Quick Answer: The France-Israel Double Tax Treaty, signed in 1995 and in force since December 1996, reduces Israeli withholding tax on dividends paid to French residents from the domestic 25% to 15%, and caps withholding on interest and royalties at 10%. Both countries have signed the Multilateral Instrument (MLI), which has modified the treaty per BEPS anti-avoidance rules. French nationals claiming treaty benefits need an ITA nikui memas mekorot reduced-rate certificate from the Israel Tax Authority before payments are made. French nationals making aliyah must also address France's exit tax under Article 167 bis of the Code Général des Impôts before transferring their tax domicile to Israel.

France has roughly 500,000 Jewish residents, the third-largest Jewish population nationally in the world, and French nationals have long been active buyers of Israeli residential property and investors in Israeli technology companies. Many make aliyah each year, leaving behind a trail of French assets, French pensions, and French tax obligations that the 1995 France-Israel Double Tax Convention exists to sort out.

The treaty follows the OECD Model Tax Convention structure that France uses for virtually all its bilateral agreements. It allocates taxing rights between the two countries on dividends, interest, royalties, capital gains, employment income, pensions, and business profits. Like all French treaties from this era, it uses the credit method rather than the exemption method: each country retains the right to tax income connected to it, and the other credits that tax against its own charge on the same income. The practical consequence is that you may owe tax in both countries on the same income — just not twice at the full rate.

1. What the France-Israel Treaty covers

The Convention between the Government of the French Republic and the Government of the State of Israel for the Avoidance of Double Taxation and the Prevention of Tax Evasion covers all taxes on income imposed by either country. For Israel, that means the Income Tax Ordinance (Pekudat Mas Hachnasa, New Version, 5721-1961) and the Land Taxation Law 5723-1963. For France, it covers l'impôt sur le revenu, l'impôt sur les sociétés, and related levies.

The treaty's main income categories:

  • Business profits — taxed only in the country where the enterprise is managed or has a permanent establishment (établissement stable)
  • Dividends — source country taxes at the reduced treaty rate of 15%
  • Interest — source country taxes at 10%
  • Royalties — source country taxes at 10%
  • Capital gains on real estate — taxed where the property is situated; Israel taxes Israeli real estate gains
  • Capital gains on shares — generally taxable only in the residence country, with an important exception for real-property companies
  • Employment income — taxed where the work is performed, with a 183-day short-assignment exemption
  • Pensions and annuities — taxed only in the country of residence
  • Directors' fees — taxable in the country of the company paying them

The treaty also contains non-discrimination, mutual agreement procedure, and exchange-of-information articles. Under the exchange-of-information provision, the Israel Tax Authority (Rashut HaMisim) and the French Direction Générale des Finances Publiques (DGFIP) can share taxpayer data. Both authorities use this channel actively.

In Practice — Treaty Precedence Under Israeli Law: Section 196 of the Income Tax Ordinance provides that the provisions of a double taxation convention take precedence over domestic Israeli tax law to the extent they are more favourable to the taxpayer. The competent Israeli authority for treaty matters is the International Taxation Division (Machleket Misui Beinleumi) of the Israel Tax Authority, headquartered at 18 Rehov Kaplan, Kiryat HaMemshala, Jerusalem 91004. Requests for reduced-rate certificates and advance rulings on treaty positions are submitted to this division. The ITA's international tax unit publishes guidance on France-Israel treaty issues on its website at taxes.gov.il, and the text of the convention is available there in Hebrew and can be compared with the French-language original.

2. Residency and the tie-breaker test

Every treaty benefit depends on the taxpayer being a "resident of" one of the contracting states. Under the treaty, a person is a resident where they are "liable to tax" by reason of domicile, residence, place of management, or a similar connection — not merely because they received income there.

