A German delegation led a much anticipated international push for new business in Iran on Monday, but a top official visiting Tehran put Israel at the top of their differences.

The remarks by Sigmar Gabriel, Germany's economy minister and Chancellor Angela Merkel's deputy, underscored that despite last week's nuclear deal between Iran and world powers any discussions on wider policy in the Middle East are likely to run into difficulties.

Iran does not recognise Israel -- the biggest opponent of the West's diplomatic outreach on the nuclear issue -- and officials routinely call for destruction of the leaders of "the Zionist regime".

The nuclear deal has been touted as an opening for greater contact between Iran and the leading nations over common interests, particularly on tackling the jihadist Islamic State group in Iraq and Syria.

Gabriel, accompanied by dozens of German business leaders, said the accord struck in Vienna "established the foundation" for boosting security in the Middle East, but Israel should fall within such discussions.

And while Germany is willing to re-engage with Iran on economic matters it would not preclude leaders in Tehran having to "bear new responsibilities, at home and abroad", said the vice chancellor.

"You must understand that for us Germans, the security of the state of Israel is also of great importance," he said.

"I understand how difficult the debate is and we in Germany also believe that the Palestinians have a right to their own state. That must be our shared international goal.

"Good relations with Germany also means at the same time that we must not question the security of the state of Israel."

Gabriel's comments came minutes after Iranian officials had laid out their plans to attract foreign business back to Tehran once sanctions are lifted under last week's nuclear deal.

Those include favourable tax conditions and faster processing time (15 days) for applications from foreign businesses wanting to do business in the Islamic republic.

Iran has said it needs tens of billions of dollars of investment and western technology to revive projects in its oil, gas and petrochemical industries, which have suffered in recent years under sanctions.

- Energy remains prime target -

The country's oil ministry in the next few months plans to unveil more attractive terms for contracts involving international firms.

After mentioning Israel, Gabriel said there was a need to "discuss difficult issues openly, in a spirit of partnership and respectfully" and "nothing needs to change in that friendship even if we hold different views".

But during a 20-minute speech he also highlighted other differences with Iran, including human rights, women's standing in society, competition law and efforts to combat corruption.

Mentioning the free establishment of business contracts, Gabriel added: "We want to discuss this with you as friends. And we believe that it will be a fruitful dialogue. I am convinced that economic freedom also needs individuality and the development of individual freedoms."

Transparency International ranks Iran as one of the most corrupt countries in the world.

Gabriel's comments on Israel drew a quick response from foreign ministry spokeswoman Marzieh Afkham, who said such longstanding differences with Germany had not affected other "constructive contacts".

"The main part of the dialogue is about the prospect of bilateral cooperation and naturally we will express our concerns about the region, including existing threats, including threats of the Zionist regime and the roots of the crises in the region," she added.

Tens of thousands of people gathered in Tehran on July 10 for annual Quds (Jerusalem) Day demonstrations in support of the Palestinians.

As is customary at such gatherings, the crowd chanted "Down with Israel" and carried placards that declared "Zionist soldiers kill Muslims". They also burned Israeli and US flags.

Such spectacles are cited by Iran's opponents as reasons for not doing business in Tehran, but international trade is expected to boom if the nuclear deal is successfully implemented.

Iran's market of 78 million people and educated workforce is long seen as untapped, and its energy sector is considered a juicy target.

With the fourth-largest oil reserves and the second in gas, Iran has the biggest combined energy deposits in the world.