International mobility, France-Israel axis

Aliyah and French tax: preparing your departure for Israel

Transferring your tax residence to Israel is far more than a change of address: it must be prepared, ideally 12 to 24 months before departure. Three mechanisms structure the file. First, the exit tax under article 167 bis of the French Tax Code, which applies at a combined rate of 31.4% as of 2026 to unrealised gains of taxpayers holding more than EUR 800,000 in securities or 50% of a company's profits, after six years of residence over the preceding ten years; as the France-Israel Convention of 31 July 1995 contains no mutual assistance clause, payment deferral is not automatic and must be requested 90 days before departure, with guarantees. Second, the six years in ten rule under article 750 ter of the French Tax Code, which keeps children remaining in France within the scope of French gift and inheritance duties. Third, the conventional apportionment of pensions and income retained in France. The firm advises exclusively on French tax law for families planning aliyah and coordinates the Israeli portion (new immigrant status) with local correspondents.

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— En bref
Tax residence
Internal criteria of French Tax Code art. 4 B, then conventional cascade of art. 4 of the 31 July 1995 Convention: permanent home, centre of vital interests, habitual residence, nationality
Exit tax
French Tax Code art. 167 bis: 6 years of residence in 10, securities worth over EUR 800,000 or 50% of profits; combined rate of 31.4% as of 2026; deferral on election to Israel (2074-ETD form, guarantees, 90 days)
Year of departure
Worldwide income taxed until date of transfer, then only French-source income; returns 2042 and 2042-NR the following year
Pensions
Private pensions taxable exclusively in Israel (Convention art. 18); public pensions generally taxable in France (art. 19)
Transfers
No succession convention; heir or donee remaining in France 6 years in 10 preceding years remains taxable in France on all property received (French Tax Code art. 750 ter, 3°)
— 01

A departure that must be prepared, not simply observed

French tax law does not know aliyah: it knows transfer of tax residence. As long as one of the criteria of French Tax Code art. 4 B is met in France (principal dwelling, principal residence, non-ancillary professional activity or centre of economic interests), the taxpayer remains taxable in France on worldwide income, regardless of the reality of his or her installation in Israel. It is the 31 July 1995 Convention, through its cascade in article 4, that resolves double residences: principal dwelling, centre of vital interests, habitual residence, then nationality. An apartment retained in Paris, a corporate mandate maintained or an estate predominantly French can be enough to shift the analysis.

The date of transfer dictates everything else: the end of worldwide taxation, the trigger date of exit tax, the starting point of the six-year countdown for article 750 ter purposes for close relatives remaining in France, and the beginning of the Israeli new immigrant regime. The estates in question are substantial: shareholdings of directors, rental real estate, life insurance contracts, liberal professionals selling their business.

Attention often focuses on exit tax; experience shows that assessments more often arise from poorly purged residence (overlapping year, dwelling retained in France, income reported to the wrong authority) or poorly dated transfers, a gift made a few months too early or too late potentially representing hundreds of thousands of euros in duties.

The firm advises exclusively on French tax law and coordinates the Israeli portion (new immigrant status, local obligations) with correspondents established in Israel. It limits its engagements to ensure direct involvement of partners.

— 02

Departure for Israel, point by point

01

Tax residence: internal criteria and conventional cascade

The transfer is secured only if the analysis is conclusive at both levels: domestic French law, then the Convention.

  • French Tax Code art. 4 B: domicile in France if the principal dwelling or principal residence, non-ancillary professional activity or centre of economic interests remains there
  • In case of double residence, the cascade of the 1995 Convention art. 4 applies: permanent principal dwelling, centre of vital interests, habitual residence, nationality, then mutual agreement
  • Recurring vigilance points: accommodation retained for use in France, spouse or minor children remaining in France part of the school year, corporate mandates and estate predominantly French
  • The status of Israeli resident presupposes tax liability in Israel by reason of domicile; the status of oleh (new immigrant) and its ten-year exemption require careful analysis of this condition, documented from installation
02

Year of departure: divided taxation and declarative obligations

The year of transfer is split in two: resident until departure, non-resident thereafter.

