A legal way to get paid for a one-time projectEven without opening a business file · the full guide for employees and freelancers

Got an offer for a one-time project outside your regular job? There are several legal routes to receive the payment properly · a casual transaction, an exempt dealer file, or a licensed manpower contractor that issues the invoice for you and pays you via a payslip. The simplest way · no bureaucracy, no business file to open.

Manpower license 1565 Ministry of Labor supervision Operating since 2016

Is there a legal way to get paid for a one-time project?

Yes. Getting paid for a one-time project is possible through several legal routes, even without opening a self-employed file with the tax authorities · reporting a casual transaction to the Israel Tax Authority, opening an exempt or authorized dealer file, or using a licensed manpower contractor that employs you as a salaried worker for the project, issues the invoice to the client and pays you via a payslip. Each option has pros and cons · and the right choice depends on the expected scope of activity.

Table of contents

Three legal ways to get paid
What a casual transaction is and how to report it
Opening an exempt or authorized dealer file
Getting paid without opening a file
Tax aspects you should know
Comparison · when each option makes sense
Common mistakes to avoid
Frequently asked questions

Three legal ways to get paid for one-time work

Getting paid for a one-time project is possible through several legal routes, even without opening a self-employed file with the tax authorities. Many salaried employees discover opportunities for extra income outside their regular job, but worry about dealing with complex bureaucracy. The good news is that the Israeli legislator recognizes this reality and allows several tracks for receiving payment in an orderly, lawful manner.

All income in Israel must be reported, whether against a payslip or against an invoice. That said, you do not always need to open a full business to get paid for a single project. The three main options are: reporting a casual transaction to the Israel Tax Authority, opening an exempt or authorized dealer file, and using a licensed manpower contractor that issues the invoice for you. According to the Israel Tax Authority, providing a service counts as a transaction under VAT law, so it must be reported appropriately.

Casual transaction

A one-off report to the Tax Authority · no file to open and no bookkeeping.

Exempt or authorized dealer

Opening a file with the authorities · suited to ongoing independent activity.

Licensed manpower contractor

NETO employs you for the project, issues the invoice and pays via a payslip.

What is a casual transaction and how do you report it?

A casual transaction is a one-off sale of a product or provision of a service that has a commercial character. Reporting is done directly on the Tax Authority website via a dedicated system. After paying the required VAT, a tax invoice is issued that you must hand over to the service recipient.

The main advantage of this route is that there is no obligation to open a business file or keep books. The downside is that the process requires dealing with the VAT offices and may be cumbersome for anyone not familiar with the subject.

When is a casual transaction exempt from VAT?

VAT regulations state that a person who carried out casual transactions up to the exempt dealer ceiling is not liable for VAT. The current ceiling stands at roughly ILS 120,000 per year. Beyond that, if the bulk of your income is from salary, a pension or an allowance, and the service is provided to a dealer or a company, the recipient can issue a self-invoice on your behalf.

A freelancer getting paid for a one-time project the legal way

Opening an exempt or authorized dealer file

A second option is opening a file with the tax authorities. Exempt dealer status suits anyone whose annual turnover does not exceed the ceiling set by law and who does not work in a profession that requires registration as an authorized dealer. Registration is done online on the Tax Authority website or by sending forms by email.

However, opening a file comes with additional obligations: annual VAT reporting, opening parallel files at the Income Tax Authority and the National Insurance Institute, and in certain cases hiring an accountant. For genuinely one-time work, this is usually not worthwhile.

Getting paid for a one-time project through a licensed manpower contractor · no bureaucracy

How do you get paid without opening a file?

The third and simplest way is using the service of a licensed manpower contractor. In this model, the intermediary company employs you as a salaried worker for the specific project, issues an invoice to your client and transfers the payment to you against an orderly payslip.

The advantages are clear: no need to open files, no dealing with reporting, and you also receive basic social rights such as pension contributions and national insurance. The only downside is the service fee the company charges. This is exactly how NETO works · you do the work, we handle all the rest.

Tax aspects you should know

Whether you choose to report yourself or use an external service, income from a one-time project is taxable. Here are the key points to be aware of.

Income tax

Income from a casual transaction with a commercial character is considered revenue income and is taxed according to your marginal tax brackets. If the service recipient is a business, they must withhold tax at source from the payment and transfer it to the Tax Authority. Without a withholding-tax exemption certificate, tax is withheld at a maximum rate of 48%.

National insurance

According to the National Insurance Institute, income from a casual transaction is considered income not from work and is subject to insurance contributions. It must be reported using form 6101, and the contribution rate ranges from 5.97% to 12% depending on the income level. Income up to 25% of the average national wage may be exempt.

