Israeli e invoice compliance

E-Invoicing: Israeli Tax Invoice Allocation Compliance

Use this skill to prepare, validate, and troubleshoot Israeli B2B tax invoices that may require a Tax Authority allocation number under the Chashbonit Yisrael model. Apply it to tax invoices, tax invoice/receipts, preliminary allocation confirmations, allocation-number verification, and recipient-side checks.

This skill is not accounting advice. Validate edge cases with a licensed Israeli accountant or tax adviser before filing.

Current operating facts

• Standard VAT rate: 18% from 01-01-2025 onward.
• Allocation threshold basis: invoice total before VAT.
• Allocation threshold from 01-01-2026 through 31-05-2026: above ₪10,000 before VAT.
• Allocation threshold from 01-06-2026 onward: above ₪5,000 before VAT.
• Primary allocation document types: tax invoice and tax invoice/receipt.
• Customer-side deduction risk: without an allocation number where required, input VAT deduction can be denied.
• Authentication: OAuth2 user-restricted authorization with service permissions.
• Sandbox and production endpoints differ; never hard-code a single host across all services.

Decision tree

flowchart TD
    A[Start with Israeli document request] --> B{Seller is VAT registered?}
    B -- No --> X[Do not request allocation. Use exempt dealer workflow.]
    B -- Yes --> C{Document is tax invoice or tax invoice/receipt?}
    C -- No --> D{Preliminary pro-forma or transaction account?}
    D -- Yes --> P[Optional preliminary allocation confirmation; not deductible input VAT.]
    D -- No --> N[No allocation request. Keep normal bookkeeping evidence.]
    C -- Yes --> E{Buyer is Israeli VAT dealer?}
    E -- No --> F[No B2B allocation request. Treat export, private consumer, or special case separately.]
    E -- Yes --> G{Amount before VAT exceeds threshold on invoice date?}
    G -- No --> H[No allocation required. Validate VAT and invoice fields anyway.]
    G -- Yes --> I[Validate payload fields and request allocation number.]
    I --> J{Approved?}
    J -- Yes --> K[Print/store full number and report right-most 9 digits in PCN874.]
    J -- No --> L{Technical or substantive refusal?}
    L -- Technical --> M[Fix data/auth/permissions and retry before issuing.]
    L -- Substantive --> O[Choose cancellation, issue without deduction notice, reverse charge, or hearing.]

Required inputs

Collect these fields before preparing an API request:

Field	Rule
invoice_id	Stable internal bookkeeping ID, unique per request.
invoice_type	Use the official document type. Use 305 for tax invoice/receipt and 300 for tax invoice.
vat_number	Seller VAT dealer number, 9 digits with a valid check digit.
customer_vat_number	Buyer VAT dealer number for Israeli B2B allocation requests.
invoice_date	Printed invoice date, YYYY-MM-DD.
invoice_issuance_date	System issuance date, YYYY-MM-DD.
accounting_software_number	Registered software number or document producer company number where applicable.
amount_before_discount	Gross amount before discount, before VAT.
discount	Absolute discount amount, never negative.
payment_amount	Net taxable amount before VAT.
vat_amount	VAT amount, normally payment_amount * 0.18.
payment_amount_including_vat	Total after VAT.
items	Line-level details where available, with quantity, unit price, discounts, VAT rate, and line totals.

Concrete examples

Example 1: B2B consulting invoice above the 01-06-2026 threshold

Facts: Israeli VAT-registered consultant invoices an Israeli VAT-registered company on 15-06-2026 for ₪6,000 before VAT.

Decision: Request an allocation number before sending the final invoice.

