Bilateral France-Israel Axis

Retaining or Selling French Real Estate After Aliyah

After transferring tax residence to Israel, real estate retained in France remains fully taxable in France: the treaty of 31 July 1995 allocates immovable property income to the State of situation of the property (Article 6). In practical terms, rental income is subject to a minimum rate of 20%, rising to 30% beyond approximately EUR 29,600 of net rental income (Article 197 A of the French Tax Code), plus 17.2% in social contributions, Israel being outside the European Union. On sale, the 19% withholding under Article 244 bis A applies, most often accompanied by a requirement to appoint an accredited tax representative. Beyond EUR 1.3 million in French real estate assets, Wealth Tax remains due each year. Our firm assists families planning aliyah in deciding whether to retain, sell, or gift French property before departure.

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— En bref
Rental Income
Minimum rate of 20%, then 30% above the second-bracket ceiling (French Tax Code Article 197 A), except on election for average rate
Social Contributions
17.2% on rental income and capital gains: the reduced 7.5% rate applies only to EU, EEA and Swiss affiliates; Israel is excluded
Capital Gain
19% withholding (French Tax Code Article 244 bis A), holding-period deductions, accredited tax representative generally required outside EU above EUR 150,000
Wealth Tax
Annual tax on French real estate assets from EUR 1.3 million of net taxable value (French Tax Code Article 964)
1995 Treaty
Immovable property income and gains taxable in the State of situation of the property (Articles 6 and 13): France retains jurisdiction
- 01

French Real Estate Does Not Follow the Resident to Israel

Departure to Israel transforms the owner into a non-resident under French law, without changing the place of taxation for French real estate. Article 6 of the France-Israel tax treaty of 31 July 1995 provides that income from immovable property is taxable only in the State where such property is situated; Article 13 adopts the same rule for gains on disposal, including for shares in immovable-heavy entities. France thus retains all jurisdiction to tax, regardless of the taxpayer's status in Israel.

The non-resident regime is substantially less favorable than the resident regime. Rental income is subject to the minimum rate under Article 197 A of the French Tax Code: 20% up to the upper limit of the second bracket (EUR 29,579 for 2025 income, annually adjusted), 30% above, except on election for an average rate calculated over worldwide income. To this add 17.2% in social contributions: the 7.5% solidarity levy, available only to persons covered by a mandatory social security scheme in an EU, EEA, or Swiss State, does not extend to Israeli residents.

Under Israeli law as currently in effect, the new immigrant (oleh hadash) generally enjoys a ten-year exemption on foreign-source income, to be confirmed with local counsel, which typically eliminates Israeli tax on French rental income during that period. This exemption is strictly Israeli in character: it does nothing to reduce French tax. The firm advises on French tax law and collaborates with Israeli correspondents on the local dimension.

The firm limits the number of matters undertaken to ensure direct partner engagement on every file, and systematically evaluates the pertinence of involvement before accepting any engagement.

- 02

Retain, Sell, or Gift: Point-by-Point Analysis

01

Retaining and Renting: Net Return After Tax

The combination of minimum rate and social contributions significantly erodes rental yield for the non-resident.

  • Unfurnished rental: actual or micro regime, then minimum rate of 20% to approximately EUR 29,600 of net rental income and 30% above (French Tax Code Article 197 A), plus 17.2% in social contributions, for a marginal burden reaching 47.2%
  • Election for average rate: on justification of all worldwide income, tax may be reduced to the rate flowing from the statutory scale; election is often pertinent during the ten-year oleh period when Israeli income is modest or exempt
  • Furnished rental from abroad: business income regime, real-method depreciation under furnished-rental rules, but reintegration of depreciation deducted into capital gain on sale under Finance Law 2025, with vigilance over self-employment contributions if crossing into professional-landlord status
  • Example: net taxable rental income of EUR 36,000, immovable value EUR 1.6 million; income tax of approximately EUR 7,800 at minimum rate, social contributions of approximately EUR 6,200, Wealth Tax of approximately EUR 4,600, for a combined annual burden near EUR 18,600, more than half the net rent
02

Selling: The 19% Withholding and Accredited Representative

Disposition by an Israeli resident follows Article 244 bis A of the French Tax Code, with a procedural requirement unique to sellers outside the European Union.

  • 19% withholding on gain, holding-period deductions under Article 150 VC: income tax exemption after 22 years, social contributions (17.2%) exemption only after 30 years, and additional tax of 2% to 6% above EUR 50,000 of taxable gain (French Tax Code Article 1609 nonies G)
  • Accredited tax representative generally mandatory for a seller resident in Israel, the automatic exemption being limited to EU and EEA; practical exemption when sale price does not exceed EUR 150,000 per seller or when ownership exceeds thirty years (BOI-RFPI-PVINR-30-20)
  • Former main residence: full exemption if sale occurs no later than 31 December of the year following departure and property has remained unoccupied (French Tax Code Article 244 bis A, I, 1), Israel satisfying the administrative mutual assistance condition via Article 26 of the treaty; absent such timing, exemption capped at EUR 150,000 of net gain for nationals of an EU or EEA State with two years prior French tax residence, for sale no later than 31 December of the tenth year following departure (French Tax Code Article 150 U, II, 2)
  • Numeric example: property acquired for EUR 800,000 in 2011, resold for EUR 1.6 million after fifteen years; gain of approximately EUR 620,000 after allowances, income tax of approximately EUR 47,000 after 60% deduction, social contributions of approximately EUR 89,000 (deduction limited to 16.5%), additional tax of approximately EUR 12,400: combined cost near EUR 148,000, or more than 9% of proceeds
03

Wealth Tax, Entities, and Ownership Structures

Indirect ownership does not remove the property from French jurisdiction; it adds distinct compliance obligations.

