The Jerusalem District Court has rejected an appeal by a man who brokered fictitious invoices between a known invoice seller and a cleaning company, and upheld a double VAT charge of ₪1,078,669 against him. Judge Avigdor Dorot gave the ruling on 13 October 2026, and it was reported on 20 October. The broker never drafted or printed an invoice. The court still held that he had issued them.
How the case reached court
Between 2010 and 2014, 174 fictitious invoices were issued, all to the same cleaning company, for transactions totalling ₪9,669,970. The company used them to claim input VAT it was not entitled to. The broker introduced the company's manager to the invoice seller, sat in on almost every meeting, and took a commission of ₪1,000 to ₪2,000 per invoice, roughly 3% to 6% of its value.
He was convicted in the Jerusalem Magistrates Court. In February 2025 he was sentenced to 45 days of community service, four months suspended, a ₪10,000 fine and probation.
Separately, the Jerusalem VAT officer demanded ₪2,157,339 from him under section 50(a) of the VAT Law. That section makes anyone who issues an invoice without authority pay the tax shown on it twice over.
Double tax on tax already paid
The VAT in the invoices, about ₪1.37 million, had already reached the state through others involved in the scheme. In its closing arguments the Tax Authority dropped the tax component itself, and some invoices had passed the limitation period. What remained was the deterrence component, about half the original demand.
The broker argued that his role was marginal. The court disagreed, relying in part on admissions he made during the VAT investigation. Under the case law the judge cited, issuing an invoice is wider than writing it up or handing it over. Someone who links the parties, recruits the recipients, or otherwise takes part in the distribution can be treated as the issuer.
The court also held that double tax is mandatory once the section's conditions are met, and is not left to the authority's discretion. It serves two ends: restoring what was taken from the public purse and deterring the next scheme in advance. A reduction for special reasons under section 100 is the exception, for cases such as an honest error or genuine lack of knowledge. A criminal sentence does not cancel the civil charge, and the law says so explicitly. The judge noted that the broker's personal circumstances had already been weighed twice, in the criminal sentence and in the authority cutting its demand roughly in half, so a further cut was not justified.
The appeal was filed in December 2021 and decided almost five years later. Filing such an appeal suspends payment unless the court orders otherwise. The broker was also ordered to pay ₪10,000 in costs within 45 days.
Where the business receiving the invoice stands
The whole scheme started with a company that wanted to offset input VAT on work nobody did. Section 50(a1), which the court mentioned, allows double tax to be charged against a dealer who deducted input VAT from an invoice that was issued without authority. The exposure does not stop with the seller or the middleman.
For a small business the practical rule is short. Offset input VAT only on an invoice from a supplier who actually delivered the goods or the service, and whose books show the sale. Anyone offered invoices for a percentage, or asked simply to introduce two people in return for a fee, should know the court treats that as issuing the invoice too. And someone else having paid the tax does not close the file: the deterrence component stays and gets collected.
To check when input VAT can be offset and on which documents, see our input VAT guide.