France–Israel Tax
France–Israel Taxation: your complete guide
Tax treaty, Olé Hadash status, exit tax, 2026 reform and departure/installation formalities — BNG & CO expertise to secure your transition.
1995 Treaty · Olé Hadash · Exit Tax · 2026 Reform
BNG & CO
BNG & CO. Accounting & Tax Advisory
BNG & CO supports individuals and businesses in Israel with all their accounting and tax requirements.
Our mission: to help you achieve simpler, more efficient, and more transparent financial management by optimising your filings and providing personalised follow-up.
Combining local expertise with an international outlook, we build lasting relationships of trust fully focused on your success.
- Company formation and management
- Tax audit
- Accounting and payroll management
- Legal and social compliance
- Aliyah preparation
France–Israel legal framework: what you need to know
Franco-Israeli taxation rests on two complementary pillars: the bilateral tax treaty of 31 July 1995 (effective 18 July 1996) and Israeli legislation for new immigrants (Income Tax Ordinance — ITO).
France–Israel tax treaty (1995)
- Article 4: definition of a "resident of a Contracting State" and tie-breaker rules in cases of dual residence (centre of vital interests, habitual abode, nationality).
- Article 6: rental income taxable only in the State where the property is located.
- Article 7: business profits taxable in the State of residence, except where a permanent establishment exists in the other State.
- Article 10: dividends — taxable in the State of residence of the recipient; withholding tax capped (5%, 10%, or 15% depending on conditions).
- Article 13: capital gains — general rule in the State of residence of the transferor; exception for real estate (taxable where located) and certain substantial shareholdings.
- Article 14: income from independent personal services taxable in the State of residence, except where a fixed base exists in the other State.
- Article 18: private pensions, annuities, and similar remuneration taxable only in the State of residence of the beneficiary.
Légifrance — Decree No. 96-814 of 11 September 1996
Israeli law — Olé Hadash status
- Section 14(a) ITO: 10-year exemption on income produced or generated outside Israel (assets and liabilities).
- Section 14A ITO: exemption on interest from foreign-currency deposits in an Israeli bank for 20 years.
- Section 97(b)(3) ITO: exemption on capital gains from the disposal of assets located outside Israel (including assets acquired during the exemption period).
- Tofes 1348: Israeli tax residency certificate to be requested from the Israel Tax Authority (ITA), generally after 12 months of residence.
Income Tax Ordinance 5721-1961 (ITO)
The provisions cited are subject to change. This summary is for information purposes only and does not replace personalised advice tailored to your asset situation.
Olé Hadash tax benefits: the 10-year exemption
A new immigrant (Olé Hadash) who is an Israeli tax resident benefits, for 10 years from the date of residency, from an exemption on foreign-source income and capital gains.
- Foreign passive income (interest, dividends, rent) exempt in Israel for 10 years.
- Foreign active income (salaries, self-employment, business profits) exempt if of foreign source.
- Capital gains on assets located outside Israel exempt for 10 years; pro-rata possible if sold after the period.
- Israeli-source income: taxed normally in Israel (subject to specific regimes).
- Exemption from reporting foreign income: maintained for Olim who arrived before 1 January 2026.
Sensitive point: an Olé Hadash may be considered a resident under the Franco-Israeli treaty (Article 4) once they have a personal link with Israel, even if they are taxable in Israel only on local-source income. France may therefore challenge a change of tax residence if French income remains — which is why a coordinated strategy is essential.
2026 tax reform: what changes for new Olim
Amendment 272 to the ITO (published 7 April 2024) modifies the reporting regime for persons becoming Israeli residents from 1 January 2026.
- The 10-year tax exemption on foreign income is maintained (Sections 14, 14A, 97(b)(3) ITO).
- The reporting exemption is removed: repeal of Sections 134B and 135(b) ITO.
- Annual obligation to report all worldwide income via Annex 1324 (Appendix D1 to Form 1301), even if tax-exempt.
- Asset declaration (Hatzharat Hon): accounts, securities, real estate, and foreign structures must be documented.