  • Non-resident Wealth Tax: tax on French real estate and rights, as well as shares in entities to the extent of their French immovable value, once net taxable value exceeds EUR 1,300,000, with scale applying from EUR 800,000 (French Tax Code Articles 964 et seq.); Article 22 of the treaty preserves this French tax authority
  • Tax-transparent entity: income and gains remain taxable in France (Article 6, paragraph 5, and Article 13 of the treaty); shares enter Wealth Tax assessment and their disposition falls under Article 244 bis A withholding; treatment of the entity on the Israeli side, which disregards French tax transparency, must be validated with local counsel
  • 3% tax (French Tax Code Articles 990 D and 990 E) on disposition by an entity: an Israeli entity may qualify for exemptions on undertaking or annual declaration, the treaty containing the non-discrimination and information-exchange provisions required; failure to declare costs 3% of market value annually
  • Shift of a tax-transparent entity to corporate income tax in event of furnished rental: frequent consequence often suffered, to be anticipated before departure
04

Gifting Before Departure: The Transfer Window

No treaty covers successions and gifts between France and Israel; French immovables remain taxable in France regardless of residency.

  • A property in France remains subject to French gift and inheritance taxes regardless of residency of donor and donee (French Tax Code Article 750 ter, 2); departure to Israel does not erase this taxable base
  • A gift before sale purges the latent gain: donee-children dispose based on declared value, which may neutralize much of the 244 bis A cost in the numeric example above
  • Exclusion of EUR 100,000 per parent and per child, renewable every fifteen years, and standard tools (usufruct, partition gift) available before departure within a purely French framework
  • Attention to the six-out-of-ten rule (French Tax Code Article 750 ter, 3): an heir or donee remaining French tax resident is taxable in France on foreign property received; Israel having applied no inheritance tax since 1981, no foreign tax credit relieves French tax
- 03

Our Approach

The firm assists families and business principals planning aliyah on the French dimension of their real estate portfolio: comparative valuation of retain, sell, and gift scenarios, election for average rate, documentation of exit exemptions, coordination of accredited tax representative, Wealth Tax and non-resident compliance, restructuring of tax-transparent entities before departure. On the Israeli side, particularly oleh status and local obligations, the firm works with trusted Israeli correspondents to ensure coherent reading of both tax systems.

  • Aliyah
  • Non-Residents
  • French Tax Code Article 244 bis A
  • Wealth Tax
  • France-Israel Tax Treaty
- FAQ

French Real Estate After Aliyah: Your Questions

Will my French rental income be taxed in France or Israel after aliyah?

In France. Article 6 of the treaty of 31 July 1995 provides that income from immovable property is taxable only in the State where the property is situated. Rental from French property thus remains subject to French income tax at the minimum rate of 20% or 30% (French Tax Code Article 197 A) and social contributions of 17.2%. During the ten-year exemption period for the new immigrant, Israel generally does not tax such foreign-source income, but this Israeli exemption never reduces French tax.

Can I escape the 17.2% social contributions as an Israeli resident?

No, under current law. The exemption from the general social contribution and related levies, which would reduce the burden to 7.5% solidarity levy alone, is available only to persons covered by a mandatory social security scheme in an EU, EEA, or Swiss State. Israel being outside all three, rental income and real estate gains for an Israeli resident are subject to the full 17.2% social-contribution rate (French Social Security Code Articles L. 136-6 and L. 136-7).

Must I appoint a tax representative to sell my property from Israel?

Generally yes. The automatic exemption from appointing an accredited tax representative is limited to sellers resident in the European Union or in an EEA State bound to France by mutual administrative assistance treaties (Iceland, Norway). An Israeli resident must thus appoint one, except when the sale price does not exceed EUR 150,000 per seller or when the property has been owned more than thirty years and is wholly exempt under holding-period deductions (BOI-RFPI-PVINR-30-20). The representative's cost, typically proportional to price, must be factored into sale economics.

Should I sell my main residence before or after departure?

Sale before departure, while the residence is still your principal home, is exempt without any timeline requirement. After departure, the exemption applies if the sale occurs no later than 31 December of the year following transfer of residence and the property has remained unoccupied in the interim (French Tax Code Article 244 bis A, I, 1), a condition of administrative mutual assistance satisfied for Israel. Beyond that date, only the EUR 150,000 net-gain cap remains available (French Tax Code Article 150 U, II, 2), limited to nationals of an EU or EEA State with at least two years prior French tax residence, for sale no later than 31 December of the tenth year following departure. Sale timing is thus a tax decision in its own right.

Will I owe Wealth Tax once I am resident in Israel?

Yes, if the net value of your French real estate exceeds EUR 1,300,000 on 1 January. The non-resident is taxable on French real estate and rights as well as shares in entities, such as tax-transparent entities, to the extent of their representative French immovable value (French Tax Code Articles 964 et seq.), with the scale applying from EUR 800,000. Article 22 of the 1995 treaty confirms France's tax authority. Only debts secured by or allocable to French assets, meeting the conditions of French Tax Code Articles 973 and 974, remain deductible, requiring a financing review before departure.

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