France taxes its residents on worldwide income. French tax residence is determined by the rules in Article 4 B of the Code Général des Impôts: residence in France, principal professional activity in France, or centre of economic interests in France. Israel taxes its residents on worldwide income under the mercaz chayim (centre of life) test in Section 1 of the Income Tax Ordinance, which looks at where the person's home, family, regular workplace, social activity, and economic interests are located.

A person who splits time between France and Israel close to 183 days in each country can trigger dual tax residence. The treaty's tie-breaker resolves this through a cascade:

  1. Permanent home: if the person has a permanent home in only one country, that country wins
  2. Centre of vital interests: if permanent homes exist in both, where are the person's closest personal, social, and economic ties?
  3. Habitual abode: where does the person more commonly reside?
  4. Nationality: if habitual abode is unclear, the nationality of the person determines residence for treaty purposes
  5. Mutual agreement: if still unresolved, the DGFIP and the ITA resolve the question through their competent authority channel

A French national who genuinely moves to Israel, sells their French home, moves their family, and registers with the Israeli Population and Immigration Authority, will typically be an Israeli tax resident and French non-resident. They owe French tax only on French-source income going forward.

In Practice — Documenting the Break from French Tax Residence: When a French national makes aliyah, breaking French tax residence cleanly requires three concrete steps. First, file a final French income tax return (déclaration de revenus) for the year of departure, marking it as a departure year (année de départ) and showing the date of transfer abroad. The DGFIP service des non-résidents at TSA 10010, 10 rue du Centre, 93465 Noisy-le-Grand Cedex handles post-departure French tax affairs. Second, notify your French bank of the change in tax domicile — French banks are required under Article 1605 bis of the CGI to apply a 30% prélèvement forfaitaire to interest if the account holder remains listed as French-resident. Third, obtain an attestation de résidence fiscale from the DGFIP for any year in which you need to prove French non-residence to an Israeli payer. This certificate is issued free of charge on request to the local centre des impôts that handled your last French return.

3. Dividends: the 15% treaty rate

Dividends paid by an Israeli company to a French resident are one of the most common cross-border payment streams between the two countries, given the large number of French nationals who hold Israeli startup equity or own Israeli companies through French holding structures.

Under Israeli domestic law, dividends paid to a non-resident individual are subject to Israeli withholding at 25% under Section 170(a) of the Income Tax Ordinance. For non-resident corporate shareholders holding more than 10% of the Israeli company, the domestic withholding rate rises to 30% under Section 126(c).

The France-Israel treaty reduces these rates. The treaty caps withholding on dividends at 15% of the gross dividend amount where the beneficial owner is a French resident individual or portfolio investor. For substantial corporate holdings — where a French company directly controls a qualifying percentage of the Israeli company's capital — verify the current treaty text for any reduced corporate-shareholder rate that may apply; the treaty may provide for a lower rate of 5% or 10% for qualifying parent companies.

On the French side, the same dividend income is reported by the French resident on their impôt sur le revenu return and taxed under the prélèvement forfaitaire unique (PFU) at 30% (comprising 12.8% income tax and 17.2% social levies under the CSG/CRDS). The Israeli withholding tax paid is credited against the French tax, preventing double taxation on the same dividend stream.

In Practice — Getting the 15% Rate Applied Before the Dividend Is Paid: An Israeli company distributing a dividend must, under Section 164 of the Income Tax Ordinance, deduct withholding at the highest applicable rate unless the shareholder has a valid reduced-rate certificate (nikui memas mekorot) in hand before the payment date. For a French resident shareholder, the application is filed on ITA Form 2513 with the International Taxation Division (address above). Required documents: a completed Form 2513, a French tax residence certificate (attestation de résidence fiscale) issued by the DGFIP for the current tax year, a copy of the French-registered shareholder's identification (passport or French company registration extract), and details of the dividend payment stream. Processing time from a complete submission is 30 to 60 working days. The certificate, once issued, is typically valid for 12 to 24 months and covers all dividends paid during that period to the named beneficiary. If the dividend has already been paid with 25% withheld, the French shareholder must file an Israeli income tax return to claim a refund — a process that takes 12 to 18 months and requires a local Israeli tax agent or filing representative.

