Cross-border transmission, France-Israel axis

Inheritance and gifts: the asymmetry that costs families millions

Israel has not taxed estates since 1981. France taxes them up to 45% in direct line above EUR 1,805,677, and up to 60% between non-relatives. Between the two: no bridge. The France-Israel tax treaty of 31 July 1995 covers income and wealth only, and there is no treaty between France and Israel on inheritance and gifts. Under French Tax Code article 750 ter, a single heir remaining domiciled in France for six of the last ten years, or a single French real estate asset, is enough to maintain French duty on the entire inheritance, regardless of aliyah. The foreign tax credit under article 784 A is useless, since Israel collects nothing. We guide families settled across France and Israel through succession planning before it becomes a problem.

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Asymmetry
Israel: no estate duty since 1981. France: rates up to 45% in direct line, 60% between non-relatives
Treaty
No inheritance treaty between France and Israel; the 1995 treaty covers income and wealth only
Territorial
CGI art. 750 ter: decedent domiciled in France, French assets, or heir domiciled in France for six of ten years triggers French duty
Life insurance
Article 990 I levy (EUR 152,500 exemption per beneficiary, 20% then 31.25%) applies if beneficiary or insured remains French-domiciled
Trusts
Israeli trusts and hekdesh: article 792-0 bis rates up to 60%, plus trustee reporting under article 1649 AB
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Zero on one side, up to 45% on the other, and no treaty between them

Israel abolished estate duty for deaths occurring since 1981: heirs of an Israeli resident pay no succession duty. France applies a progressive scale reaching 45% in direct line above EUR 1,805,677 per share, after an exemption of EUR 100,000 per child (CGI articles 777 and 779), and 60% between non-relatives.

This split would be manageable if a treaty divided taxing rights. But the France-Israel tax treaty of 31 July 1995 covers only income and wealth taxes; there is no bilateral treaty on successions or gifts. Succession is therefore governed by domestic law alone, and in practice by French law only: the foreign tax credit under CGI article 784 A, which allows credit for foreign duty paid on assets abroad, is pointless when Israel collects nothing.

The consequence is often underestimated by families planning aliyah: the decedent's departure does not remove the succession from French taxation. Under CGI article 750 ter, a single heir remaining domiciled in France for six of the last ten years, or a single asset located in France, is enough to maintain French duty in whole or part. For example, for an estate of EUR 4,000,000 passing to a single child who stayed in Paris, French duty approaches EUR 1,500,000, with zero Israeli duty to credit.

Our firm limits its engagement to ensure direct partner oversight of each file, and systematically evaluates the relevance of an engagement before proceeding.

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Points of friction, one by one

01

French territorial scope: CGI article 750 ter

Three alternative criteria, each sufficient alone, to bring succession into French tax jurisdiction.

  • 1st: decedent or donor domiciled in France per CGI article 4 B: entire worldwide estate is taxable in France
  • 2nd: decedent or donor domiciled outside France: assets located in France (real estate, including held via a holding company, French securities, receivables) remain taxable
  • 3rd: heir, donee, or beneficiary domiciled in France on the transmission date and for at least six of the ten preceding years: taxable on entire assets received, whether French or Israeli
  • After aliyah, the 3rd test reverses: an heir settled in Israel exits worldwide taxation only after ceasing to meet the six-of-ten-years test, assessed year by year
02

Life insurance: what departure changes and what it does not

The article 990 I levy operates under its own territorial rules, distinct from succession duty.

  • Premiums paid before age 70: article 990 I levy after exemption of EUR 152,500 per beneficiary, taxed at 20% up to EUR 700,000 then 31.25% above
  • Own territorial scope: the levy applies if the beneficiary is domiciled in France at death and has been for six of the ten preceding years, or if the insured is domiciled in France at death
  • The insured's departure to Israel only neutralises the levy if beneficiaries themselves have also left France long enough; premiums paid after age 70: article 757 B, succession duty above a global EUR 30,500 exemption
  • Luxembourg life insurance offers a contractual framework suited to mobile situations (multi-currency, non-resident-insured neutrality), without changing these French territorial rules, which must be integrated into the beneficiary clause
03

Israeli trusts and hekdesh: the punitive rates of CGI article 792-0 bis

Israeli fiduciary structures generally fall within the French definition of 'trust'.

