In this guide we will present the main differences between activity as an exempt dealer and an authorized dealer, from various perspectives.
We will explain who is entitled to register as an exempt dealer, and what are the main differences in terms of the nature of the activity and the conduct with the authorities. We will also review the various considerations for registration as an exempt or authorized dealer.
2. Comparison Table:
The following table summarizes the main differences between activity as an exempt dealer and an authorized dealer:
|Topic||Exempt Dealer||Authorized Dealer|
|Who May Register as Such:||In order to register as an exempt dealer, the following conditions must be met: – The turnover of transactions up to NIS 100,000 per year (2015).
– Does not deal with certain areas (such as a free professional, doctor, mediator, consultant, etc. – from a closed list).
– You can not register as an exempt dealer as a limited company.
|Each dealer may register as an authorized dealer|
|Payment of Value added Tax, and Offset of VAT Inputs:||An exempt dealer is generally not required to pay value added tax, but also is not entitled to deduct input VAT from products and services purchased for the purpose of his business activity.||An authorized dealer is liable for VAT, but is also entitled to offset the input tax deriving from his expenses.|
|Advantage of Working With:||Households and private customers – because there is no need to add VAT to the transaction price||Other authorized dealers – this is because authorized dealers can offset the input VAT from the invoice that the dealer will issue to them.|
|Dealing with VAT Authorities:||Easy, simple reporting once a year||Reporting once a month or once every two months, according to cycle and law|
|Dealing with the Income Tax Authorities and National Insurance:||In general, there is no special advantage in the very fact of registration as an exempt dealer – which is the relevant definition for VAT purposes only.|
|Reputation:||An exempt dealer may suffer from the reputation of a small and unfounded business||There’s no reputation problem|
|Moving to Activity as an Authorized Dealer or Vice Versa:||A convenient and simple transition. In the month in which the turnover exceeds the annual ceiling, start to report as an authorized dealer.||The transition from an authorized dealer to a dealer is more complex|