- Foreign companies controlled from Israel: the ITA may require annual reports and accounting documents.
- Aliyah Bonus 2026: temporary exemption on certain Israeli-source income for arrivals in 2026 (capped amounts, phased out over 5 years).
Strategic tip: if your foreign assets are complex and reporting confidentiality is a priority, effective Aliyah before 31 December 2025 allows you to retain the 10-year reporting exemption. Beyond that date, transparency becomes mandatory — but the tax exemption remains in place.
French exit tax (Article 167 bis CGI)
When leaving France for Israel, exit tax may apply to latent capital gains on securities held on the date of transfer of tax domicile.
Cumulative conditions
- French tax residence for at least 6 years out of the 10 years preceding departure.
- Holdings with an aggregate value ≥ €800,000, or holding ≥ 50% of a company's profits.
- Effective transfer of tax domicile outside France (Israel is not an EU/EEA member).
Mechanism and timelines
- Taxation at an overall rate of approximately 31.4% (12.8% income tax + 18.6% social levies, LFSS 2026).
- Payment deferral on request (Israel: no automatic deferral) — Form 2074-ETD must be filed no later than 90 days before departure, with guarantees (≈ 12.8% of gross latent gains).
- Appointment of a French tax representative mandatory to obtain deferral.
- Full relief if securities are retained: 2 years if value < €2,570,000, 5 years if ≥ €2,570,000.
- Mandatory annual monitoring: Forms 2074-ETS / 2074-ETSL while deferral is active — failure to file = immediate payment due.
Plan for exit tax 12 to 18 months before Aliyah: portfolio valuation, structuring of guarantees, and timeline for any pre-departure disposal. French real estate follows a separate regime (real estate capital gains, not the movable exit tax).
Formalities when leaving France
- Year of departure: dual filing — Form 2042 (1 January → date of departure, worldwide income) + 2042-NR (date of departure → 31 December, French-source income only).
- Foreign income during the resident period: Form 2047 attached to Form 2042.
- Non-residents with French income: annual Form 2042-NR to SIPNR (Noisy-le-Grand), deadline Zone 1 (generally end of May).
- Request the average tax rate rather than the 20% minimum on French rental income if your worldwide income is modest.
- Check the withholding rate on French dividends: the treaty provides for 0%, 5%, 10%, or 15% depending on the case — refund possible if over-withheld.
- IFI: still due if French real estate assets exceed €1.3M, even after departure.
- Secondary residence in France: must be explicitly declared when filing your departure declaration.
Formalities upon arrival in Israel
- Obtain Olé Hadash status from the Ministry of Integration (Aliyah via the Jewish Agency / Nefesh B'Nefesh).
- Open a tax file with the ITA upon settling in: tax identification number (mispar zehut / teudat zehut).
- Request Tofes 1348 (tax residency certificate) after residency is established (≈ 12 months).
- Annual Israeli return (Form 1301): Israeli income mandatory; foreign income depending on date of arrival.
- Activity retained in France: assess whether a permanent establishment or fixed base exists under the treaty.
- Israeli VAT (Ma'am, 18% since 2025): register as Ossek Mourché or Hevra Ba'am depending on activity.
- Bituach Leumi (social security): mandatory registration; France–Israel social security agreements to be checked according to status.
10 tips to secure your tax transition
Plan 18 months ahead
Map assets, income, companies, real estate, and departure timeline before any irreversible decision.
Coordinate both tax residences
French tax residence (CGI Art. 4 B) and Israeli residence (183 days / centre of life) must be analysed together, not separately.
Document your centre of life
Lease, utility bills, school enrolment, local bank account, phone subscription: essential evidence in case of audit.
Do not confuse "paper" Aliyah and actual relocation
A gap between Aliyah date and actual settlement may jeopardise the exemption and Israeli tax residence.
Structure before departure
Company formation, contributions, shareholders' agreements, and activity location: better to structure before losing French tax residence.
Anticipate exit tax
Simulate the amount, negotiate guarantees, and choose between retention and disposal before departure.
