France–Israel Bilateral Axis
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France–Israel Taxation: Treaty Framework and Points of Friction

The tax axis between France and Israel combines a 1995 treaty that is protective of income and wealth, an Israeli exemption regime highly favourable to new immigrants, and yet a major blind spot: the complete absence of any treaty on inheritance and gifts. The firm Bensaid Avocats, admitted to the Paris and Geneva Bars, maps out here the rules of cross-border taxation and the risk areas for estates connected to both countries.

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Analysis written by tax lawyers admitted to the Paris and Geneva Bars. Informational content that does not constitute personalised advice.
— In brief
Treaty
Signed 31 July 1995, in force since 1996, revised by the BEPS multilateral convention (MLI).
Dividends
Withholding tax capped at 5% (holding ≥ 10%) or 15% in other cases.
Olim regime
Israeli ten-year exemption on foreign-source income, with no effect on French taxation.
Inheritance
No treaty: risk of unrelieved double taxation, Israel having levied no such duties since 1981.
Transparency
Automatic CRS exchange active since 2019, reinforced by CRS 2.0 on 1 January 2026.
— 01

Key Markers of the France–Israel Axis

The France–Israel tax relationship rests on an old but partial treaty foundation. The treaty of 31 July 1995, which entered into force on 18 July 1996 and was published by Decree no. 96-814 of 11 September 1996, covers only taxes on income and on wealth. It has since been amended by the BEPS multilateral convention (the MLI), whose consolidated version is published by the French tax authorities.

This architecture creates a defining asymmetry: income flows and movable wealth benefit from a clear framework, whereas the transmission of estates remains governed by domestic law alone, with no treaty safety net. Understanding this balance is the prerequisite to any wealth structuring between Paris, Geneva and Tel Aviv.

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Issues and obligations

Taxation of Income and Movable Wealth

The treaty allocates the right to tax according to the nature of the income. Dividends (Article 10) are taxable in the State of residence of the beneficiary, the source State levying only a withholding tax capped at 5% where the company holds at least 10% of the capital, or at 15% in other situations. Interest (Article 11) and royalties (Article 12) bear a withholding tax capped at 10%. As regards capital gains (Article 13), the rule varies with the asset disposed of: real-estate gains are taxable in the State where the property is located; disposals of substantial shareholdings may be taxed in the source State up to a limit of 18%; other movable property is taxable only in the State of residence of the transferor, unless connected to a permanent establishment. Private pensions (Article 18) fall solely within the State of residence of the beneficiary, while public pensions and remuneration (Article 19) are, in principle, taxed in the paying State. For residual double taxation, France applies the tax-credit method, creditable and capped (Article 23), while Israel for its part applies a deduction method. Wealth tax also falls within the scope of the treaty. An Israeli resident holding real-estate assets in France thus remains liable for the French IFI (real-estate wealth tax) once the net taxable value of his French-situated assets crosses the entry threshold of EUR 1,300,000, the scale applying from EUR 800,000.

The New-Immigrant Regime and Its Limited Effect

Introduced by the 2008 Israeli tax reform (Amendment 168 to the Income Tax Ordinance), the new-immigrant regime (Olim Hadashim) grants a ten-year tax exemption on foreign-source income: interest, dividends, rents from property located outside Israel, royalties, certain capital gains and remuneration from an activity carried out abroad. Historically, this regime combined exemption with a reporting waiver. The essential point of vigilance, on the France–Israel axis, is that this exemption is strictly Israeli. It in no way neutralises France's right to tax. If the taxpayer retains the status of French tax resident, or if the income concerned is French-source, France fully retains its right to tax, irrespective of the advantage granted by Israel. A notable change takes effect on 1 January 2026: the ten-year exemption remains, but the reporting obligation is reinstated, ending the reporting secrecy previously enjoyed by olim. Combined with the automatic exchange of information, this reform removes the historic opacity of the regime. The exact terms of entry into force warrant a case-by-case check at the time of structuring.