4. Interest: the 10% treaty rate

Interest paid from Israel to a French resident — on Israeli bank deposits, Israeli corporate bonds, shareholder loans, or intercompany lending — is subject to Israeli withholding under Section 170(a) of the Income Tax Ordinance. The domestic rate for most non-resident recipients is 25% on bank deposit interest and private loan interest.

The France-Israel treaty caps Israeli withholding on interest paid to a French resident at 10% of the gross interest amount, provided the French resident is the beneficial owner of the interest. Ten percent is a low rate by Israeli treaty standards, and it makes the treaty worth using for intercompany lending and structured financing arrangements between the two countries.

Domestic exemptions that may beat the treaty rate entirely: Section 9(15) of the Income Tax Ordinance exempts interest on shekel deposits by non-residents in Israeli banks from Israeli withholding where certain conditions are met. Interest on Bank of Israel short-term bills (Makam) and Israeli government bonds (Shahar) held by registered foreign investors is also exempt under Section 9(15a). Where a domestic exemption applies, there is no Israeli withholding at all — better than even the 10% treaty rate. Always check whether a domestic exemption applies before investing time in a treaty-rate certificate application.

In Practice — Bank of Israel Foreign Investor Registration: A French-resident investor who holds Israeli government bonds or bank deposits and wants to use the Section 9(15) domestic interest exemption must register with the Bank of Israel as a foreign investor. Registration is done through an Israeli bank: the investor provides a French passport, an attestation de résidence fiscale confirming non-Israeli residence, and relevant account documentation. The bank submits the registration to the Bank of Israel, and the account is designated as a cheshbon toshav chutz (foreign resident account). Interest credited to that account is then automatically exempted from Israeli withholding without any further certificate. If the account is mis-classified — a common administrative error — the bank may deduct 25% even though the exemption applies; the correction requires a direct bank approach and, if not resolved, a Form 135 refund claim with the ITA.

5. Royalties: the 10% treaty rate

Royalties paid from Israel to a French resident — for the use of Israeli patents, trademarks, know-how, software licenses, or other intellectual property — are subject to Israeli withholding under Section 170(a) of the Income Tax Ordinance. The domestic rates vary by royalty type and recipient category, but can reach 23% or higher for non-resident corporate recipients.

Under the France-Israel treaty, withholding on royalties paid to a qualifying French resident is capped at 10% of the gross royalty amount. This single rate covers most forms of intellectual property royalties — verify the current treaty text for any category-specific carve-outs. The standard nikui memas mekorot application process applies (see Section 9 below).

French companies licensing technology into Israel should also note the Israel Innovation Authority (IIA) R&D grant framework under the Encouragement of Research, Development and Technological Innovation in Industry Law 5744-1984. If the Israeli licensee has received IIA grants for the underlying technology, Section 19B of that law restricts how know-how royalties are structured and imposes a knowledge-transfer approval process — a requirement that operates independently of the treaty withholding rate.

6. Capital gains and Israeli real estate

For French nationals who own Israeli property or Israeli company shares, the capital gains article is where the treaty gets genuinely consequential.

Israeli real estate: The treaty gives Israel the primary right to tax gains on Israeli immovable property. A French resident who sells an Israeli apartment, office block, agricultural land, or parking facility owes Israeli mas shevach (appreciation tax) under the Land Taxation Law 5723-1963. The rate for non-resident sellers is 25% of the real, inflation-adjusted gain, calculated under Section 48A of the Land Taxation Law. There is no access to the single-apartment exemption (pturim l'dira yechida) that Israeli residents use. France then taxes the same gain under PFU rules but credits the Israeli mas shevach paid, preventing double taxation — though neither tax is eliminated.

