Is there a tax coordination obligation in the National Insurance?
National insurance is one of the taxes imposed on all residents of Israel, and it also includes the payment of health fees and health tax.
The payment of the health tax allows us to go to the hospital and receive medical services, and the payment of social insurance premiums provides us with insurance for various cases during life, some of which are short-term, for example: unemployment benefits, pregnancy care, maternity benefits, etc., and some of them are long-term, such as: disability from work , residual pension etc.
The amount of payment of social security contributions varies according to the income a person has, when the taxation is progressive, that is, in the form of steps, when in principle there are two tax steps.
Please note that the reference is to an employee only!!!
First level is for income from work between NIS 0 – 5453 3.5% per month
Second level is for income from work between 5454 NIS – 43,240 NIS 12% per month
In light of this, it can be understood that a person who works in two places needs coordination in order to pay social security according to his income. (Similar to income tax).
It is important to note that the employee was not harmed by a lack of coordination of social insurance payments, in the event of an insurance event and a claim by the Social Insurance Institution, he will receive his full rights,
The problem is only the employer’s, who, if he knew about it, is obligated to pay the differences if there is an audit of deductions.
The obvious conclusion is:
Employers, make sure that your employees have coordination of social security contributions, because the exposure and responsibility is yours alone!!
How to coordinate social security payments:
1. In order to carry out the coordination, first the insured must know who the main employer is.
(This is the employer who filled in a month’s salary in form 101).
2. If at the primary employer the employee’s salary is less than 5,453 gross, the employee must fill out form 644, in which he will declare the amount of income from the primary employer and transfer it to the secondary employer.
3. The secondary employer will enter the declaration data from the employee into the payroll software and will receive an automatic confirmation of the deduction of social insurance and health fees at a reduced rate.
If the employee’s income is above the maximum income accepted in the economy (43,240 gross), the employee must fill out appropriate forms provided by the employers through the payroll software, in order to receive an exemption from paying social security at the secondary employer.
It is important to note that despite the knowledge that he deserves an exemption from National Insurance, the secondary employer cannot exempt the employee from payment without approval from National Insurance!!!!
If the employee receives from the main employer more than 5,453 gross or less than 43,240 gross, there is no need to coordinate social security contributions, but the main employer deducts social security contributions from the employee according to the higher percentage and that’s it. 12%.
An important point – the pension payer will always be the secondary employer even if he sets aside the higher amount.
Who is exempt from paying social security:
1. A married resident of Israel whose husband works and she sits at home.
(If she goes to work even part-time, she is obligated to pay social security)
2. Anyone who is not a resident of Israel.
3. 100% permanently disabled from work.
4. A general disabled person from 75% to 100% at least for a whole year is exempt from paying social insurance during the disability period.
5. Those who have reached retirement age. 64 women / 67 men.
National insurance reimbursement for recent years – up to 7 years back
If the employee wishes to coordinate social security contributions for previous years, he can do so directly at the social security branch to which he belongs while filling out a social security contribution coordination form – refund request.
Successfully!