A Guide for Israeli Companies on Setting Up a Business in the UK

For Israeli entrepreneurs and investors, the United Kingdom presents an attractive destination for international expansion. The UK offers a stable legal system, access to international markets, and a business-friendly environment, making it an appealing choice for technology start-ups, import/export companies, and established Israeli corporates. However, understanding how to start a business in the UK from Israel requires careful planning and a clear grasp of the legal framework. This article sets out the key steps and considerations to help Israeli companies make a smooth and compliant entry into the UK market.

Choosing the Right Legal Entity

The first decision is selecting the most suitable structure for your UK presence. Common options include:

• Private Limited Company (Ltd): The most popular route for foreign investors. An Ltd provides limited liability, separate legal personality, and flexibility in share ownership. It is ideal for most trading businesses and can be incorporated with a single director and shareholder, who do not need to be UK residents.
• Limited Liability Partnership (LLP): Useful for professional services or joint ventures where partners wish to share management but limit personal liability.
• UK Branch Office: Allows an existing Israeli company to operate directly in the UK. A branch is not a separate legal entity, but the Israeli parent remains fully liable for UK debts.
• Representative Office: Suitable for market research or liaison activities but cannot trade or earn revenue.

Choosing the right entity will affect taxation, reporting obligations, and risk exposure, so legal advice at the outset is critical.

UK Company Formation for Foreign Nationals

Israeli nationals can incorporate a UK company without being resident in the UK. UK company formation for foreign nationals involves several key steps:

1. Name Reservation and Incorporation: Your chosen company name must be unique and meet Companies House requirements.
2. Registered Office: Every UK company needs a registered address in the UK, which can be provided by a professional service.
3. Directors and Shareholders: At least one director is required, and details of directors, shareholders, and persons with significant control (PSC) must be filed.
4. Constitutional Documents: The memorandum and articles of association set out how the company will operate.
5. Filing with Companies House: Incorporation is completed online or via an agent, typically within 24–48 hours once documents are in order.

Supporting documentation will include certified copies of passports, proof of address, and anti-money laundering (AML) checks.

Employment Law Basics

If you plan to hire UK staff, it is important to comply with local employment law. Written employment contracts, adherence to minimum wage rules, pension auto-enrolment, and statutory holiday entitlements are all mandatory. Israeli employers should also be aware of restrictions on using contractors to avoid employment liabilities, as well as the need to conduct right-to-work checks for all employees.

Key Regulatory Considerations

Operating in the UK brings ongoing compliance duties. Important areas include:

• GDPR/Data Protection: Any UK business collecting personal data must comply with UK GDPR, including appointing a data protection officer where appropriate.
• Companies House Filings: Annual confirmation statements, statutory accounts, and updates to shareholder/director information must be submitted on time.
• UK Corporate Tax: A UK company will generally pay corporation tax on its profits (currently 25% for most companies). Transfer pricing rules may apply where the Israeli parent transacts with the UK subsidiary.

Failure to meet these obligations can lead to fines, reputational damage, and in serious cases, criminal liability.

Common Pitfalls and Practical Tips

Israeli businesses often underestimate the importance of early tax planning, particularly around cross-border profit repatriation and double tax treaty relief. Another common oversight is employment compliance - UK labour laws differ significantly from those in Israel and require careful contracts and HR policies. Engaging local legal and accounting professionals early can avoid costly errors and provide peace of mind.

How We Can Help

Setting up in the UK is an exciting step for Israeli companies, but navigating the legal requirements is not always straightforward. Our Israel Group advises on entity selection, incorporation, regulatory compliance, employment law and cross-border tax planning. Whether you are exploring how to start a business in the UK from Israel or need guidance on legal requirements for Israeli companies in the UK, our team provides clear, practical advice to help you establish and grow your UK operations with confidence.