Real property companies: The treaty contains a "real property company" provision that allows Israel to tax gains a French resident makes on the sale of shares in an Israeli company where the majority of the company's asset value derives from Israeli real estate. This overrides the general Section 97(b) exemption that non-residents otherwise use for Israeli share sales, and means that shares in Israeli real estate holding companies do not benefit from that exemption. Confirm the exact threshold with the current treaty text and ITA guidance before structuring a real estate holding through an Israeli company.

Israeli tech and startup shares: A French resident selling shares in an Israeli technology company — one whose value does not derive primarily from Israeli real estate — is generally exempt from Israeli capital gains tax under Section 97(b) of the Income Tax Ordinance, provided the French resident holds less than 10% of the company and certain other conditions are met. The treaty reinforces this: the gain is taxable only in France as the residence country. The ITA may require a withholding clearance certificate under Section 68A before the share transfer closes, even where the exemption applies; this is a procedural formality and typically processed within 30 working days by the ITA's Capital Markets unit.

In Practice — Mas Shevach on Israeli Property: The Timeline: When a French resident sells Israeli real estate, the mas shevach process runs as follows. Within 30 days of signing the purchase contract (chozeh mekar), the seller or their Israeli attorney files a mas shevach declaration (hatzharas mekar) with the local Land Taxation Authority (Misui Mekarkein) office — Tel Aviv District: Kaplan 17 Rothschild Blvd, Tel Aviv; Jerusalem District: 1 David Ben Gurion Boulevard; Haifa District: 15 Pal-Yam Avenue. The ITA issues a tax assessment within 60 to 90 days. Tax must be paid within 60 days of the sale contract date to avoid late payment interest at the statutory rate (currently approximately 4% annual CPI linkage plus interest surcharge). Once tax is paid or a payment arrangement is confirmed, the ITA issues a nikui mas shevach clearance certificate. Without this certificate, the Land Registry (Tabu) will refuse to register the buyer's ownership — so the sale cannot be completed until the seller's mas shevach account is settled.

7. Employment income and the 183-day rule

The France-Israel treaty contains the standard OECD rule for employment income: a person working in a country is taxable there on the wages from that work. However, short-term assignments are protected by the treaty's 183-day rule: an employee sent to Israel by a French employer for a temporary assignment remains taxable only in France if (a) they spend fewer than 183 days in Israel during the relevant 12-month period; (b) the salary is paid by — or on behalf of — the French employer; and (c) the cost is not borne by a permanent establishment of the French employer in Israel.

All three conditions must be met simultaneously. If an Israeli subsidiary or branch reimburses the French parent for the assignment cost, the cost-borne-by-permanent-establishment test fails and Israeli tax applies from day one, regardless of the 183-day count.

French employees working in Israel who do not meet all three conditions owe Israeli income tax from the first day on Israeli-source employment income. They must register with the ITA and obtain a Tofes 101 for their Israeli employer to withhold the correct amount. France then credits the Israeli employment tax on the relevant portion of income, preventing double taxation.

8. Pensions: French state and private pensions for Israelis

The treaty's pensions article follows the OECD Model: pensions and annuities are taxable only in the country of residence of the recipient. A French national who makes aliyah and receives a French private pension — from an assurance-vie, a plan d'épargne retraite (PER), or a company pension scheme — is taxable on that pension income only in Israel once they become an Israeli tax resident.

Israel's ten-year new-immigrant tax exemption under Section 14(a) of the Income Tax Ordinance exempts qualifying new immigrants from Israeli tax on foreign income (including foreign pensions) for ten years from the date they become Israeli tax residents. A French new immigrant who receives French pension income during that exemption period owes neither French tax, as a non-resident, nor Israeli tax, under the Section 14 exemption. For French retirees with substantial pension income, this window can be worth more than all other treaty benefits combined.

French government civil servant pensions (pensions de fonctionnaire de l'État) are treated differently: many French tax treaties reserve the right to tax those pensions for France, regardless of where the recipient lives. The France-Israel treaty should be checked carefully for the civil servant pension article, as it may give France — not Israel — the taxing right over pensions paid by the French government to former civil servants who have moved to Israel.

