Capital
Jerusalem (limited recognition)
Currency
ILS
Languages
Hebrew, Arabic
Population size
9.3 million
Average Monthly Salary
~€$,800
Region
Middle East
Gift Giving Norms
Respectful, culturally aware, ships from EU warehouse
Major Corporate Gift Days
Rosh Hashanah, Passover
Customs Complexity
Moderate
VAT - Standard Rate
VAT ~17%
Duty Free Threshold
$75 personal import threshold
Ave Duty Rate
Varies by product
1. Employee Merch vs. Gifts
Under Israeli tax law, non-cash benefits provided to employees can be taxable if they serve as personal perks rather than essential job tools. The Israeli Tax Authority (ITA) determines whether an item is necessary for work or is a taxable benefit.
1.1 Merchandise for Employees
Work-Related (Generally Non-Taxable)
Uniforms & Necessary Tools
If branded clothing or protective gear is integral to an employee’s duties, it usually does not count as taxable.
Branded Accessories
T-shirts, pens, or mugs carrying a visible company logo—uniformly given to staff—are often considered part of corporate identity rather than personal possessions.
Potentially Taxable Benefits
High-Value or Personal Items
Electronics, designer wear, or products with little direct relevance to daily work tasks might be treated as part of an employee’s taxable income. Employers would then address wage tax (PAYE) or social contributions accordingly.
Frequent Gifting
Repeated distributions of merchandise throughout the year might raise suspicion of disguised remuneration. Seek local tax advice if planning multiple employee gifts.
1.2 Gifts for Non-Employees (Clients, Partners, Event Attendees)
Tax & Deductibility
Israel generally permits tax deductions for business gifts, provided they genuinely support promotion or client relations. Excessive or frequent gifts may spark review by the ITA.
Compliance & Religious Sensitivity
Israel has a diverse religious and cultural context. Maintaining records of higher-value gifts is prudent, particularly when dealing with regulated sectors or public entities.
1.3 Marketing Merch
Promotional Merchandise
Branded items (like T-shirts, tote bags) distributed at fairs or product events typically qualify as marketing expenses, assuming documentation (invoices, distribution logs) proves their promotional intent.
2. Shipping, Customs & Duties
Although not in the EU, Israel has free trade agreements with several countries (including the EU), possibly reducing or removing some import duties if rules of origin apply.
2.1 Shipping
2.2 Importing
Israel often applies VAT (17%) on imported goods above its personal import thresholds (~$75 for personal shipments). For corporate shipments, standard import VAT/duties might apply unless preference is claimed.
2.3 DDP vs. DAP
Delivered Duty Paid (DDP): We or the sender cover all import fees, easing receipt for the Israeli consignee.
Delivered At Place (DAP): The recipient handles duties/VAT upon arrival, which can lead to delays if not pre-warned.
2.4 With Monday Merch
We dispatch from our EU warehouse, and we ensure an easy, tax compliant process.
3. Cultural & Local Etiquette
3.1 Gifting customs
4. Sustainability & Local Regulations
4.1 Sustainability & Regulations
5. HR & Employee Relations Considerations
5.1 HR & Employee Relations
6. Summary and Key Takeaways
6.1 Summary & Takeaways
7. Frequently Asked Questions
7.1 Questions & Answers
Do employees get taxed on branded merch?
If it’s purely job-related with clear logos, usually not; personal items can be taxed as benefits.
Are business gifts deductible?
Yes, if used for promotion or relationship-building within cost limits—keep receipts for Israeli tax compliance.
How do we ship to Israel from Monday Merch?
We ship from our European warehouse. Customs/vat rules apply if goods exceed thresholds entering Israel.
