Invoicing a client abroad - step by step
The first client from abroad has signed, the payment is on its way - and now come the small questions nobody answered: is it allowed to issue an invoice in English? In dollars? What goes in the VAT line? And who exactly do you invoice when the money passes through Stripe or Paddle? In this guide we go through all of these in order, so your books are clean from the very first transaction.
First: who is your client? (the answer is not always obvious)
Before issuing an invoice, you need to know to whom. Among builders there are three common structures - and each has a different answer:
| How you sell | Who the client is | What the documentation looks like |
|---|---|---|
| Directly (PayPal, bank transfer, processing on the Israeli business) | The end user or the business that purchased | A lawful document per transaction - usually automatically, through invoicing software connected to the processing setup |
| Through a Merchant of Record (Paddle, Lemon Squeezy) | The MoR company itself - a single foreign corporation | The MoR issues invoices to the users; you document the reconciliation with the MoR according to the period reports. Details in the MoR guide |
| Through an app store (App Store, Google Play) | In practice - the reconciliation with Apple or Google | The store's period reports are the basis |
This distinction determines everything: how many invoices you will issue in a month (hundreds or one), against whom the zero rate is examined, and what the books will look like.
Language, currency and rate - what is allowed and what is customary
- Language: for a foreign client it is customary and accepted to issue an invoice in English - most Israeli invoicing programs support this by default. The recording in your books is of course conducted under the Israeli bookkeeping rules.
- Currency: you may denominate the transaction amount on the invoice in foreign currency. The important rule: in the books and the filings the amount is recorded in shekels, at the relevant exchange rate - as a rule the Bank of Israel representative rate at the date of the transaction. Invoicing programs do the conversion automatically.
- Numbering and sequence: invoices to foreign clients are part of the same lawful document sequence of the business - not a "separate" series living in a spreadsheet. Every document enters the books.
The gap between the dashboard and the bank: you saw a $100 sale in the dashboard and 340 ILS arrived at the bank instead of 370? That is not "money that vanished" - those are processing and conversion fees. In the books you record the income at the full (gross) amount and the fees as a recognized expense. Recording according to "what landed in the bank" is one of the most common mistakes - and it distorts both the income and the expenses.
What must appear on an invoice to a foreign client
A practical checklist for every export invoice:
- Your details: business name, dealer number, address - as usual.
- The foreign client's full details: name, full address abroad, and for a business also a local registration or VAT number if there is one. This is not a formality: these are your evidence that the client is a foreign resident, and they are what protects the zero rate in an audit.
- A clear and truthful description of the service (for example "Monthly subscription - [Product], July 2026").
- Amount and currency, alongside the shekel value at the rate.
- The VAT line: 0% - an export transaction under Section 30(a)(5). In invoicing programs you simply select "zero-rated transaction" or "foreign resident client".
And alongside the invoices, an evidence folder for every significant client: the agreement or order, correspondence, and proof of payment from abroad. Three minutes of order that are worth a great deal at the moment of truth.
And what about Israel Invoices and allocation numbers?
The Israel Invoices model - a requirement for an allocation number from the Tax Authority on tax invoices above 5,000 ILS before VAT (in force from 1 June 2026) - is intended to prevent fictitious input VAT deduction in Israel. It is relevant when an Israeli business client deducts the VAT on your invoice. A foreign client does not deduct Israeli VAT, so in pure export activity the subject barely touches you in practice. Do you also have Israeli B2B clients? Make sure your invoicing software is connected to the allocation system.
Three common mistakes - and how easily they are avoided
- Recording income by the net that landed in the bank. Always gross plus fees as an expense. It is both more correct and it increases your recognized expenses.
- Issuing a designed "Invoice" from a graphics tool instead of a document from recognized software. Pretty - but it is not a lawful document. Work only with software that meets the bookkeeping rules.
- Marking 0% without keeping evidence of the client's foreign residency. The zero rate rests on the ability to prove who the client is and from where payment was made.
A licensed Israeli CPA (license no. 500125101) accompanying businesses and self-employed clients across Israel - including founders, builders and owners of digital products. Bookkeeping, filings to the authorities, annual reports and personal financial guidance. About Adir →
Official sources
- Value Added Tax Law - Section 30(a)(5) and transaction documents (Hebrew)
- Israel Tax Authority - bookkeeping and the Israel Invoices model (Hebrew)
- Bank of Israel - representative exchange rates
The information in this guide is general only, current as of August 2026, and does not constitute tax advice or a substitute for professional advice fitted to your business's circumstances. It is a condensed adaptation of our fuller Hebrew guide. For personal advice - talk to us.
Invoicing abroad - the questions everyone asks
A receipt or a tax invoice - what do I issue to a foreign client?
It depends on your status: an osek patur issues a receipt (it does not issue tax invoices at all); an osek murshe issues a tax invoice or a tax invoice-receipt, with an export transaction marked at a 0% VAT rate. The foreign client itself usually just asks for an "Invoice" for its internal purposes - and the lawful Israeli document in English answers that perfectly.
At exactly which rate is the income recorded?
As a rule, at the Bank of Israel representative rate relevant to the date of the transaction, and invoicing programs apply this automatically. The differences arising up to the actual conversion date (a different rate, conversion fees) are treated in the books as exchange differences and fees.
My American client sent me a W-9 or W-8BEN form - what do I do with it?
That is a form of the American tax authority (IRS) intended to determine whether tax must be withheld from you at source in the US. As an Israeli dealer (an individual) the relevant form is usually the W-8BEN, which declares that you are a foreign resident for American purposes and activates the Israel-US tax treaty. Do not fill in a W-9 (it is for American citizens and residents). If you have any connection to the US - citizenship, a green card - stop and talk to us before signing.
Do I need to issue an invoice for every single subscriber when there are hundreds of users?
If you sell directly (PayPal, Israeli processing), every transaction needs a document, so you connect the invoicing software to the processing setup and the documents are created automatically for every charge. If you work through a Merchant of Record, the MoR handles the documents facing the end users, and you document only the periodic reconciliation with it. This is one of the central considerations in choosing between the routes.
What about European VAT or American sales tax on my sales?
An important question that sits outside the Israeli field: many countries require foreign digital sellers to register and collect local tax above certain sales thresholds. A Merchant of Record takes on exactly that pain; in direct selling, tools such as Stripe Tax help track it. We expanded on the American side in the sales tax guide.