Inheritance and Gifts: The Treaty Blind Spot

This is the most critical point of the France–Israel axis: there is no tax treaty between the two States on inheritance and gifts. The 1995 treaty covers only income and wealth. Transmission is therefore governed exclusively by the domestic law of each country. Yet the two systems are diametrically opposed. Israel abolished inheritance duties in 1981: heirs bear no transfer duty on gratuitous transfers. France, by contrast, taxes broadly as soon as a French connection exists, under Article 750 ter of the General Tax Code (CGI): a French-resident deceased or donor, an heir who has been a French resident for at least six of the last ten years, or an asset located in France. The absence of a treaty deprives the taxpayer of any mechanism for the automatic elimination of double taxation. The foreign-tax credit under Article 784 A of the CGI remains theoretically available, but it becomes inoperative where Israel levies no duty: there is then no foreign tax to credit. An heir may thus pay inheritance tax in France without any offsetting credit, which calls for rigorous estate planning.

Transparency, Exit Tax and Planning

The France–Israel axis now operates within an environment of near-total transparency. Israel adopted the CRS law on 2 January 2019 and carries out the automatic, annual exchange of information on financial accounts with France. The CRS 2.0 revision, transposed into French law by Decree no. 2025-1277 of 19 December 2025, takes effect on 1 January 2026 and notably extends the mechanism to crypto-assets. Departure from France to Israel also triggers the exit tax of Article 167 bis of the CGI, where the taxpayer has been a French tax resident for at least six of the last ten years and holds shareholdings above 50% or securities with an aggregate value exceeding EUR 800,000. The overall rate is 30% under the flat tax, with an option for the progressive scale. As Israel is outside the European Union, the deferral of payment is not automatic as of right and must be assessed in light of the treaty and the existing administrative assistance. In the face of these mechanisms, anticipation is decisive. The firm Bensaid Avocats, present in Paris and Geneva, assists Israel-connected estates in the combined reading of the two domestic laws and the treaty, in order to secure flows, prepare transmissions and calibrate departures. Each situation calls for its own analysis, taking account of residence, the nature of the income and the ownership structure.

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Lead counsel — Me Jonathan Bensaid

Me Jonathan Bensaid, founding partner, advises UHNWIs, family offices, executives and non-residents on international wealth taxation and cross-border compliance. The firm is admitted to the Paris & Geneva Bars.

  • France–Israel treaty
  • international taxation
  • olim
  • inheritance
  • exit tax
  • IFI
  • non-residents
— Frequently asked questions

A Protective Treaty, an Inheritance Blind Spot

Does the France–Israel treaty cover inheritance?

No. The treaty of 31 July 1995 covers only taxes on income and on wealth. Inheritance and gifts fall exclusively within the domestic law of each country, with no treaty mechanism to eliminate double taxation.

What is the withholding-tax rate on dividends?

The withholding tax is capped at 5% where the beneficiary company holds at least 10% of the capital of the distributing company, and at 15% in other cases, under Article 10 of the treaty.

Does the Israeli ten-year exemption shield against French tax?

No. The new-immigrant regime is strictly Israeli. It does not neutralise France's right to tax, which subsists if the taxpayer remains a French tax resident or if the income is French-source.

Does an Israeli resident pay the IFI in France?

Yes, on his French-situated real-estate assets alone, once the net taxable value exceeds the entry threshold of EUR 1,300,000, the scale applying from EUR 800,000. The treaty covers wealth tax.

Is the exit-tax deferral automatic on departure to Israel?

No. As Israel is outside the European Union, the deferral of payment is not automatic as of right. It may nonetheless be obtained in light of the treaty and the existing administrative assistance, subject to conditions and guarantees, which calls for a case-by-case analysis.

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Securing Wealth Between France and Israel

The France–Israel axis combines a favourable treaty framework on income with high exposure on transmissions. The firm Bensaid Avocats, admitted to the Paris and Geneva Bars, assists executives, families and non-residents in the cross-reading of the two bodies of law and in the structuring of their wealth.

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Informational content current as of 1 July 2026, not constituting personalised legal or tax advice. Treaty rates and article numbers must be confirmed against the consolidated text published by the tax authorities. The firm Bensaid Avocats, Paris and Geneva Bars.