  • Transmission of a specific share to an identified beneficiary: succession duty per the kinship to the settlor, under standard domestic rules
  • Share broadly devolved to descendants without individual allocation: taxation at the highest direct-line rate, 45%, with no exemption
  • Other cases (unidentified beneficiaries or shares, trustee subject to non-cooperative state law, or trust created after 11 May 2011 by then-French-domiciled settlor): 60%, levy payable by the trustee
  • Reporting obligations under article 1649 AB (event-driven and annual disclosures) wherever a French connection exists; a hekdesh constituted before aliyah for heirs in France combines punitive rates with disclosure exposure
04

Planning strategies: timing is everything

The decisive moves happen before departure, or before territorial lookback periods expire.

  • Give before aliyah: use French exemptions (EUR 100,000 per parent per child, renewable every fifteen years, CGI article 784) and lower tax brackets, while purging latent gains for the donee, when assets are in French tax reach anyway. After departure, a gift of non-French assets remains taxable in France so long as the donee meets the six-of-ten-years test under CGI 750 ter, 3rd. The best sequence is usually: give before departure, then defer further transmissions until the donee exits the lookback window, with French real estate remaining taxable in any event
  • Bare ownership split: gift of bare ownership with retained usufruct, taxed on bare-ownership value alone per CGI article 669 schedule (60% of full value for a sixty-to-seventy-year-old donor), with usufruct extinguishing tax-free at death
  • Manage the timings: after departure, defer transmissions of non-French assets while a donee remains in the six-of-ten lookback, and arbitrate French real estate holdings, the only fraction permanently taxable
  • Restructure: revise life-insurance beneficiary clauses, examine a French trust vehicle if relevant, and avoid unplanned constitution of trusts or hekdesh exposed to article 792-0 bis
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Our approach

Our firm advises in French tax law families, executives, and significant wealth holders settled across France and Israel: succession territorial mapping (CGI 750 ter), gift timing before and after aliyah, life-insurance contract restructuring, trust and hekdesh treatment, succession reporting with cross-border elements, and succession-duty disputes. For Israeli law aspects (civil succession law, oleh status, local structures), we work with Israeli counsel under unified case direction.

  • International succession
  • CGI art. 750 ter
  • Life insurance 990 I
  • Trusts 792-0 bis
  • Aliyah
- FAQ

France-Israel inheritance: your questions answered

Does aliyah alone free me from French succession duty?

No. The decedent's move to Israel satisfies only the first criterion of CGI 750 ter. Remaining taxable in France are assets located in France (2nd criterion), and entire assets inherited by any heir domiciled in France on the transmission date and for at least six of the ten preceding years (3rd criterion). A family with one child in Paris remains fully subject to French duty on that child's inheritance, including Israeli holdings.

Is there a tax treaty between France and Israel on succession?

No. The treaty of 31 July 1995, published by decree no. 96-814 of 11 September 1996, covers income and wealth taxes only. No bilateral treaty addresses succession or gifts. Each state applies its own law: Israel collects nothing, France applies its rates. The foreign tax credit under CGI article 784 A, available for foreign duty actually paid on assets abroad, is inoperative by design.

What happens to a French life insurance contract after aliyah?

The contract continues, but its tax treatment at death turns on the article 990 I levy's own territorial rules: the levy (20% then 31.25% above EUR 700,000, after EUR 152,500 exemption per beneficiary) applies if the beneficiary is domiciled in France at death and was for six of the ten preceding years, or if the insured is domiciled in France at death. The insured's move to Israel alone does not shield beneficiaries who stayed in France. Premiums paid after age 70 fall under CGI article 757 B and succession duty above EUR 30,500 global exemption. A review of the beneficiary clause and premium timing is essential before departure.

Why gift before aliyah rather than after?

Because a gift made before departure deploys French exemptions (EUR 100,000 per parent per child, renewable every fifteen years) and lower tax brackets, while purging latent gains for the donee, and the estate is in French tax reach anyway at that stage. After departure, a gift of non-French assets remains taxable in France as long as the donee meets the six-of-ten-years test under CGI 750 ter, 3rd. The best sequence is usually: gift before departure, then defer further transmissions until the donee exits the lookback window, with French real estate always remaining taxable.

Is an Israeli trust or hekdesh a good tool for family wealth tied to France?

Rarely in its current form. Wherever a French connection exists (settlor, beneficiary domiciled in France for six of ten years, or French asset), transfer via trust falls under CGI article 792-0 bis: standard succession duty if a specific share goes to an identified beneficiary, but 45% with no exemption for a share broadly devolved to descendants and 60% in other cases, with reporting obligations under article 1649 AB imposed on the trustee. Israeli fiduciary structures must be analyzed against this definition before creation, and are most often replaced by French or Luxembourg tools better suited to the tax reality.

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