{
  "invoice_id": "INV-2026-0615-001",
  "invoice_type": 305,
  "vat_number": 123456782,
  "customer_vat_number": 777777715,
  "customer_name": "Example Customer Ltd",
  "invoice_date": "2026-06-15",
  "invoice_issuance_date": "2026-06-15",
  "accounting_software_number": 123456782,
  "amount_before_discount": 6000.00,
  "discount": 0.00,
  "payment_amount": 6000.00,
  "vat_amount": 1080.00,
  "payment_amount_including_vat": 7080.00,
  "items": [
    {
      "index": 1,
      "description": "Monthly consulting services",
      "quantity": 1,
      "price_per_unit": 6000.00,
      "discount": 0.00,
      "total_amount": 6000.00,
      "vat_rate": 18.00,
      "vat_amount": 1080.00
    }
  ]
}

Example 2: B2B invoice below the threshold

Facts: Israeli VAT-registered supplier invoices an Israeli VAT-registered customer on 10-06-2026 for ₪4,900 before VAT.

Decision: No allocation number required. Still validate VAT math and mandatory bookkeeping fields.

Example 3: Foreign customer export service

Facts: Israeli supplier issues a zero-rated invoice to a non-Israeli customer.

Decision: Do not request a Chashbonit Yisrael B2B allocation number. Keep export evidence and zero-rate support documentation.

Example 4: Pro-forma request before payment

Facts: Cash-basis supplier needs buyer assurance before issuing the tax invoice.

Decision: Use preliminary allocation confirmation for document code 332 where the API workflow applies. Do not treat the preliminary confirmation as deductible input VAT.

CLI quick use

python scripts/israeli_e_invoice_compliance_cli.py validate invoice.json
python scripts/israeli_e_invoice_compliance_cli.py threshold --invoice-date 2026-06-15 --amount 6000
python scripts/israeli_e_invoice_compliance_cli.py approve invoice.json --environment sandbox --token "$ITA_TOKEN"

Python quick use

from scripts.israeli_e_invoice_compliance_client import (
    Environment,
    InvoiceApprovalRequest,
    InvoiceComplianceClient,
)

request = InvoiceApprovalRequest.from_payload(payload)
request.raise_for_validation_errors()

client = InvoiceComplianceClient(access_token="...", environment=Environment.SANDBOX)
response = client.request_approval(request)
print(response.approved, response.confirmation_number)

Troubleshooting

Symptom	Likely cause	Action
401 Unauthorized	Missing, expired, or wrong OAuth2 token.	Refresh token and verify OAuth2 user-restricted flow.
403 Forbidden	Missing Tax Authority permission for the service or dealer.	Re-grant digital authorization for the operator and VAT dealer.
404 Not Found	Wrong endpoint host or path.	Check sandbox versus production path and service version.
406 Not Acceptable	Permission mismatch for seller or customer VAT number.	Confirm the authorized dealer and request party.
422 Unprocessable Entity	JSON shape does not match schema.	Validate fields, numeric precision, date format, and required conditional fields.
Error 431	VAT number incorrect.	Validate 9-digit check digit and dealer number.
Error 434	Invoice date too old.	Confirm retroactive request rules and avoid reusing stale dates.
Error 435	Invoice date more than a month ahead.	Use the actual printed invoice date.
Error 446	Missing user_id and user_name.	Send one of the conditional service-operator fields when required.
Error 460	Invoice not approved.	Follow held-invoice alternatives and document the selected decision.

Anti-patterns

• Do not calculate the threshold on the amount including VAT.
• Do not request an allocation number for every receipt or pro-forma by default.
• Do not place a preliminary allocation confirmation on a tax invoice as if it were an allocation number.
• Do not send production requests with sandbox credentials.
• Do not retry a substantive refusal as a new invoice with changed IDs to bypass controls.
• Do not omit the buyer VAT number for an Israeli B2B invoice above the threshold.
• Do not print only an internal request ID; print the allocation number returned by the Tax Authority.
• Do not ignore the PCN874 shortened-number requirement; store the full number and report the right-most 9 digits where required.

Output checklist

Before finalizing an invoice, verify:

1. Document type is correct.
2. Seller and buyer VAT numbers pass check-digit validation.
3. Invoice date selects the correct threshold.
4. Amount before VAT is used for the threshold test.
5. VAT is calculated at 18% unless a valid zero-rate or exemption applies.
6. Allocation number is present when required.
7. Refusal handling is documented when allocation is not approved.
8. The invoice copy, request payload, response payload, and authorization trail are retained.