IL Invoice Organizer

Step 1: Identify Invoice Type and Source

Determine what documents the user has:

Key: Only tax invoices (300, 305) allow VAT input deduction (nikui mas tsumos).

Step 2: Extract Invoice Data

Parse the following fields from each invoice:

Step 3: Extract VAT (1/6 Rule)

For Israeli invoices where only the total (gross) amount is visible:

# VAT extraction from gross amount (כלל השישית)
vat_rate = 0.18  # 18% standard rate
gross_amount = 1180  # סכום כולל מע"מ

# Method: VAT = gross * (rate / (1 + rate)) = gross * (18/118)
vat_amount = gross_amount * (vat_rate / (1 + vat_rate))
# = 1170 * (0.18 / 1.18) = 1180 * 0.1525 = 180

net_amount = gross_amount - vat_amount
# = 1180 - 180 = 1000

Shortcut: VAT = Total / 6.556 (approximately 1/6 of the gross, hence "klal hashishit")

Step 4: Categorize by Tax Authority Standards

Assign each expense to a Tax Authority category:

Use scripts/categorize_invoices.py for automatic categorization.

Step 5: Identify Business Type

Determine supplier and customer business status:

Important: You can only deduct input VAT (mas tsumos) from tax invoices issued by Osek Murshe suppliers. Receipts from Osek Patur do not have VAT to deduct.

Step 6: Generate Accountant-Ready Export

Organize the data for the accountant (ro'eh cheshbon):

Output format (CSV/Excel):

Date, Supplier, TIN, Invoice#, Category, Net, VAT, Total, Notes
15/01/2025, חברת אלפא, 515000000, 1234, קבלני משנה, 10000, 1700, 11700, שירותי פיתוח

Include summary:

• Total expenses by category
• Total input VAT (mas tsumos) to reclaim
• Missing invoices or data gaps flagged
• Separate section for non-deductible items

Example 1: Monthly Invoice Organization

User says: "I have 30 invoices from this month. Help me organize them for my accountant" Actions:

1. Collect: Invoice images or text data from user
2. Parse: Extract supplier, amount, VAT, date from each
3. Categorize: Assign Tax Authority category per Step 4
4. Validate: Check TIN format, VAT calculation, allocation numbers
5. Run python scripts/categorize_invoices.py --input invoices.csv
6. Export: Generate accountant-ready CSV with summary Result: Organized expense report with VAT summary ready for accountant

Example 2: VAT Extraction from Receipts

User says: "I paid 5,850 NIS total for cloud services. What is the VAT portion?" Actions:

1. Apply 1/6 rule: VAT = 5,850 * (0.18 / 1.18) = 892.37 NIS
2. Net amount: 5,850 - 892.37 = 4,957.63 NIS
3. Categorize: Communications (code 50) for cloud services
4. Note: Verify supplier is Osek Murshe and issued tax invoice Result: VAT of 892.37 NIS extractable, net expense 4,957.63 NIS in Communications category

Example 3: Osek Patur Invoice Handling

User says: "I got an invoice from a freelance designer, but there is no VAT line" Actions:

1. Check: Is the supplier Osek Patur (עוסק פטור)?
2. If Osek Patur: No VAT to deduct, record full amount as expense
3. Categorize: Professional services (code 60) or Marketing (code 90)
4. Note: Request the supplier's TIN and verify their status Result: Full amount recorded as expense with no VAT deduction, flagged for accountant

Scripts

• scripts/categorize_invoices.py -- Categorizes Israeli invoices by Tax Authority expense codes, extracts VAT, and generates accountant-ready reports. Run: python scripts/categorize_invoices.py --help

References

• references/expense-categories.md -- Complete list of Tax Authority expense categories with codes, common examples, and special rules for deductibility (vehicle 2/3 rule, entertainment limits). Consult when categorizing unusual expenses.

Error: "VAT amount doesn't match"

Cause: Rounding differences between line-item VAT and total VAT Solution: Israeli invoices may have rounding differences of up to 1 NIS. Use the VAT amount printed on the invoice (not recalculated). If no VAT line exists, use the 1/6 rule from Step 3.

Error: "Cannot determine business type"

Cause: Invoice does not clearly state Osek Murshe or Osek Patur Solution: Look for "עוסק מורשה" on the invoice. Check TIN on Tax Authority website. If unclear, treat as Osek Patur (no VAT deduction) and flag for accountant review.

Error: "Expense category unclear"

Cause: Invoice description is vague or multi-category Solution: Use the primary purpose of the expense. When in doubt, assign to "Other" (code 999) and let the accountant reclassify. Common confusion: software subscriptions (Communications 50, not Office supplies 40).