Authorities clarify criteria for companies to qualify for ‘Hi-Tech’ visas

IMPACT – MEDIUM

What is the change?  The Israeli government has clarified the criteria it will apply to determine if a company qualifies for the new Hi-Tech, or HIT, visa.

What does the change mean? When a company registers with the registrar, the Central Statistics Bureau classifies the company. The Innovation Authorities then request this confidential information from the Bureau and review certain corporate information to determine if the company qualifies as a high-tech company.

• Implementation time frame: Immediate and ongoing.
• Visas/permits affected: HIT visas.
• Who is affected: Companies seeking to qualify as hightech companies in Israel for purposes of applying for HIT visas.

Business impact: Companies will be considered based on funding, tax exemptions or public listing from the Innovation Authorities, or based on which industry they are in or based on their R&D costs. Israeli registered companies will be considered based on various factors, mainly on which industry sector they are in.

Background: The HIT visas, introduced through regulations earlier this year, are available only to visa-waived nationals working for high-tech companies registered in Israel. The visas are processed in six days and allow the employee’s spouse to work, although details are not yet clear.

If an Israeli-registered company has received either monetary funding, a tax exemption or a public listing on the Tel Aviv Stock Exchange as an R&D company from the Innovation Authorities in the last three years, it will qualify as a high-tech company.

If it has not received any of those benefits from the Innovation Authorities, it will still qualify if it is in one of the following industries: pharmaceutical product manufacturing, manufacturing of computers and components or electrical or optical components, computer programming/consultation/related services, research and development (not including social sciences), manufacturing of aircrafts or space ships and their components, or IT processing and data storage.

A company that does not qualify based on the above criteria may still be eligible as a high-tech company if its R&D costs exceed 7 percent of its overall sales turnover in the previous calendar year or if at least 15 percent of its employees work in R&D.

BAL Analysis: The clarifications are a welcome development that should help companies determine if they may qualify to use the new HIT visas. The relevant authorities will make the actual determination of whether a company qualifies when the visa application is submitted for a company under the HIT process.

This alert has been provided by the BAL Global Practice group and our network provider located in Israel. For additional information, please contact your BAL attorney.

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