I. How to check the financial standing of your Israeli partner
About to do business in Israel? A Short General Guide* on Finding Information on the Financial Standing of Individuals and Corporations in Israel (by Attorney Yehuda Landau**)
General information regarding a corporation (such as its address, shareholders, directors and whether the company has submitted its annual report to the authorities) can be retrieved from the website of the Corporations Authority (the Ministry of Justice) www.gov.il/en/service/company_extract.
Information pertaining to corporations that are traded in the Tel Aviv Stock Exchange including quarterly / annual financial reports and immediate reports, is available in the TASE website maya.tase.co.il .Often, review of financial news websites on the Internet (in Hebrew and rather partially in English) will reveal relevant information (if available) e.g. The Marker (financial news of "Haaretz"), Globes, Calcalist.
In addition, it is possible to search in legal databases whether a corporation (or an individual) is involved in litigation, especially if a judgment is rendered. The existence of the legal procedure, the parties and the judgement, if rendered, are usually publicly available. In general, pleadings and minutes of the hearings / evidence are not made public.Corporations which manage a database are required to be registered in the Database Registry and certain information is available in their regard. The same applies to corporations that are engaged in construction as they must be registered in the Contractors Registry.
In certain specific lines of business (real estate, high-tech, healthcare, certain manufacturing activity, etc.) it may also be possible to trace additional information on the business activity of a corporation from the database pertaining to that line of business.When information on the credit worthiness of a corporation is required it is advisable to contact a licensed Authorized Business Information Bureaus which monitor credit information for any incorporated business which is registered with the Israel Tax Authority. There are currently (7/2020) two such bureaus (www.bdicoface.co.il/en/, www.dbisrael.co.il/en/). Alternatively, one can contact business rating companies.
To obtain general corporate rating, both Standard & Poor's (www.maalot.co.il/) and Moody's (www.midroog.co.il) have subsidiaries in Israel.
Another option would be to ask the many companies specializing in business intelligence to conduct a specific investigation into a specific company. This is usually conducted without the target company's knowledge. If performed with its knowledge, then a standard due diligence process can be carried out with the assistance of a law firm or a Certified Public Accountant.
While some of the suggestions above relating to corporations are relevant also to individuals, there are some privacy laws restricting gathering of information on individuals.Financial news websites and legal databases are relevant for individuals as well. However, matters adjudged in the Family Courts (including parties names) are not open to the public.
There are certain categories of private service providers such as lawyers, psychologists, engineers and architects, real-estate brokers, financial advisors and medical professionals about which additional information is available as they are registered in their respective official professional registries.
Individuals' Credit Worthiness
Unlike Switzerland where one can obtain an extract from the debt collection registry (Betreibungsregisterauszug / registre des poursuites / registro delle esecuzioni) debt collection processes are different in Israel. Moreover, there is now in Israel a new central registry (which started its activity in 2019) that enables any grantor of credit to receive, through one of the licensed credit bureaus (www.dbisrael.co.il/en/, www.bdicoface.co.il/en/, www.directscore.co.il/) credit data of individuals (not corporations). This database is managed by the Bank of Israel (the State's central bank) (“the Central Database”).
Until 2019, information regarding financial difficulties was limited to information on bankruptcy procedures in respect of individuals and liquidation of corporations. Individuals could also be registered but only if collection procedure against them proved difficult (such as "debtor limited in resources" in accordance with a judicial decision by the Execution Bureau). For additional information a creditor (or a contractual party / credit provider) had to contact business intelligence service providers.
With the recent legislative changes, the implementation of the new Credit Data Law -2016 and the creation of the Central Database, licensed "Credit Bureaus" were established, enabling credit providers to receive additional information on individuals from a database that did not previously exist. If the business relationship is not that of providing credit - see below.
The Central Database is fed from several reliable sources such as the official Receiver General (supervising insolvency processes), the law courts, Execution Bureaus, banks, credit card issuers and other providers of consumer credit, the Electric Company etc. The list is not exhaustive and the Minister of Justice can add (and delete) therefrom.
Nevertheless, a person who is not interested that his details will be kept in the Central Database may prevent it by submitting a request, unless) there is evidence of distinct failure to pay debts.There are a few conditions that must be met in order for a Credit Bureau to provide a credit report, such as: the information must be required for a credit transaction (that is not by definition low risk) or to guarantee a transaction, and the consent of the customer to provide this information is required. It should be noted that information is provided not only to the Credit Bureaus but also to the bodies that regularly provide information to the Central Database.
A Bureau can also give a "Credit Indication" which is not a full report but only an indication of whether to give a customer credit or not, based on the information from the database showing the customer is not clearly avoiding paying his debts.The information relates to the last 3 years and is not to be relied on if older than 60 days. For the purposes of a Credit Report information regarding the gender, age, sexual orientation, race, religion, country of origin, nationality, place of residence and family or health condition of a client may not be brought into account.
The information provided is confidential and may not be held after the period for which the credit agreement is valid, and if no credit was provided, for a period longer than 60 days.
