The Israel Invoice Model - The Complete Guide to Allocation Numbers
The “Israel Invoice” (חשבוניות ישראל) model is the most significant invoicing reform in Israel in the past decade. Its goal is to fight fictitious invoices by having the Tax Authority pre-approve every tax invoice above a certain amount.
What the reform requires
A tax invoice whose amount (before VAT) exceeds a threshold set by law must receive an allocation number (מספר הקצאה) from the Israel Tax Authority before the customer receiving it can deduct input VAT on it. Without an allocation number, the invoice itself is still valid, but the VAT deduction on it is blocked - and a business customer simply won’t agree to accept it.
The threshold drops every year
The reform was designed from the start to be gradual: the threshold started high and drops each year, so that progressively more invoices fall under the allocation requirement over time. As of 2026, the threshold stands at 5,000 NIS before VAT. In practical terms, while only large transactions needed an allocation number in the reform’s early years, today almost every significant B2B invoice requires one.
Anyone issuing invoices manually, or using a system that doesn’t support automatic allocation, feels this acutely: every invoice above the threshold requires manual handling through the Tax Authority’s systems.
Who this applies to - and who it doesn’t
The reform applies to licensed dealers (עוסק מורשה) and companies, for every tax invoice above the threshold. It doesn’t apply to exempt dealers (עוסק פטור), who don’t issue tax invoices at all (until they switch to licensed-dealer status). And invoices below the threshold don’t require an allocation number either, even for a licensed dealer.
How it works in practice
- First, the business connects its Tax Authority account through the system (government authentication and permission approval), a one-time process that takes a few minutes.
- From the moment it’s connected, every tax invoice that meets the conditions automatically sends an allocation request right after being issued, with no form and no manual action needed.
- The allocation number is printed on the invoice and lets the customer deduct input VAT as usual.
What happens when a request fails
A technical glitch, a temporary disconnection, or an issue on the Tax Authority’s end can cause a request to fail. It’s important to understand: the invoice is still issued and valid. The failure doesn’t block issuing - it just means there’s no allocation number yet. From there, you can either retry the request, which succeeds in most cases, or continue without a number if the customer doesn’t need to deduct input VAT (a private customer, for example); in that case, a note stating that input VAT can’t be deducted from the invoice is printed on it.
What to check in the system you’re using
- The request is sent automatically and doesn’t require manual action for every invoice.
- A failed request doesn’t block issuing the invoice.
- There’s a clear path for retrying the request or continuing without a number.
- The allocation number is printed on the invoice and stored on it permanently.
How Slate handles Israel Invoice
On Slate, connecting to the Tax Authority is a one-time action done from Settings, and from that moment on, every relevant tax invoice automatically requests an allocation number. Issuing doesn’t wait for a response and isn’t blocked if the request fails. Retrying the request or confirming you want to continue without a number are both available directly from the document, and the required note is printed automatically whenever there’s no allocation number.