Wealth & Non-Residents
English

France-Italy Taxation: The Bilateral Axis Decoded

The tax axis between France and Italy rests on two distinct bilateral treaties, one for income and wealth tax, the other for inheritance and gift tax. Understanding how they interlock is the precondition to any cross-border wealth decision, whether for an Italian national settled in France, a French national holding assets in Italy, or a family split between the two countries.

Request a confidential first exchange Your obligations
The firm Bensaid Avocats, tax lawyers admitted to the Paris & Geneva Bars. Analysis based on official sources (Legifrance, BOFiP, OECD), current as of 1 July 2026.
— In brief
Two treaties
Income/wealth (Venice, 1989) and succession/gifts (Rome, 1990)
Residence
Cascading tie-breaker (art. 4): nationality does not prevail
Dividends
Withholding capped at 15% (5% for a company holding ≥ 10%)
Succession
Major gap: 4% in Italy versus up to 45% in France
Exit tax
Automatic deferral on a move back to Italy (EU/EEA)
— 01

Two Bilateral Treaties, Two Logics

The France-Italy axis presents a rarity within the French treaty network: it is covered by two distinct treaties. The treaty on income and wealth taxes, signed in Venice on 5 October 1989, entered into force on 1 May 1992 (decree no. 92-422 of 4 May 1992). It forms the foundation of any analysis of mobility or asset holding between the two countries. It is supplemented by a protocol and an exchange of letters that clarify its application.

The second treaty, devoted to inheritance and gifts, was signed in Rome on 20 December 1990 and entered into force on 1 April 1995 (decree no. 95-351 of 28 March 1995). This succession coverage is exceptional: most treaties concluded by France do not address gratuitous transfer duties. For French-Italian families, this radically changes the picture, since the allocation of the right to tax is framed by the treaty and not left to the sole interplay of the two domestic laws.

These two texts override domestic law in allocating fiscal jurisdiction between Paris and Rome and in eliminating double taxation. The firm, present in Paris and Geneva, systematically maps out which of the two States holds the right to tax each category of income and each asset before building any wealth strategy.

— 02

Issues and obligations

Tax Residence: The Decisive Point

Article 4 of the 1989 treaty defines residence by reference to domestic law: a person is a resident of the State where they are liable to tax by reason of their domicile, residence, place of management or a similar criterion. Where both States simultaneously claim residence, the treaty applies a cascading tie-breaker rule. The order is strict: first the State of the permanent home; failing that, the State of the centre of vital interests, meaning the closest personal and economic ties; then, failing that, the State of habitual abode; then nationality; finally, if no criterion decides, a mutual agreement between the two administrations. This hierarchy is crucial: nationality comes into play only as the second-to-last resort. An Italian national living in France will, in the vast majority of cases, be a French tax resident within the meaning of the treaty, regardless of their passport. Conversely, a French national whose home and vital interests have shifted to Italy may cease to be a French resident despite their nationality. Residence litigation is among the most active in French-Italian matters, and its documentary preparation determines the outcome of any reassessment.

The Treatment of the Main Types of Income

Dividends (art. 10): withholding tax in the source State is capped at 15% for an individual, and reduced to 5% where the beneficiary is a company holding at least 10% of the capital for twelve months. Interest (art. 11) is capped at 10%, with several exemptions (credit tied to sales of industrial equipment, payments by public entities, interbank loans). Royalties (art. 12): the cap is 5%, with a full exemption for copyright on literary, artistic and scientific works. Capital gains (art. 13) follow a logic of location: real estate gains are taxable in the State where the property is situated; gains on substantial holdings (≥ 25%) in a company are taxable in the State of that company; other disposals of securities remain taxable solely in the State of residence of the seller. Employment income (art. 15): taxation takes place, in principle, in the State where the activity is carried out, subject to application of the 183-day rule. Pensions (art. 18 and 19) call for particular vigilance: private pensions are taxable only in the State of residence, but public pensions and social security pensions are taxable in the source State. Article 18 has historically raised application difficulties, documented by the BOFiP, which a French-Italian retiree has every interest in anticipating.

Succession, Gifts and Real Estate Wealth

It is in succession matters that the French-Italian axis reveals its most striking gap. Italy applies very moderate inheritance duties: an allowance of roughly one million euros per direct-line heir and a rate of around 4%. France, by contrast, applies a progressive scale reaching 45% in the direct line. The 1990 treaty determines which of the two States taxes according to the location of the assets and the domicile of the deceased or the donor; the planning stakes are considerable and justify a precise, asset-by-asset mapping of the estate. As regards wealth, a resident of France is subject to the real estate wealth tax (IFI) on their worldwide real estate holdings, Italian assets included, once the net taxable value exceeds 1.3 million euros, the scale applying from 800,000 euros. Holding a second home in Tuscany, Lombardy or on the lakes falls squarely within the French base. Finally, the exit tax under article 167 bis of the CGI may be triggered on departure from France, for example on a move back to Italy. The 2026 rate reaches 31.4%, but a transfer to an EU or EEA State, including Italy, gives rise to an automatic payment deferral, without guarantee or express request. The firm, admitted to the Paris and Geneva Bars, coordinates these regimes to secure both the arrival and the departure.

— 03

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-Italy tax treaty
  • tax residence
  • French-Italian succession
  • IFI
  • dividends
  • exit tax
  • non-residents
— Frequently asked questions

The Essentials of the French-Italian Axis

How many tax treaties bind France and Italy?

Two distinct treaties: that of 5 October 1989 for income and wealth taxes (in force on 1 May 1992) and that of 20 December 1990 for inheritance and gifts (in force on 1 April 1995). This dual coverage, notably on succession, is rare within the French treaty network.

Does Italian nationality determine tax residence?

No. Article 4 of the 1989 treaty applies a cascading tie-breaker: permanent home, then centre of vital interests, then habitual abode, and only then nationality. An Italian living in France is therefore generally a French tax resident, whatever their passport.

What is the withholding rate on French-Italian dividends?

Withholding tax is capped at 15% for an individual. It is reduced to 5% where the beneficiary is a company holding at least 10% of the capital of the distributing company for twelve months.

Why is the France-Italy succession gap so significant?

Italy applies an allowance of roughly one million euros per direct-line heir and a rate of around 4%, whereas France reaches 45% in the direct line. The 1990 treaty determines which of the two States taxes, which makes planning decisive.

Does my apartment in Italy fall within the French IFI?

Yes, if you are a tax resident of France. The IFI covers worldwide real estate holdings once the net taxable value exceeds 1.3 million euros, the scale applying from 800,000 euros. Assets located in Italy are therefore included in the base.

Cité par

Structuring Wealth Between France and Italy

Every French-Italian situation turns on the precise characterisation of residence, the location of assets and the interplay of the two treaties. The firm Bensaid Avocats, present in Paris and Geneva, assists individuals, executives and families in mapping their wealth, securing their reporting obligations and anticipating succession stakes. An initial discussion makes it possible to identify the points of vigilance and the room for manoeuvre specific to your configuration.

Request an audit See Jonathan Bensaid's profile

This content is provided for general information purposes and does not constitute personalised legal or tax advice. The data is current as of 1 July 2026 and is subject to change. Any decision must be the subject of an individual analysis by a lawyer.