Effective June 1, 2026: Allocation number required for invoices over 5,000 NIS
Dear customers,
We wish to inform you that an additional stage of the Israeli invoice reform will take effect starting June 1, 2026.
From this date, in transactions between businesses, any invoice exceeding 5,000 NIS, before VAT, must include an allocation number from the Tax Authority. An invoice without an allocation number may prevent the customer from deducting input tax for it.
How should one prepare?
When issuing invoices to customers: Ensure your accounting software is connected to the Israel Invoicing System and that a valid allocation number is generated. To do this, make sure to accurately enter the customer's business number (ח"פ) or company registration number (ע"מ), the amount before VAT, and the VAT amount.
When receiving invoices from suppliers: Upon receiving an invoice exceeding 5,000 ILS, before VAT, ensure it includes a valid allocation number before VAT deduction.
Manual or offline invoicing software: If you use a manual ledger or a system that is not automatically connected, you must manually submit an online request for the number on the Tax Authority's website.
Exempt dealers: The obligation does not apply to you as an invoice issuer, as you do not issue tax invoices. However, when receiving invoices from suppliers, you must examine the implications of the matter according to the needs of the business.
We recommend ensuring that your systems are ready and that you have the appropriate permissions in your personal area on the Tax Authority website.
For complete information on the Tax Authority website, click [Here]
In addition, it is important to note that from 7/1/2026, another change will take effect, which also concerns transactions between dealers registered in the same dealer union.
This means that even internal transactions between companies or entities registered within the same VAT union may require obtaining an allocation number, provided they meet the threshold conditions stipulated by law. Therefore, in addition to updating accounting systems, it is important to also review the invoicing and settlement methods between the parties within the union.
In cases where there are fixed monthly charges between companies within the same VAT group, it may be necessary to update the transfer amounts to reflect a charge plus VAT, depending on the required invoicing method.
In case of any questions or any lack of clarity, our office is at your disposal.