Generally speaking, there is an abundance of information in the Internet on "doing business in Israel" which may be useful in order to obtain an idea on the differences in business culture and attitude between Switzerland and Israel (one should bear in mind that this is very often subjective to the writer and his personal experience).
Although Israel is a member of the OECD and has adapted much of its institutions to suit the standards the organization, it should be noted that much of the information referred above is in Hebrew, websites' English sections rarely contain all the information available in the Hebrew segments and some of the websites / databases are open only to subscribers. All official reports / extracts are provided for a fee.
* This general information is given as a service to the members of the Swiss-Israel Chamber of Commerce and is not legal advice.
** The writer of this info page, an Israeli lawyer with more than 30 years' experience, is the resident partner managing the Zurich branch (in existence since 1998) of the Israeli law firm of Rosenberg Abramovich Schneller - ROSAK (www.rosak-law.com).
II. Entry into Switzerland and Residence Permits
1. Entry requirements
1.1 Recognized identity document (pass or ID) for crossing the border (a) issued within the previous 10 years and (b) validity for at least 3 months after intended date of departure from the Schengen Area.
1.2 Visa – generally not required for short-term stays (up to 90 days in any 180-days period) of Israeli nationals, but onlyfor short-term stays (up to 90 days in any 180-days period) in case of the exercise of a gainful occupation (i) exceeding 8 days within 1 year or (ii) in any case in the construction industry, catering and hotel services, cleaning industry, security and surveillance services, erotic services orfor stays of more than 90 days in any 180-days period. (If you plan to exercise a gainful occupation, you need a residence permit from the immigration authorities before a visa is issued.)
Visas are issued by the Swiss diplomatic representations abroad or the cantons.
When a visa is required, a travel medical insurance has to be stipulated with a coverage of at least CHF 30'000 and including coverage for costs for repatriation for medical reasons or death and for urgent medical attention or emergency hospital treatment during the stay in Switzerland. Exceptions: for (i) those who have a travel medical insurance as a result of their professional activities and (ii) those for whom the host or guarantor with domicile/seat in Switzerland has stipulated a travel medical insurance.
1.3 Financial means for the period of stay: It must be ensured that the person entering into Switzerland does not become a burden on the social assistance system. Evidence: proof of own financial resources, bank guarantee or other comparable securities, travel medical insurance, or declaration of sponsorship by the host with domicile or seat in Switzerland (engaging to meet uncovered costs caused by the foreign nationals, incl. costs of living, accident, illness and return trip up to CHF 30'000).
1.4 Not posing a threat to public security and order or to Switzerland’s international relations
1.5 Not being subject to a measure banning them from entry or an order for expulsion from Switzerland the applicable Swiss criminal laws
1.6 Providing a guarantee of leaving Switzerland if only a temporary period of stay is planned
2. Residence permits with gainful employment
2.1 Israeli nationals who intend to exercise a gainful occupation in Switzerland require a permit to work irrespective of the period of stay.Exceptions: (i) providers of temporary cross-border services in Switzerland for periods below 8 days (counter-exceptions: construction industry, catering and hotel services, cleaning industry, security and surveillance services, erotic services) and (ii) employees of a foreign employer exercising a temporary gainful occupation in Switzerland, in general for periods below 8 days or for periods of maximal 90 days if they are already integrated in the EU/EFTA labor market.
2.2 ProcedureApplication: The applicant (in the case of self-employment) or the employer (in the case of salaried employment), respectively, applies for a permit to the competent labor market authority of the relevant canton at the planned place of employment.
Cantonal preliminary decision: The cantonal labor market authority examines the application and makes a preliminary decision according to the following criteria:
• Economy interest: The admission must be in the interest of the economy as a whole.
• Quotas: There must be free availability according to the quotas determined by the Swiss Federal Council for short stay and residence permits, if applicable tothe specific case.
• Personal requirements: The applicant must be a manager, specialist or qualifiedworker. To be considered: prospective integration (based on professionalqualifications, social and professional adaptability, language skills, age, etc.).
Otherwise, the applicant must be an investor and entrepreneur who maintains existing jobs or create new jobs, or a recognized person from the world of science,culture and sport, or a person who is part of an executive transfer betweeninternationally active companies, or a person whose activity in Switzerland is indispensable for economically significant international business relationships.
• Accommodation: The applicant must have a suitable accommodation in Switzerland.
• Precedence (in case of salaried employment): It must be proven that no suitable Swiss/EU/ EFTA citizens or persons with residence permit in Switzerland, can be found for this job. (Note: Foreign nationals with a Swiss university degree
may, however, be admitted if their work is of high academic or economic interest. They shall be temporarily admitted for a period of 6 months after completion of their education or training in Switzerland to find suitable work.)
• Salary and employment conditions (in case of salaried employment): The salary and employment conditions must be customary for the location, profession and sector.
• Financial and operational requirements (in case of self-employment): The necessary financial and operational requirements must be fulfilled so that the applicant does not become a burden on the social assistance system.