Optimise withholding tax
Request application of the treaty rate on French dividends and interest; reclaim overpayments.
Pensions and retirement
Treaty Article 18: private pensions taxable in Israel if you are resident there — plan for conversion and reporting.
Rental property in France
French rental income taxable in France (Art. 6); Form 2042-NR + micro-foncier or actual regime; average rate may apply.
Have an audit before the first return
Voluntary disclosure or preventive regularisation always costs less than an adjustment after a FR/IL cross-border audit.
Preparing your Aliyah or already living in Israel?
BNG & CO supports you from A to Z to secure every stage of your tax, accounting, and wealth transition.
Aliyah should not be improvised: thorough advance preparation is essential to avoid mistakes, optimise your situation, and protect your assets.
With our team, we guide you through the entire process, from pre-departure preparation to your effective settlement in Israel.
- Preparation and optimisation of your tax Aliyah
- Tax disconnection from France and fiscal landing in Israel
- Managing the exit tax process when leaving France
- Voluntary disclosures and tax situation regularisations
- Reporting your rental income and other income in Israel
- Analysis and deferral of effective settlement if your Aliyah was done "on paper"
- Support to preserve and optimise your 10-year exemption in Israel
- Company formation and structuring in Israel and France
- Day-to-day accounting and tax management of your activity
- Support for entrepreneurs working between France and Israel
- Full support for French speakers in Israel on all administrative, tax, and business matters
Our strength : a genuine bridge between France and Israel.
Within the firm:
- a tax lawyer with solid experience of the tax administration — former Israeli tax inspector
- a French chartered accountant and statutory auditor
- sharp on-the-ground expertise in Franco-Israeli issues
We also support you with:
- →real estate investment in Israel
- →financing renegotiation
- →wealth management solutions
- →France → Israel fund transfers via our specialist partners
Our goal: to offer you a clear, secure, and high-performing solution at every stage of your project.
Most frequently asked questions
Pre-Aliyah checklist — simple and effective
12 to 18 months before: asset audit, exit tax simulation, analysis of French income to retain. 6 months before: company structuring, 2074-ETD preparation if applicable. 90 days before: exit tax deferral request + guarantees. On departure: dual filing 2042/2042-NR. On arrival: ITA file, Olé Hadash status, Tofes 1348 within 12 months.
I keep an activity in France — what are the tax implications on both sides?
If you carry on activity in the French market from Israel, France may tax via a permanent establishment (Treaty Art. 7). In Israel, Israeli-source income is taxable; strictly foreign income benefits from the 10-year Olé Hadash exemption. A "hybrid" activity (FR clients, work from IL) requires source-of-income analysis.
Opening a structure in Israel to grow a business — how does it work?
Choice between Ossek Patour (small turnover), Ossek Mourché (VAT, self-employed), and Hevra Ba'am (Israeli Ltd.). Registration with the ITA, Bituach Leumi affiliation, invoicing with Ma'am (18%). If clients or a subsidiary in France: check the treaty (permanent establishment, transfer pricing). BNG & CO supports formation, accounting, and Franco-Israeli compliance.
New Olé Hadash law 2026 — key takeaways?
For residents from 01/01/2026: the 10-year exemption on foreign income is maintained, but annual reporting of all foreign income and assets becomes mandatory (Amendment 272 ITO). Olim who arrived before 2026 keep the 10-year reporting exemption. Bonus: temporary exemption on certain Israeli income for 2026 arrivals.
Am I subject to exit tax when moving to Israel?
Yes, if you were a French tax resident for 6 out of 10 years and hold securities ≥ €800,000 (or ≥ 50% of a company). Israel does not offer automatic EU deferral: request + guarantees 90 days before departure (2074-ETD). Relief after 2 or 5 years of retention depending on portfolio value.
Are my French rental incomes taxable in Israel during the 10 years?
No, in principle exempt in Israel (foreign-source income, Section 14(a) ITO). However, they remain taxable in France as real estate income located in France (Treaty Art. 6), via Form 2042-NR.
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