Tax coordination & National Insurance refund
Who needs tax coordination with National Insurance, how it is done and how to claim a refund.
Read moreHow to Determine the Primary Employerand the secondary employer for National Insurance
Working several jobs at once? Israel's National Insurance has clear criteria for determining the primary and secondary employer. At the secondary employer, contributions are deducted starting immediately from the second bracket · so it is important to update Form 101 correctly and avoid overpaying.
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How do you determine the primary employer?
The primary (main) employer is the permanent workplace where your salary is stable and higher · in that order of priority. All other workplaces are considered secondary, and at those the National Insurance contributions are deducted starting immediately from the second bracket. Once you have determined which is primary and which is secondary, mark in Section E of the secondary employer's Form 101 that you have other income. Part of this information is drawn from the National Insurance Institute website.
How is the primary and secondary employer determined?
The National Insurance Institute has several criteria for determining the main employer, and you should follow them · and update Form 101 accordingly. If you work as a salaried employee in several workplaces, the one considered the main employer is the workplace that meets the following conditions, in this order:
1Permanent workplace
The first priority is a permanent workplace · not temporary or one-off.
2Stable salary
A workplace where the salary is stable · with no unusual change from month to month.
3Higher salary
Among the workplaces · the one where you earn a higher salary than the rest.
Please note: once you have made a decision regarding the main and secondary employer, you must mark in Section E of the secondary employer's Form 101 that you have other income. Form 101 is filled in at the start of employment and at the start of each year.
Form 101 · employee card
Who must submit Form 101 · the employee card
Every salaried employee must submit Form 101.
What to attach when submitting the form
When submitting Form 101 to the employer, you must attach a copy of your ID card with the appendix. You should also attach documents, certificates and forms as detailed in the relevant places on the form.
How to submit Form 101
The completed form must be submitted to the employer together with the relevant documents within 7 days of starting work. In addition, the form must be filled in, signed and resubmitted at the start of each tax year.
Note: the form is also used to carry out tax coordination. Tax coordination is done when the employee works at an additional workplace or has income from other sources.
Salaried worker who also receives an early pension
The workplace where you are employed as a salaried worker is considered the main employer, and the pension payer is the secondary employer.
Please note · you must mark in Section E of the pension payer's Form 101 that you have other income. Form 101 is filled in at the start of employment and at the start of each year.
Salaried worker who is also self-employed
If you work both as a salaried employee and as self-employed · the workplace where you are salaried is considered the main employer. The self-employed portion of your income is reported and paid separately to National Insurance.
Here too, if you have more than one income source, it is worth checking tax coordination to make sure the deductions are correct · no more and no less than required.
Why it matters · and tax coordination
Correctly determining the primary and secondary employer sets how National Insurance contributions are deducted. At the secondary employer the deduction starts immediately from the second bracket, so an incorrect update can lead to overpaying National Insurance · or to a debt if too little was deducted.
If too much was deducted, you can carry out a tax coordination and National Insurance refund · the next article explains who needs it and how it is done.
- None of the above should be regarded as tax advice, legal advice or advice of any kind · on any matter you should consult a professional to examine the specifics of your case.
For NETO support and customer service · contact support, get in touch, or call +972-8-976-1874.
Frequently asked questions
How is the primary and secondary employer determined?
The primary employer is the permanent workplace where your salary is stable and higher · in that order of priority. All other workplaces are secondary, and at those the National Insurance contributions are deducted starting immediately from the second bracket.
What do you mark on the secondary employer's Form 101?
On the secondary employer's Form 101 you must mark in Section E that you have other income. The form is filled in at the start of employment and each tax year, and submitted to the employer within 7 days of starting work.
I am salaried and also receive an early pension · which is primary?
The workplace where you are employed as a salaried worker is the main employer, and the pension payer is the secondary employer. Mark in Section E of the pension payer's Form 101 that you have other income.
I am salaried and also self-employed · which is primary?
The workplace where you are employed as a salaried worker is the main employer. The self-employed portion of your income is reported and paid separately to National Insurance.
Why update the primary and secondary employer correctly?
A correct update prevents overpaying or underpaying National Insurance. If too much was deducted you can carry out a tax coordination and refund, and if too little was deducted a debt may arise.
Who must submit Form 101?
Every salaried employee submits the form to the employer within 7 days of starting work, together with a copy of their ID card and appendix, and fills it in again at the start of each tax year.
Summary
- The primary employer = a permanent workplace, with a stable and higher salary · in that order of priority.
- At the secondary employer, mark Section E of Form 101 · you have other income. Fill it in at the start of employment and each year.
- Salaried + early pension · the salaried job is primary. Salaried + self-employed · the salaried job is primary.
- A correct update prevents double payment · and if too much was deducted you can request a tax coordination and refund.
Employing someone across more than one job?
NETO handles payment, deductions and reporting to National Insurance for you · you receive a proper tax invoice and we take care of the rest.
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