Israeli startups are quietly leaving the country—and it’s not for vacation.
Behind the scenes, founders are moving HQs, flipping their legal structures, and pulling capital offshore. The reason? A tax regime that’s becoming too expensive and too risky for global growth.
Israel’s top earners face nearly 50% tax rates when all levies are considered. Corporate tax hovers around 23%. And the kicker? If you’re a tax resident, you’re taxed on every shekel of global income—no matter where you earn it.
For a country built on innovation, this structure is turning into a straightjacket.
The reality is simple:
Founders who remain domiciled in Israel risk being taxed twice.
IP created in Israel? It may still be taxed there—even if the legal entity is abroad.
Strategic decisions made locally can trigger “permanent establishment” rules that bring your foreign profits back under Israeli tax law.
That’s why the smart money is flipping out—literally.
More than 70% of startups have begun shifting away from Israel—by relocating HQs, incorporating overseas, or restructuring finances.
In early 2023 alone, 80% of new startups opted to incorporate abroad from day one.
Top destinations?
🌍 Cyprus, Greece, Azerbaijan—offering:
Tax breaks and legal clarity
Fast-track residency or citizenship for execs
Pre-built tech hubs designed for Israeli founders
Major names are already executing the playbook:
🧳 Papaya Global moved its funds abroad, with the CEO publicly stating she’d never incorporate in Israel again.
🛫 Wiz, one of the most valuable cybersecurity startups, relocated its entire structure to the U.S.
This isn’t theory. It’s reality. And it’s accelerating.
If you’re building a startup in or from Israel, ask yourself:
🧠 Could your global ambitions be constrained by your tax address?
📍 Is your IP or decision-making still anchored in Israel without you realizing it?
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