Worth remembering: when you use a licensed manpower contractor, tax withholding and national insurance contributions are handled automatically from the payment · you receive an orderly payslip without dealing with reporting yourself.

When should you choose each option?

The choice between the options depends on your personal circumstances and the expected scope of activity. If it really is a single project, it is probably not worthwhile to open a dealer file that will require ongoing maintenance even when there is no income:

Criterion	Casual transaction	Exempt dealer	Manpower contractor (NETO)
Opening a file with authorities	Not required	Required	Not required
Bookkeeping and reporting	One-off VAT report	Ongoing annual reporting	None · fully automatic
Best suited for	A single independent job	Ongoing independent activity	A fast, simple solution
Social rights	No	No	Pension and national insurance
Cost	VAT and tax per report	Fees, sometimes an accountant	Service fee only

Experts in the field recommend examining the expected scope of activity before deciding. A casual transaction suits someone doing a single job who wants to handle it independently · opening a dealer file suits someone planning ongoing independent activity · and a manpower contractor service suits anyone looking for a fast, simple, bureaucracy-free solution.

Common mistakes to avoid

The most common mistake is ignoring the reporting obligation. Receiving payment for a service without reporting it to the tax authorities is a criminal offense in Israel. Even for a small amount, the risk is not worth the supposed saving.

Another mistake is using unauthorized invoicing companies. The Tax Authority acts firmly against companies that issue fictitious invoices, and using them can lead to severe legal consequences for both the service recipient and the service provider.

What should you know before you start?

Before taking on a one-time project, make sure you understand the following aspects: the net amount that will remain in your hands after taxes and fees, who is responsible for issuing the invoice, and the timeline for receiving payment. Full transparency with the service commissioner will prevent misunderstandings down the line.

Ultimately, getting paid for a one-time project the legal way is simpler than it seems. Ready to start working with NETO on your next project?

How does it work with NETO?

1Sign up free

Quick registration in a minute · no business file to open and no forms with the authorities.

2NETO issues the invoice

We employ you for the project, issue the invoice to the client and withhold the tax as required.

3Get paid via a payslip

The payment reaches you on an orderly payslip · including pension and national insurance contributions.

Frequently asked questions

Can I get paid for a one-time project without opening a business?

Yes, there are two main options: reporting a casual transaction directly to the Israel Tax Authority, or using a licensed manpower contractor that employs you as a salaried worker for the project and issues the invoice on your behalf.

How much tax do you pay on income from a one-time project?

The income is taxed according to your marginal income tax brackets. In addition, national insurance contributions apply according to brackets and income level. If you use a manpower contractor, the taxes are deducted automatically from the payment.

What is a casual transaction under the law?

A casual transaction is a one-off, non-recurring sale of a product or provision of a service that has a commercial character. The law allows you to report such a transaction without opening a business file with the tax authorities.

Do you have to report income from one-time work?

Yes, all income in Israel must be reported to the tax authorities. Failing to report income is a criminal offense, even if it is a small amount or a single one-time job.

Which is better · an exempt dealer file or an external service?

For a genuinely one-time project, an external service is usually preferable because it saves the bureaucracy of opening and maintaining a file. Opening an exempt dealer file is more suitable for those planning ongoing independent activity over time.

Summary

Three legal ways · a casual transaction, an exempt/authorized dealer, or a licensed manpower contractor.
All income must be reported · failing to report is a criminal offense, even for a small amount.
Income is subject to marginal income tax and national insurance · with an external service it is all deducted automatically.
For a one-time project · a licensed manpower contractor like NETO is usually the fast, cost-effective solution.

Got a one-time project? Get paid legally without opening a file

Legal disclaimers

It is important to clarify that NETO provides full social benefits by default, but the worker/employer do not always choose this, so the employment agreement will specify it. NETO also operates in some cases under labor law and in other cases under the classification order for employers and determination of insured persons, which varies according to the nature and duration of the work and the terms of the agreement and the definitions in law · and there are times when the employer-employee relationship exists as a three-way relationship as defined in the Manpower Contractors Law. Details at the following link

The information on this page provides a general overview only and does not constitute legal, accounting, tax or any other professional advice. Use of this information is at the reader's sole responsibility and should not be relied upon for making decisions. Before taking any action, it is recommended to consult a qualified lawyer, accountant or tax advisor.

NETO services are provided, depending on the circumstances, in accordance with labor laws and the terms of manpower contractor license no. 1565.

Welcome to NETO

Get in touch

Info & policies

Book a demo