  • Until date of transfer: taxation in France of worldwide income; after this date: taxation of French-source income only (withholding, rental income, capital gains on real property)
  • Year following departure: return 2042 for the period of residence and 2042-NR for French-source income after departure, to the tax office for non-resident individuals
  • French-source income after departure: tax calculated at minimum rate of 20%, increased to 30% beyond an annually indexed threshold (around EUR 29,000 of taxable net income), except election for average rate if more favourable (French Tax Code art. 197 A)
  • Social levies on rental income (bare ownership) and capital gains on real property of French source: 17.2% for a resident of Israel, furnished rentals falling instead under rate of 18.6% since LFSS 2026; reduced rate of 7.5% (solidarity levy only) remains reserved for persons affiliated to a social security scheme of the EU, EEA or Switzerland
03

Exit tax to Israel: a deferral that is not automatic

The 1995 Convention contains no mutual assistance clause: the favourable regime of automatic deferral does not apply.

  • Scope of French Tax Code art. 167 bis: French tax resident 6 years in the preceding 10 years, holding securities with global value exceeding EUR 800,000 or at least 50% of a company's profits; the basis covers unrealised gains, earn-out receivables and deferred gains (150-0 B ter)
  • Combined rate of 31.4% as of 2026 (12.8% income tax and 18.6% social levies, after CSG increase in LFSS 2026), with possible election for the graduated rate
  • Automatic deferral is reserved for departures to the EU or to a state that has concluded with France mutual assistance comparable to the European Directive; the France-Israel Convention limits itself to exchange of information (art. 26): departure to Israel falls in practice under deferral on election
  • Deferral on election: declaration 2074-ETD, designation of a tax representative in France and establishment of guarantees equal to 12.8% of the amount of gains and receivables concerned, all no later than 90 days before transfer; relief after 2 years of retention (securities under EUR 2.57 million) or 5 years, or in case of return to France
04

Pensions, accounts and property retained in France

Aliyah does not purge economic ties with France: each element retained has its own regime.

  • Private pensions (base and supplementary pensions from private employment, life annuities): taxable exclusively in the state of residence (Convention art. 18), thus in Israel after transfer, where the new immigrant regime may apply; pensions paid for public services remain in principle taxable in France (art. 19, § 2), except for the retiree resident in Israel who possesses Israeli nationality alone
  • Immovable property retained: rental income and gains taxable in France; in case of sale, levy under French Tax Code art. 244 bis A (19% and social levies) and designation of an accredited tax representative, exemption reserved for residents of the EU and EEA (except dispositions under EUR 150,000 or retention over thirty years)
  • Wealth tax: the non-resident remains taxable on immovable property and rights located in France (French Tax Code art. 964) from EUR 1,300,000 of taxable net value
  • Accounts and contracts: the PEA (tax-privileged equity savings plan) and life insurance can in principle be retained after departure, with a withholding regime specific to non-residents; French accounts must be declared on the Israeli side, the declarative obligation of olim being restored since 2026, in a context of automatic CRS exchange between the two states
05

Optimal timeline: give, purge, date. A worked example

Anonymised case drawn from firm dossiers: an executive aged 58, married, two children, one remaining in France.

  • Situation: securities in his company valued at EUR 5 million (acquisition cost EUR 1 million), a Paris apartment of EUR 2.4 million retained in bare ownership, aliyah planned in eighteen months
  • Gift before departure: a gift transfer of securities worth EUR 1.6 million purges the corresponding unrealised gain and removes these securities from exit tax basis; duties are the same whether the gift occurs before or after departure as long as the donee child remains resident in France (French Tax Code art. 750 ter, 3°, six in ten rule), but only the gift prior to transfer purges the gain
  • Exit tax at departure: residual unrealised gains of approximately EUR 2.7 million, i.e. nearly EUR 848,000 of theoretical taxation at 31.4%, placed in deferral on election (2074-ETD form, guarantees, tax representative, application filed 90 days before departure); relief at end of 5 years of retention
  • Date of departure: fixed after receipt of the company's annual dividend and before 31 December, to avoid an overlapping year; the apartment retained shifts into the scope of art. 244 bis A, wealth tax and social levies at 17.2%, which is calculated before deciding between retention and sale
— 03

Our approach

The firm intervenes in French tax law at each stage of the aliyah project: residence audit and securing the transfer date, calculation and management of exit tax (2074-ETD form, guarantees, tax representative), timing of gifts before departure with regard to French Tax Code art. 750 ter, treatment of the departure year and returns 2042 and 2042-NR, structuring of property, accounts and contracts retained in France. For the Israeli portion (new immigrant status, local declarative obligations), the firm works with Israeli correspondents and ensures overall coherence of the file.

