According to the "Foreign Resident" definitions in sections 1 and 30(c) in the VAT Law, for a corporation to be considered as a "Foreign Resident", it must meet the following criteria:

1. It was registered or incorporated only outside of Israel.

2. It has no business or activity in Israel.

According to certain court rulings, a foreign company is deemed to be conducting business or activity in Israel, and therefore not considered as a "Foreign Resident" for the purpose of Section 30c of the VAT Law

1. It conducts regular and ongoing activity in Israel, such as creating direct contact with customers, including drafting agreements, retaining customers, collecting money and engaging in business management and / or;

2. The foreign company runs an activity in Israel via an agent or a representative (as opposed to an independent broker or sales agent), whose authority is broad and constitutes a branch of the company in Israel.