Federal consent decision: The State Secretariat for Migration (SEM) examines the preliminary decision of the cantonal labor market authority from a federal perspective and may grant its consent and inform the cantonal (labor market and immigration) authorities accordingly.Visa: In case of consent of the SEM, the cantonal immigration authority authorizes the Swiss diplomatic representations abroad to issue a visa (if needed).Registration: The applicants can enter into Switzerland with the visa and must register with the competent authority at their place of residence in Switzerland within 14 days upon entry and in any case before they begin employment. (Exception: in general, no registration requirement for foreign nationals with short stay permit of maximal 4 months in a 12-months period.) 2.3 Types of permitsShort stay permit
• is granted for limited periods of stay up to one year;
• is granted only for a specific purpose of stay;
• is subject to quotas and can be subject to conditions;
• can be extended by up to two years totally (condition: same employer); thereafter, a new permit is possible only after 1 year residence abroad;
• withholding taxation applies.
• is granted for limited periods of stay of more than one year;
• is granted only for a specific purpose of stay;
• is subject to quotas, priority to Swiss/EU/EFTA nationals and controls of salary and working conditions; can be subject to conditions. No entitlement / subject to discretionary powers of the immigration authorities;
• can be extended of two years;
• change to self-employment is subject to a specific permit requirement;
• withholding taxation applies.
Permanent residence permit
• is granted for an unlimited duration and without conditions;
• under the prerequisites: (i) uninterrupted residence in Switzerland for a minimum of 10 years, (ii) uninterrupted residence permit for at least 5 years and (iii) no grounds for revocation. No entitlement / subject to discretionary powers of the immigration authorities;
• change to self-employment is not subject to any permit requirement; no labor market restrictions; no withholding taxation.
Cross-border commuter permit (in case an Israeli national has place of residence in a neighbor country) is granted
• for limited periods of stay;
• only for employment in a border zone;
• under the conditions that the commuter (i) has a permanent right of residencein a neighboring state, (ii) has had his/her place of residence for a minimum of 6 months in the neighboring border zone, and (iii) must return to the place of residence abroad at least once a week;
• can be extended for 1 year.
3. Residence permits without gainful employment
3.1 Israeli nationals intending to stay in Switzerland for a period of more than 3 months without gainful employment require a residence permit. (Instead, no residence permit is required for any period of stay of up to three months.)
3.2 ProcedureApplication: The applicant (in the case of self-employment) or the employer (in the case of salaried employment), respectively, applies for this permit to the competent immigration authority of the relevant canton at the planned place of residence before entering Switzerland.
Cantonal decision: The cantonal immigration authority examines the application. Admissions are allowed generally only in the following cases:
• Education and training: if (i) the management of the educational establishment confirms that the person concerned is eligible for education or training, (ii) suitable accommodation is available, (iii) the required financial means are available,(iv) the foreign national students fulfil the personal and educational requirements for the planned education or training course and (v) they have a health insurance policy that also includes accident coverage.• Retired persons: if (i) they have reached a minimum age of 55 years (ii they have special personal relations to Switzerland e.g. longer residence periods, education, employment or close relatives in Switzerland, (iii) they have the required financial means to cover the cost of living in Switzerland so as to ensure that they will not become dependent on welfare benefits and (iv) they have a health insurance policy that also includes accident coverage.• Medical treatment: if (i) financing and (ii) return are guaranteed and limited to the time extent of the medical treatment and (iii) they have a health insurance policy that also includes accident coverage.Federal consent decision: The State Secretariat for Migration (SEM) examines the preliminary decision of the cantonal migration authority from a federal perspective and may grant its consent and inform the cantonal authority accordingly.Visa: In case of consent, the cantonal immigration authority authorizes the Swiss diplomatic representations abroad to issue a visa (if needed).Registration: The applicants can enter into Switzerland with the visa and must register with the competent authority at their place of residence in Switzerland within 14 days upon entry.3.3 Types of permits: (a) Short stay permit, (b) Residence permit and (c) Permanent residence permit (see section 2 above).
Derogations from the admission requirements in Sections 2 and 3 above are permitted in cases such as (a) family reunification, (b) personal hardship or important public interests, (c) foster children, (d) persons to be protected from exploitation who are particularly at risk in view of their work, (e) victims and witnesses of trafficking in human beings and of persons who are cooperating with the prosecution authorities as part of a witness protection, (f) relief and development projects in the interests of economic and technical cooperation, (g) facilitation of international economic, scientific and cultural exchange as well as basic and continuing professional education and training, (h) simplification of the transfer of senior management staff and essential specialists within internationally active companies, (i) au-pair workers recruited through a recognized organization, (j) readmission of foreign nationals who held a residence or permanent residence permit, (l) employment and participation in employment programs of asylum seekers, temporarily admitted persons and persons in need of protection.Particularly relevant laws and ordinances:
• Federal Act on Foreign Nationals (FNA), RS 142.20
• Ordinance on admission, residence and gainful employment, RS 142.201