on business expenses, while Unregistered Contractors cannot.
- Income Threshold: Unregistered Contractors are limited to an annual income threshold (100,491 ILS in 2025), while there is no such limitation for Registered Contractors
- Reporting Requirements: Registered Contractors are required to provide more detailed reports and maintain full bookkeeping.
In terms of income tax and national insurance, there is no difference between the two – both pay according to the same rates.
A Micro Business is a relatively new track designed for self-employed individuals with low incomes. Its main advantages are:
- Automatic Deduction: Automatic deduction of 30% of income without needing to prove expenses or keep receipts.
- Simplicity: Minimal reporting and registration requirements, without the need for detailed bookkeeping.
- Income Limitation: Limited to an annual income of up to 120,000 ILS.
- No VAT: No obligation to register and report to VAT.
A Micro Business is especially suitable for self-employed individuals at the beginning of their journey, those with a side occupation, or businesses with relatively low expenses.
This post is also available in: עברית (Hebrew) Русский (Russian) العربية (Arabic)
