The Biggest Mistakes German Companies Make in Israel

How cultural pace, regulation and negotiation styles shape success in Israel

German companies entering the Israeli market usually arrive with a clear plan, defined objectives, and high professional standards.
However, Israel is a different market not better, not worse, but fundamentally different.

This article is intended to provide clarity not to create concern, but to highlight some of the real complexities of doing business in Israel.
It is not a comprehensive guide, but an initial perspective. Companies that understand these differences early save time and costs and avoid unnecessary mistakes.

Business Culture: Same Goal, Very Different Pace

In Germany, business processes are typically thorough, structured, and carefully planned.
In Israel, especially in high-tech and innovation-driven sectors, the pace is significantly faster.

In many cases, responses are expected within the same day. Silence for a day or two may be perceived as a lack of interest, even when it simply reflects an internal review process.

This difference directly affects project management, decision-making, negotiations, and trust-building. Without proper alignment, unnecessary friction can arise even when both sides are professional and well-intentioned.

Law and Regulation: How Things Work in Practice

Israel’s regulatory framework is modern and Western, yet its practical implementation differs from what many European companies are used to.

In Israel, the difference between a stalled process and one that moves forward often depends on knowing:

which bank branch to approach,
which contact person to speak with,
and how to advance a process efficiently.

This knowledge is not written in legislation. Only those who operate daily within the Israeli ecosystem, with unique experience in the distinct business environment between German and Israeli companies, truly understand how things work.

Registering a company quickly with the Companies Registry is not always enough. Inaccurate planning can stall the start of operations in subsequent stages, for example, when opening a bank account or dealing with the tax authorities, if the legal, tax, and business structures have not been defined appropriately for the business’s needs. What is required is guidance from someone on the inside who knows how to move processes forward.

Taxation: Israel Is Not Europe

A critical point that many German companies discover only after entering the market:

There is no VAT double-taxation treaty between Israel and Germany.
There is no Reverse Charge mechanism as applied within the EU.

As a result, tax structures that function smoothly in Europe do not necessarily apply in Israel. Tax planning that is not locally adapted can create exposure, delays, and unnecessary costs even at early stages.

Negotiations in Israel: Strategy, Not Concession

Negotiations in Israel are often dynamic and can be lengthy. This is a typical aspect of local business culture.

Experienced market participants know that it is often necessary to arrive with specific points intended from the outset for discussion, adjustment, or a calculated, strategic “apparent concession” to protect the elements that truly matter.

This is not a concession out of weakness, but a deliberate strategy aligned with local norms. Immediate acceptance of all terms may actually indicate that better conditions could have been achieved.

Israel Is Not One Single Culture

Israel is often perceived as a unified high-tech market. Still, in reality, it is a highly diverse society: a large number of religions, cultures, and origins, as well as a significant number of immigrants from different countries, each with distinct communication styles and business norms. These differences affect employee management, sales, negotiations, and commercial relationships, whether a company is employing staff in Israel or selling into the local market.

The Advantage of an International Firm

Given this multi-layered complexity, there is a clear advantage to working with a valid One Stop Shop.

Not merely a collection of services, but an integrated team providing a holistic view across:

Legal & Tax
Compliance
Accounting
Finance
Strategic advisory
Mergers & acquisitions
Technology implementation

When these disciplines operate together, companies receive a coherent solution, not fragmented advice.

In addition, reporting is delivered bilingually and in multiple currencies, enabling German management and boards to understand the data and make informed decisions outside Israel clearly.

Germany–Israel Desk

At Auren, a dedicated Germany–Israel Desk focuses exclusively on supporting German companies active in Israel. The desk has been in operation for approximately 20 years, assisting German mid-sized companies (Mittelstand) and large corporations with market entry and ongoing operations across a broad range of industries, including high-tech, biotechnology and life sciences, renewable energy, infrastructure, finance, and banking, as well as additional technology-driven and industrial sectors.

The Desk operates from Israel with deep local expertise, alongside a dedicated German team that includes a local partner in Germany. This integrated model bridges German and Israeli business cultures, identifies gaps early, shortens time to market, and ensures a clear and structured process for both parties.

Auren is an international advisory firm ranked among the Top 15 international associations worldwide, with 350+ offices in more than 70 countries.

Companies interested in operating in Israel are welcome to contact us:

📧 Tlv.office@auren.co.il
📧 dirk.peper@auren.de
📧 ofir.angel@auren.co.il