Legal Updates

VAT liability for tips

January 1, 2025
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Published in Afik News 422 22.01.2025

On January 1, 2025, the Israeli Tax Authority published a clarification (https://www.gov.il/he/pages/pa010125-3) that transactions executed as of March 31, 2025, the Authority will begin enforcing its position, published on July 25, 2024, that tips given to service providers (e.g., waiters in restaurants) are subject to VAT.  Please note that on February 28, 2024, an order was published in the Official Gazette updating the VAT in Israel from 17% to 18% as of January 1, 2025.

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