Digital invoices in Israel: what they are and what is required

In Israel, a digital invoice is what the bookkeeping regulations call a "מסמך ממוחשב" (computerized document): created, sent, received, viewed and stored by computer, signed with the issuer's secure or certified electronic signature, and marked with the words "מסמך ממוחשב". A PDF without that signature is not one, and the allocation number is a separate requirement.

This is a technical description of what the official texts say, not tax advice. Whether a rule applies to your business, and how, is a question for your accountant or tax adviser.

What counts as a digital invoice under Israeli bookkeeping rules?

The Income Tax (Bookkeeping) Instructions, 1973 (הוראות ניהול פנקסי חשבונות) define a computerized document as one that meets two cumulative conditions. Income Tax Circular 24/2004, published by the Tax Authority, explains the definition and the amendments of June 2003 and January 2004 that introduced it:

• It stays on a computer from start to finish - it is created, sent, received, viewed and stored by computerized means. The circular states that a paper copy therefore cannot be a computerized document.
• It carries the issuer's electronic signature - a secure (מאובטחת) or certified (מאושרת) electronic signature, as the Electronic Signature Law, 2001 defines them.

Section 18ב adds that the words "מסמך ממוחשב" must appear prominently on the document. Before these amendments, the circular notes, a tax invoice received over the internet was recognised neither for an income tax expense deduction nor for offsetting input VAT. The amendments gave a properly signed computerized document the same status as paper.

The circular's technical annex describes two jobs for the signature: it identifies the signer, and it seals the content so any change made after signing can be detected. A secure signature is unique to its holder, allows prima facie identification, is produced by means under the holder's sole control and reveals later changes; a certified signature is a secure one for which a certification authority issued an electronic certificate. It must be the issuer's own signature - the circular's example is that a related company's signature may not be used - although a business with several employees does not need a personal signature for every employee who produces documents.

Documents a business may send by computer

Section 18ב(א) lists four documents a business may send by computer, after they have been recorded in its accounting system:

• A receipt voucher (שובר קבלה) - what people search for as a digital receipt.
• An invoice, except an invoice that also serves as a delivery note.
• A credit note (הודעת זיכוי).
• A tax invoice under the VAT bookkeeping regulations, again except one that serves as a delivery note.

The document must be produced either automatically from the permanent file of the accounting system with no additional typing, or by scanning the original document. An invoice that travels with goods as a delivery note stays on paper: the circular says a printed copy goes to the carrier, and the invoice may additionally be sent to the customer as a computerized document. When a receipt is sent as a computerized document, the payer's signature on it is no longer required. A credit note, per the circular, takes effect once the customer confirms receiving it, and an electronic confirmation must carry the customer's certified signature. The document types themselves are explained in tax invoice, receipt and invoice-receipt and in payment demand versus tax invoice.

What the regulations require from the business that sends

Beyond the signature, section 18ב and the retention rules in section 25 place five duties on a business that sends computerized documents:

1. Notice before the first document. Section 18ב(ב): notify the assessing officer (פקיד השומה) by registered mail before the first computerized document is sent.
2. The recipient's consent. Section 18ב(ג): send only to someone who agreed, in writing or electronically, before the first document and for as long as they have not cancelled, and keep the consent or its cancellation in the accounting system. The circular gives an "I Agree" click as an example of electronic consent.
3. Payment methods with a secure signature. Section 18ב(ד): if the document is signed with a secure rather than a certified signature, payment is accepted only by the customer's credit card, a crossed non-negotiable cheque in the customer's name, or a direct transfer from the customer's bank account to the business's account recorded in its books.
4. Keeping the signed file. Section 25(ג2): a computerized document sent or received is kept, signed, on computerized storage as part of the accounting system. Having the same data in the permanent file does not replace it.
5. Keeping the scanned original. Where the document was created by scanning, section 25(ד) requires keeping the paper original for at least three years from filing the income report for that tax year.

The circular is explicit that the regulations do not dictate the channel. An email carrying the file, or a website where each customer downloads their own invoices with a personal code, are both examples it gives. Recording what was sent, to whom and when is covered in emailing invoices and proving delivery.

Signed invoice, scan, plain PDF and allocation number compared

Is the allocation number the same as a digital invoice?

No. The allocation number belongs to the Israel Invoices model (מודל חשבוניות ישראל), described in VAT execution instruction 01/2025 of 7 December 2025. Under the Economic Efficiency Law of 2023, a business needs an allocation number on a tax invoice as a condition for deducting the input VAT in it. A paper invoice from a numbered book can carry one, and a correctly signed digital invoice can lack one. The instruction lists four conditions for the issuer to request a number:

• The amount before VAT exceeds the threshold: 20,000 ILS in 2025, 10,000 ILS from 1 January 2026, and 5,000 ILS from 1 June 2026.
• The tax invoice includes VAT.
• The customer is an עוסק מורשה (licensed dealer).
• The customer asked for an allocation number.

An invoice with only exempt or zero-rated transactions needs no number and will not get one, while a business may request a number for an invoice of any amount. The request goes either automatically through the accounting software, or through a dedicated Tax Authority web application launched in November 2023, intended for businesses using paper invoice books and for cases where the software route is not available. From 2025 the Tax Authority may withhold a number where it has reasonable grounds to suspect an invoice is issued unlawfully, with a hearing process set out in the same instruction. The engineering side is covered in what allocation numbers mean for your system and allocation numbers for developers.

What should you check in your invoicing software?

The Tax Authority states that software for a computerized accounting system - document issuing, inventory, bookkeeping or part of these - usually requires registration, and that a business using such software should check it has a valid registration certificate. Software a business developed itself or through its own employees is exempt, as is software through which no part of the accounting system is managed, such as employee hours reporting. According to the registration service page, a registered program must include a module that produces files in the uniform structure (מבנה אחיד). What to look at:

• The software appears in the public registry, searchable by entity number, software name or software house, and its "תוקף אישור" (certificate validity) date has not passed.
• Issued documents carry your business's electronic signature and the words "מסמך ממוחשב".
• Documents are generated from the system's own data, with no retyping into a template.
• Customer consent to receive computerized documents is recorded and kept.
• The signed file that was sent is stored, not only the data behind it.
• The software requests allocation numbers automatically - the VAT instruction notes that the Tax Authority contacted registered software producers so they could prepare an online interface.

One limit worth knowing: the Tax Authority says a registration certificate does not confirm the software's performance or its compliance with the bookkeeping instructions, and that using the software is the business owner's responsibility.

Sources

• Israel Tax Authority - Income Tax Circular 24/2004: changes to the bookkeeping instructions, computerized documents (Hebrew PDF)
• Israel Tax Authority - VAT execution instruction 01/2025: the Israel Invoices model, allocation numbers (Hebrew PDF)
• Israel Tax Authority - registry of software for computerized accounting systems (Hebrew)