Open a Romanian company from Israel — €990 flat.

The Israel–Romania double tax treaty

Israel is outside the EU, so unlike EU founders you do not have the EU directives to fall back on — the bilateral Israel–Romania treaty is what governs cross-border payments. It caps Romanian withholding tax on money leaving the SRL and lets you credit Romanian tax against Israeli tax on the same income, avoiding a double full-rate hit.

The reduced 5% interest rate applies to qualifying loans/equipment financing; 10% otherwise. Rates per the Israel–Romania treaty as summarised by PwC; confirm eligibility for your own case.

Permanent establishment & control-and-management

The treaty taxes the SRL in Romania unless it has a permanent establishment in Israel. The residence question is the one to watch: under Israeli law a company is resident in Israel if its business is controlled and managed from Israel — so a Romanian SRL whose real decisions are all made from Tel Aviv can be treated as Israeli-resident and taxed on its worldwide income, and the treaty tie-breaker for a dual-resident company points to the place of effective management. Genuine Romanian substance — a local office, local management, an employee — is what keeps control-and-management out of Israel.

Israel's CFC rules — Section 75B

Israel taxes its residents on worldwide income and has a controlled-foreign-company regime in Section 75B of the Income Tax Ordinance. In broad terms, where Israeli residents control more than 50% of a foreign company whose income is mostly passive and taxed abroad at a low effective rate (below 15%), the undistributed passive profits can be treated as a deemed dividend and taxed in Israel now rather than on eventual distribution. The regime targets passive income parked in a low-tax company; an active operating business with real turnover and substance is a different profile — but because the micro-company regime is a low-rate turnover tax, an Israeli founder should have an Israeli adviser check how the effective-rate and passive-income tests apply.

Two practical points specific to Israeli founders. First, banking: Israeli banks and the CRS reporting regime scrutinise foreign corporate structures, so expect to document the SRL's activity and beneficial ownership. Second, and often the whole reason for doing this — EU payment processors, marketplaces and clients that will not onboard an Israeli entity generally will onboard an EU-resident SRL with an EU VAT number.

There is also a specific disclosure duty: Israeli residents who hold shares in a foreign company are generally required to declare the holding to the tax authority (the Form 150 declaration filed with the annual return), and a resident with foreign income normally files a full Israeli return rather than relying on payroll withholding. It is a reporting obligation, not an obstacle — but it should be set up correctly from the first year to avoid penalties.

Who opens a Romanian SRL from Israel

Mostly Israeli tech, SaaS and e-commerce founders who need an EU-resident company to reach EU clients, EU marketplaces and EU payment processors, and who want an EU VAT number without relocating. See how formation works and the ongoing Romanian accounting.

This page is general information for Israeli founders, not Israeli tax advice. Your CFC exposure, residence position and reporting depend on your own facts — confirm them with an Israeli tax adviser.