In Practice — Section 14 Exemption for New Immigrants Receiving French Pensions: The Section 14(a) exemption applies automatically for 10 years to olim and returning residents who have been outside Israel for at least 10 consecutive years. To use it, the new immigrant does not file an Israeli tax return reporting foreign income during the exemption period — but they must file a Form 1301 annual declaration confirming that all income received falls within the exemption scope. New immigrants should also notify the National Insurance Institute (NII / Bituach Leumi) at their local branch within 12 months of arrival that they hold foreign pension income, to ensure NII contributions are correctly assessed. NII contributions on foreign pension income are capped at 7% for those between 18 and retirement age; the specific cap amount for 2026 is linked to the average wage and should be confirmed with the NII at the time of assessment.

9. How to claim France-Israel treaty benefits

Treaty benefits are not automatic in Israel. An Israeli company or bank paying dividends, interest, or royalties to a French resident must withhold at the full domestic rate unless the recipient holds a valid nikui memas mekorot (reduced-rate withholding certificate) issued by the ITA.

The application process:

  1. Obtain an attestation de résidence fiscale from the DGFIP confirming your French tax residence for the year of payment. Request it from your local centre des impôts or online via the espace particulier on impots.gouv.fr. Issued free; typical processing time 2 to 4 weeks.
  2. Complete ITA Form 2513 (available at taxes.gov.il or from the International Taxation Division, Jerusalem). The form asks for personal details, identification numbers, details of the income stream and payer, and the treaty article relied upon.
  3. Attach supporting documents: the attestation de résidence fiscale, a copy of your French passport or French company registration, and details of the Israeli payer (company number, address, nature of the payment).
  4. Submit to the ITA International Taxation Division in Jerusalem, by courier or post. The ITA does not currently accept Form 2513 by email.
  5. Wait for processing: 30 to 60 working days for straightforward applications; longer for complex structures or where the ITA requests additional information.
  6. Provide the certificate to the Israeli payer before any payment is made. The Israeli company must keep a copy in its withholding tax records.

The certificate is valid for the period stated on its face — typically 12 to 24 months. It must be renewed before expiry if the payment stream continues.

In Practice — MLI Modifications to the France-Israel Treaty: Both France (effective September 26, 2018) and Israel (effective January 1, 2019) have applied the Multilateral Instrument (MLI) to their bilateral tax treaties. The MLI has modified the France-Israel convention in several ways: it has introduced a principal purpose test (PPT) as a general anti-avoidance rule, which allows the ITA or DGFIP to deny a treaty benefit if one of the principal purposes of a transaction or arrangement was to obtain that benefit. It has also amended the mutual agreement procedure article. The PPT means that treaty shopping structures — for example, routing payments through a French holding company with no genuine economic substance in France, solely to access the 15% dividend rate — are now explicitly at risk of challenge by the ITA. Where the ITA denies treaty benefits under the PPT, the domestic rate applies and the taxpayer must appeal through the mutual agreement procedure or Israeli court system. Genuine French-resident beneficial owners with real economic substance in France are unaffected.

10. The French exit tax and making aliyah

For French nationals making aliyah, the single largest tax planning issue is often France's exit tax under Article 167 bis of the Code Général des Impôts, not Israeli taxation at all.

The French exit tax applies when a person who has been a French tax resident for at least six of the previous ten years transfers their tax domicile abroad. It taxes unrealized capital gains on shares, securities, and company interests held at departure where the total portfolio value exceeds €800,000, or the total unrealized gains exceed €800,000. The tax rate is the PFU rate of 30% (12.8% income tax plus 17.2% social levies).

