Osek Sachir in Israel: What Freelancers Need to Know
If you work as a freelancer in Israel and receive payments under the Osek Sachir model, you may be exposed to serious legal and tax risks. This guide explains what Osek Sachir is, why it’s problematic, and how NETO’s licensed alternative (License #1565) lets you issue invoices legally — without registering a business.
Guide Summary
The Osek Sachir model is a problematic payment arrangement in Israel that does not comply with labor and tax laws. Here is what freelancers and businesses need to know – and the legal alternative:
- The Osek Sachir model does not comply with Israeli labor and tax regulations
- Freelancers need a licensed, legal alternative to issue invoices without a business
- NETO is a licensed EOR (license #1565) – fully legal and approved by Israeli authorities
- Only 5% service fee – with full employee benefits including pension, sick leave, and vacation
- U.S. citizens and Olim Hadashim can save up to 15% on Social Security tax
Table of Contents
- What Is Osek Sachir?
- What Is the Problem with the Osek Sachir Model?
- The Legal Alternative to Osek Sachir – NETO
- How Does It Work? Step by Step
- Is It Legal?
- Who Is It For?
- Comparison: Self-Employed vs. NETO
- U.S. Citizens & Olim Hadashim – Save on Tax
- Benefits of NETO Over Osek Sachir
- Frequently Asked Questions
- Summary
Service Fee Only
Official License
Legal & Compliant
Tax Savings (US/Olim)
What Is Osek Sachir?
The term “Osek Sachir” (literally “employee business”) refers to a model in Israel that allows freelancers to issue invoices and receive payslips without registering as a formal business. In essence, it is marketed as a hybrid solution – not quite an employee, not quite self-employed.
The Osek Sachir model is popular among freelancers who want to avoid the complexity of opening an Osek Murshe (licensed business) or Osek Patur (exempt business), including VAT registration, bookkeeping, and tax filings. However, this model does not comply with Israeli labor and tax law.
What Is the Problem with the Osek Sachir Model?
The Israeli Tax Authority and the Ministry of Labor have made it clear that the Osek Sachir model has serious legal and financial problems. The model does not meet the requirements of Israeli labor and tax law. Here are the main problems:
Many Osek Sachir providers do not hold the required labor contractor license (in Hebrew: Rishyon Ko’ach Adam), which is mandatory under the Employment of Workers by Manpower Contractors Law for any company that intermediates between freelancers and employers in Israel.
Payslips are issued without real employer-employee relations, creating legal risks for both the freelancer and the client. This exposes both parties to potential lawsuits and fines.
Providers can be investigated for tax fraud, false reporting, and issuing of fictitious invoices. In many cases, clients cannot deduct expenses or VAT because the invoices were not legally valid.
Workers using the Osek Sachir model do not receive actual employee benefits such as pension contributions, severance pay, sick leave, or vacation days – despite being classified as “employees” on paper.
The Legal Alternative to Osek Sachir – NETO
NETO is a licensed Israeli payroll and staffing company (license #1565), officially authorized to employ workers on behalf of businesses and issue invoices, payslips, and tax reports. Unlike Osek Sachir, NETO operates under full compliance with Israeli labor, tax, and insurance laws.
When you work through NETO, you become a formal employee of NETO. As a result, NETO handles all your tax obligations, social benefits, and pension contributions on your behalf. You simply focus on your work.
What NETO Offers Freelancers
- Legal invoicing – issue invoices without opening a business file
- Full payslips – receive an official salary slip every month
- Employee benefits – pension, sick leave, vacation, and severance accrual
- Tax compliance – NETO handles income tax, VAT, and Bituach Leumi
- Salary protection – NETO deposits guarantees to protect your salary even if the client fails to pay
- Only 5% fee – transparent pricing with no hidden charges
How Does It Work? Step by Step
Getting started with NETO is simple, fast, and completely free. Here is the process:
- Register on NETO – Sign up for a free account at neto.work. Registration is quick, free, and online.
- Submit a Work Order – Fill in your client’s name, project details, and the agreed fee. This takes just a few minutes.
- NETO Issues the Invoice – A legal invoice is sent to your client on your behalf. The client pays NETO directly.
- Client Pays – Your client can pay via bank transfer or credit card.
- You Receive Your Payslip – NETO transfers your salary to your bank account with a full, legal payslip including all tax deductions and social benefits.
Is Osek Sachir Legal in Israel?
