I rent premises for my business from a private individual. The landlord wants the rent paid but says he cannot issue a tax invoice and I should issue a self-invoice instead. How can I claim the rental expense?
Our answer
A self-invoice can document the VAT treatment — after checking the classification
Where a VAT-registered business rents commercial property from a person who is not a VAT dealer, and the transaction falls within the occasional real-estate transaction arrangement under Regulation 6B, responsibility for VAT passes to the tenant. The tenant issues an invoice in its own name instead of the landlord and reports it. A landlord’s statement that they have no business is not sufficient: their status and the nature of the letting must be checked first.
Paying the landlord and accounting for VAT are different steps
Under this arrangement, VAT is not paid to the private landlord as if they had issued a tax invoice. Rent is paid under the lease, after dealing with any required withholding tax. The tenant calculates and reports VAT through the self-invoice and the appropriate return. Check whether the lease amount is exclusive or inclusive of VAT; do not automatically add to or deduct from the agreed rent.
If the property is used for VAT-taxable transactions and the statutory requirements are met, the VAT may be deductible as input tax. If deduction is unavailable or restricted, VAT may remain payable. The letting is not VAT-exempt merely because the landlord is a private individual.
How is the rental expense recorded?
Rent incurred to produce income may be deductible, subject to the applicable rules and withholding and reporting obligations. Keep the lease, landlord and property details, payment evidence and self-invoice, and reconcile the bookkeeping entries. A self-invoice alone does not establish deductibility: business use and payment or accrual under the applicable reporting basis must be supported.
VAT deductible as input tax should not also be included in the rental expense. Private or mixed use requires a separate assessment.
Rent that can be claimed as an expense generally attracts 35% withholding unless a valid exemption or reduced-rate certificate applicable to rental payments is available. The office should check the certificate, any required withholding-tax registration, remittance and reporting. Do not assume a certificate for another payment category covers rent.
What should you send to the office?
- The signed lease, property details and intended use.
- The landlord’s identifying details and VAT status.
- The rent amount and the lease’s VAT terms.
- The rental withholding certificate and payment evidence.
This example concerns a VAT-registered business renting commercial premises in Israel. Exempt dealers, non-profits, financial institutions, residential letting and landlords carrying on a letting business require a separate assessment.
Official sources
This is the office’s general professional explanation; the actual transaction must be reviewed before a document is issued. The linked judgment illustrates that a self-invoicing obligation does not automatically confer an input-tax deduction.
- חוק מע״מ / VAT Law — סעיפים 1, 38 ו־41: הגדרות וניכוי תשומות
- פסק דין באתר הרשות השופטת / Official judgment — תקנה 6ב וחשבוניות עצמיות בשכירות; ניכוי תשומות נבחן בנפרד
- רשות המסים — דע זכויותיך וחובותיך, דמי שכירות / Tax Authority guide: rental expenses and withholding
- רשות המסים — בקשה להפחתת ניכוי במקור / Reduced withholding application
Reviewed on 20 October 2026.