  • Aliyah
  • Transfer of tax residence
  • Exit tax
  • France-Israel Convention
  • French Tax Code art. 750 ter
— FAQ

Aliyah and French tax: your questions

When do you cease to be a French tax resident in case of aliyah?

On the date of the effective transfer of tax residence, assessed under French Tax Code art. 4 B criteria and then, in case of double residence, the cascade in art. 4 of the 31 July 1995 Convention (permanent principal dwelling, centre of vital interests, habitual residence, nationality). The date of obtaining new immigrant status or that of aliyah flight is insufficient: as long as a principal dwelling, activity or centre of economic interests remains in France, the tax authority can maintain French residence. The date retained must be consistent with the facts (family relocation, termination or rental of accommodation, cessation of functions) and documented.

What returns must I file in the year following my departure?

Two returns in the year following transfer: the 2042, for worldwide income received between 1 January and the date of departure, and the 2042-NR, for French-source income received after departure. The file falls under the tax office for non-resident individuals, to which the new address in Israel must be reported. In subsequent years, only French-source income remains reportable in France, at the minimum rate of 20% or 30% of French Tax Code art. 197 A, except election for average rate when more favourable.

Does exit tax apply in case of departure to Israel, and is deferral automatic?

Exit tax under French Tax Code art. 167 bis applies if you have been a French tax resident 6 years in the preceding 10 years and hold securities with global value exceeding EUR 800,000 or at least 50% of a company's profits. Payment deferral is not automatic to Israel: the 1995 Convention contains no mutual assistance clause, condition of automatic deferral outside the European Union. You must therefore elect deferral by filing form 2074-ETD, designating a tax representative in France and establishing guarantees, no later than 90 days before transfer. Taxation, calculated at combined rate of 31.4% as of 2026, is relieved after 2 or 5 years of retention depending on security value, or in case of return to France.

Will my French pension still be taxed in France after aliyah?

In principle no for private pensions: Convention art. 18 reserves taxation of pensions and life annuities to the beneficiary's state of residence, thus to Israel once transfer is secured, where the new immigrant regime may also apply. Exception is made for public pensions (art. 19, § 2), paid for services rendered to the state or a French collectivity: they remain taxable in France, except if the retiree is resident in Israel and possesses Israeli nationality without possessing French nationality. The qualification of each pension (base scheme, supplementary, civil service pension) must be verified line by line before departure.

May I retain my PEA (tax-privileged equity savings plan), life insurance and French accounts?

Yes, in principle. Transfer of tax residence outside France does not entail closure of PEA or life insurance contracts, whose products then fall under a withholding regime specific to non-residents; some banks and companies contractually restrict non-resident accounts, which must be verified institution by institution. On the Israeli side, these holdings enter the scope of declarative obligations of olim, restored since 2026, and of automatic information exchange between the two states: consistency of declarations on both sides has become a full control point.

Is it better to gift to my children before or after departure to Israel?

Departure of parents is insufficient to exit French duty scope: as long as the donee child or heir remained domiciled in France at least 6 years in the preceding 10 years, French Tax Code art. 750 ter, 3° renders taxable in France all property received, French or foreign, and there is no France-Israel Convention on successions and gifts to correct double taxation, Israel moreover applying no death duties since 1981. The interest in a gift before departure lies elsewhere: given before transfer, a gift of securities purges the unrealised gain and reduces the exit tax basis, while using exemptions of EUR 100,000 per parent and per child, renewable every fifteen years. The timeline is built gift by gift.

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