Yes – 100% legal. NETO operates under an official labor contractor license (#1565) issued by the Israeli Ministry of Labor. This license authorizes NETO to employ workers on behalf of businesses, issue payslips, manage taxes, and provide all statutory employee benefits.
Furthermore, NETO meets all requirements under Israeli labor law, tax law, and national insurance regulations. The company is regularly audited by government authorities and maintains full transparency with its employees.
In contrast, the Osek Sachir model operates without proper licensing and does not comply with Israeli labor and tax law. Therefore, choosing a licensed provider like NETO is essential for legal protection.
Who Is It For?
NETO’s service is ideal for a wide range of professionals in Israel who want to work legally without opening a business. Specifically, the service is designed for:
- Freelancers who want to issue invoices without registering as Osek Murshe or Osek Patur
- Consultants and project-based workers who work with multiple clients
- Tech professionals (developers, designers, PMs) who prefer employment benefits
- New immigrants (Olim Hadashim) who are not yet familiar with the Israeli tax system
- U.S. citizens and green card holders who want to minimize Social Security tax obligations
- Part-time workers who want a legal framework for occasional projects
- International businesses that need to hire freelancers in Israel compliantly
Comparison: Self-Employed vs. NETO
The following table compares three options for freelancers in Israel: working as a self-employed individual (Osek Murshe/Patur), the problematic Osek Sachir model, and working through NETO as a legal EOR employee.
| Feature | Self-Employed | Osek Sachir (Not Licensed) | NETO (Legal EOR) |
|---|---|---|---|
| Legal Status | Legal | Problematic / Not Licensed | Legal (License #1565) |
| Business Registration | Required | Not required | Not required |
| VAT Filing | You manage | Unclear | NETO handles |
| Income Tax | You manage | Unclear | NETO handles |
| Pension & Benefits | Self-funded | None | Full employee benefits |
| Payslip | No | Questionable | Official payslip |
| Legal Risk | Low | High | None |
| Bookkeeping | Required | Not clear | Not required |
| Cost | Accountant + fees | Varied | 5% of invoice |
U.S. Citizens & Olim Hadashim – Save on Tax
If you are a U.S. citizen, a green card holder, or a new immigrant (Oleh Hadash) to Israel, working as self-employed can trigger significant tax obligations. Specifically, when you work with U.S.-based clients as a freelancer, you may be required to pay:
- U.S. Self-Employment Tax – 15.3% of your net income (Social Security + Medicare)
- U.S. Federal Income Tax – on worldwide income
- Israeli Income Tax – plus VAT and Bituach Leumi
However, when you work through NETO, you are classified as a formal employee – not self-employed. As a result, the U.S.-Israel Social Security Totalization Agreement applies, which means:
Benefits of NETO Over Osek Sachir
- Fast and Easy – Create invoices in minutes, no business license required
- Secure and Legal – Licensed HR contractor (License #1565), fully approved by all authorities
- Full Employee Benefits – Pension, sick leave, vacation pay, and severance accrual
- Transparent Pricing – Only 5% fee with no hidden costs
- Salary Protection – Guarantees deposited to protect your salary
- No Bookkeeping – No need for an accountant or tax filings
- Dedicated Support – Personal support team available for all your questions
- Tax Savings – U.S. citizens and Olim can save up to 15% on Social Security
Osek Sachir Israel – Frequently Asked Questions
Why Choose NETO?
NETO is the legal, smart, and easy alternative to Osek Sachir. Here is why thousands of freelancers in Israel trust NETO:
- We issue your invoices – legally, on time, with full documentation
- We handle all taxes – income tax, VAT, Bituach Leumi – you do nothing
- We provide full benefits – pension, sick leave, vacation, severance
- We protect your salary – guarantees deposited for every project
- We save you money – US citizens save up to 15% on Social Security
Summary
The Osek Sachir model is a problematic arrangement in Israel that operates without proper licensing and fails to comply with labor and tax laws. Freelancers who previously relied on this model must now use a legal alternative.
NETO is the leading licensed EOR in Israel, offering freelancers a fully legal way to issue invoices, receive payslips, and enjoy full employee benefits – all for just 5% of the invoice amount. Contact us today to get started.
Ready to Work Legally in Israel?
Join thousands of freelancers who trust NETO – the legal alternative to Osek Sachir.
This guide is provided for informational purposes only and does not constitute legal advice. For specific questions about your situation, consult a qualified labor law professional. Visit our FAQ page for more answers. Last updated: 2026.