Payment can be deferred (sursis de paiement). When departing for a country that has an administrative assistance and mutual collection treaty with France — which Israel qualifies for through the 1995 treaty and associated exchange-of-information protocols — a French national can elect to postpone the exit tax until the shares are actually sold. To use this deferral, the taxpayer must:

  • File IFI/impôt sur le revenu forms 2074-ETD and 2041-GL with their final French return declaring the exit tax base and requesting the deferral
  • Provide a French guarantor (caution) or security if the tax authority requires one — not always mandatory for Israel destinations but advisable to check
  • Notify the DGFIP of any sales of the relevant assets after departure, so deferred tax becomes payable at that point

If no deferral is elected, the exit tax becomes payable within 30 days of departure. French nationals who move to Israel without addressing the exit tax often receive an unexpected demand years later when the DGFIP conducts a review of their final return.

On the Israeli side, there is no entry tax or deemed-acquisition-at-market-value rule for new immigrants — Israel does not impose a charge on imported wealth. However, the ITA's pre-immigration ruling service (sheirut shiput mukdam) at the International Taxation Division can issue a binding advance ruling on how specific asset classes will be treated during and after the Section 14 exemption period. French nationals with significant portfolios should request such a ruling before arrival, particularly for assets that may generate Israeli-taxable income after the exemption expires.

Frequently Asked Questions

Under the France-Israel Double Tax Treaty, Israeli withholding on dividends paid to a French resident is capped at 15% of the gross dividend. Israel's domestic rate for non-resident individuals is 25% under Section 170(a) of the Income Tax Ordinance, so the treaty produces a meaningful reduction. To get the 15% rate applied at source rather than the full domestic rate, the French shareholder must obtain a nikui memas mekorot reduced-rate certificate from the Israel Tax Authority's International Taxation Division before the dividend is declared. Without the certificate, the Israeli company must withhold at 25% and the shareholder must claim a refund — a process that typically takes 12 to 18 months.

Yes. France taxes its residents on worldwide income. Israeli rental income, dividends from Israeli companies, and gains on Israeli real estate are all reportable on a French impôt sur le revenu return. The treaty prevents double taxation using the credit method: Israel taxes Israeli-source income first at the treaty-reduced rate, and France taxes the same income but grants a foreign tax credit for the Israeli tax paid. The credit prevents the same income from being taxed twice but does not eliminate either country's charge. French residents report their Israeli income on their annual return and claim the credit on the foreign income pages.

France's exit tax under Article 167 bis of the Code Général des Impôts applies when a person who was a French tax resident for at least six of the prior ten years moves abroad. It taxes unrealized capital gains on shares and financial assets worth more than €800,000 at departure at the 30% PFU rate. When departing for Israel, a French national can elect a payment deferral (sursis de paiement) — deferring the exit tax until assets are actually sold — because the France-Israel treaty and information-exchange protocols satisfy the mutual-assistance requirement for deferral. The deferral application must be filed with the DGFIP on Form 2074-ETD alongside the final French income tax return. French nationals who overlook the exit tax often receive unexpected demands years later.

Yes. The France-Israel treaty gives Israel the primary right to tax gains on Israeli immovable property. A French resident who sells an Israeli apartment owes mas shevach to the Land Taxation Authority at 25% of the real, inflation-adjusted gain. There is no single-apartment exemption for non-residents. The seller must file a mas shevach declaration with the local Land Taxation Authority office within 30 days of signing the sales contract and pay the tax within 60 days. The Land Registry (Tabu) will not transfer title without a nikui mas clearance certificate confirming the tax has been paid or secured. France then taxes the same gain but credits the Israeli mas shevach paid.

Once a French national genuinely moves to Israel and breaks French tax residence, France taxes them only on French-source income — French property, French bank accounts, French dividends, and pensions from the French state system. Israeli-source income earned after the move is no longer taxable by France. To break French residence cleanly, the person must file a departure-year return, notify the DGFIP of the change, and move their economic life to Israel. French nationals with ongoing French income streams — such as French rental income or French civil servant pensions — remain partially connected to the French tax system and should take advice from a cross-border advisor in both countries.

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