How to hire your first Israeli engineer (without an entity).

Step 1: Decide on EOR vs entity

For your first hire, this isn't really a decision. Use an Employer of Record. The math is in our EOR vs Israeli entity post, but the short version: setting up an Israeli entity costs $15k–30k and takes 4–6 months. An EOR like EORIL gets you hiring in 48 hours for $399/month per employee.

Revisit entity when you have 20+ Israeli hires and you're sure Israel is a long-term market for you. Until then, EOR is the right call.

Step 2: Set the salary band

Israeli software-engineer salaries are competitive — globally so. The Tel Aviv tech market has been pulled up by years of NVIDIA, Google, Meta, Microsoft, and Israeli unicorns paying near-Silicon-Valley rates. 2026 market benchmarks for gross monthly salary in NIS:

Notes:

• AI / ML, infra, security: add 15–25% over the bands above. Talent supply is tight.
• Frontend, mobile: bands are accurate but expect more salary variance.
• Senior unicorn-trained candidates: band-top or above. Don't bother low-balling — they're being head-hunted constantly.
• Salaries are quoted in NIS gross per month in Israel, not USD per year. State your offer that way.

The "total employer cost" reality check

Israeli employer costs add ~25% on top of gross salary (pension 6.5%, severance 8.33%, employer Bituach Leumi ~7%, plus EOR fee if applicable). A ₪40,000/month gross hire actually costs you about ₪50,000–52,000/month all-in. Use our salary calculator to model any number.

Step 3: Plan the benefits package

Statutory benefits (pension, severance, paid leave) are mandatory. To win the offer, plan for:

• Keren Hishtalmut (study fund): 7.5% employer + 2.5% employee. Tax-exempt up to ₪15,712/month base. If you skip this, your offer reads as cheap. Senior Israeli candidates expect it.
• Private health insurance: top-up over the national plan, ₪150–400/month/employee. Especially important for senior candidates with families.
• Meal cards (Cibus or Ten Bis): ~₪36–55 per working day, loaded on a card usable at restaurants and grocery delivery. ~₪900/month value. Tax-efficient.
• 22–24 vacation days (statutory minimum is 12, but the market gives more).
• Sick days paid from day 1 at 100% (statutory minimum is unpaid first day, 50% days 2–3, 100% from day 4 — most employers waive this).
• Equity: See Step 4.

For senior candidates, also consider:

• Vehicle lease (taxed benefit; usually offered above mid-six-figure roles)
• Wellness budget / gym / therapy reimbursement
• Home-office stipend
• Generous parental leave top-ups beyond the statutory minimum

Step 4: Equity under the 102 Capital Gains Track

This is the most-asked question from US founders. Yes, you can grant your normal RSUs/ISOs/NSOs to an Israeli employee. The vehicle is the Section 102 Capital Gains Track, the Israeli-tax-efficient stock-plan framework.

How it works

1. Your global stock plan needs an Israeli sub-plan compliant with Section 102. Most modern equity platforms (Carta, Pulley, Shareworks) have a 102 template, or your Israeli counsel can draft one.
2. The sub-plan must be filed with the Israeli Tax Authority (ITA) at least 30 days before the first grant. The ITA has 90 days to object; silence = approval.
3. You appoint a 102 trustee in Israel. Equity grants are deposited with the trustee, who holds them for the statutory holding period.
4. Holding period: 2 years from the grant date to qualify for capital gains treatment (25% flat tax for the employee instead of marginal income tax up to 50%).

Tracks within Section 102

• Capital Gains Track (best for employee): 25% capital gains tax on the gain at sale. Company gets no deduction.
• Ordinary Income Track: employee pays marginal tax on the gain. Company gets a tax deduction. Usually only relevant if the company has Israeli profit.
• For 99% of foreign-owned grants, you'll use Capital Gains Track.

EORIL can introduce you to Israeli equity counsel and trustees — getting the sub-plan filed correctly the first time saves a lot of headache. Ask us for an intro.

Step 5: Make the offer

Israeli offer letters look slightly different from US ones. Include:

• Gross monthly salary in NIS (e.g., ₪42,000). Don't quote USD.
• Total employer cost for context (this is increasingly expected).
• Pension contribution rates (employee 6%, employer 6.5%) and severance (employer 8.33%).
• Keren Hishtalmut rates if offered (7.5% / 2.5%).
• Number of vacation days.
• Notice period (typically 30 days after probation).
• Equity grant — number of options/RSUs, strike price, vesting (typical: 4 years, 1-year cliff), 102 Capital Gains Track.
• Sign-on bonus or relocation if applicable.
• Start date.

If you're hiring through EORIL, we provide the Hebrew + English contract templates and handle the legal side. You just sign off on the commercial terms.

Step 6: Close the candidate

Israeli engineers are evaluative — they'll do their homework on your company, your funding, and your tech. Win them by:

• Moving fast. A 6-week interview loop loses candidates. Israeli tech moves quickly.
• Showing genuine commitment to Israel. If they're hire #1, explain the plan: when will you hire #2? Will there be an Israeli team lead eventually? Will you visit Tel Aviv quarterly?
• Being clear on equity. Don't hand-wave. Provide a 409A valuation, dilution scenarios, and a clear cap on what they're being granted.
• Time zone respect. Don't schedule 11pm Israel calls. Tel Aviv–NYC is a 7-hour difference; Tel Aviv–SF is 10. Late-morning Israel works for both.
• Connecting them to existing customers / advisors / VCs in Israel. Israeli engineers care about your network.

Step 7: Onboarding

With EORIL, onboarding takes 48 hours from signed contract:

1. Send signed offer.
2. EORIL sends the bilingual employment contract for e-signature.
3. Employee fills onboarding form (bank details, pension fund choice, tax credit form 101).
4. EORIL registers them with Bituach Leumi, enrols in pension, and sets up payroll.
5. Day 1: they're a fully compliant Israeli employee, on your team.

Common mistakes

• Offering in USD per year. Israeli candidates think in NIS per month. Convert.
• Skipping Keren Hishtalmut "for budget reasons." You'll lose senior candidates over this $200/month decision.
• Trying to hire someone as a contractor to skip EOR fees. Misclassification risk is enormous in Israel. Don't.
• Promising "we'll set up an Israeli entity later." The candidate doesn't care. They want to know their employment is compliant TODAY. EOR is compliant.
• Forgetting the 102 sub-plan for equity. If you grant without 102 protection, the employee owes marginal tax (up to 50%) instead of 25% capital gains. They will notice.