The France-Israel tax treaty, article by article

The tax treaty between France and Israel was signed in Jerusalem on July 31, 1995. It covers income tax and wealth tax. The official list does not grant France or Israel the right to tax inheritances, but Article 24 § 6 addresses exemptions from gift and inheritance taxes. Three rules distinguish it: a cap of 18% on capital gains from the sale of substantial shareholdings, three levels of withholding tax on dividends (5%, 10%, and 15% of the tax rate), and taxation of private pensions solely in the country of residence.

A text from 1995, no amendments, the multilateral convention since 2019

The official list of conventions (BOI-ANNX-000306, version of April 29, 2026) includes, for Israel, the line "C July 31, 1995," classified as "IR – IF." It does not indicate any amendments. The convention was approved by Law No. 96-503 of June 11, 1996, and published by Decree No. 96-814 of September 11, 1996. The BOFiP (Official Bulletin of Public Finances) states that it entered into force on July 18, 1996, with application from January 1, 1997, for taxes withheld at source.

The multilateral convention (MLI) modifies it. List BOI-ANNX-000511 (April 29, 2026) gives two effective dates in France: January 1, 2019, for taxes withheld at source, and July 1, 2019, for other taxes. The tax authorities publish a consolidated version of the convention as amended by the MLI.

Maximum deductions and key rules

A cap is not a rate. French dividends paid to a non-resident individual are subject to a withholding tax of 12.80 % (rate in effect as of January 1, 2026) under domestic law, "subject to more favorable provisions in tax treaties." The cap of 15 % is higher than this rate; the page does not explain how the two interact, which must be examined on a case-by-case basis.

Who is a resident? Article 4

A person is considered a resident of a State if they are subject to tax by virtue of their domicile, residence, or place of management; persons taxed only on income (or wealth) from sources located in that State are excluded (§ 1). For an individual resident in both States, § 2 considers, in order: permanent home, center of vital interests, habitual residence, nationality, and then the agreement of the competent authorities. Our page on Article 4 B of the French General Tax Code (CGI) deals with domestic tax domicile.

Dividends: a case targeting Israeli companies

The 10% % rate applies under the same holding conditions as the 5% % rate, provided the paying company is resident in Israel and the dividends are drawn from profits taxed in Israel at a rate lower than the standard Israeli corporate tax rate. Since the introduction of the MLI (Minimum Tax on Income), the holding period is calculated on a 365-day basis, including the payment date.

Capital gains: the 18% limit of Article 13 § 2

The basic rule (§ 5) reserves most of the gains for the state of residence of the transferor. Real estate falls under the jurisdiction of the state where it is located (§ 1 a), as do securities of which more than 50% of the value is derived from real estate during the 365 days preceding the transfer (§ 1 b).

For substantial shareholdings, the state of residence of the company whose shares are being transferred may levy a tax, and the text specifies: "the tax thus established may not exceed 18 percent of such gains." A shareholding is considered substantial starting at 10% of the capital, or 25% for a family company, held, alone or with related persons, at any time during the twelve months preceding the transfer. Article 13 § 2 b ii defines a related person: for a company, a person controlled by the transferor or who controls the transferor, or who is controlled by the same person; for an individual, the spouse, an ascendant, or a descendant of the transferor or their spouse. The threshold is a limit. It does not state that the domestic law of France or Israel levies this tax.

Wages and self-employment: two calculations of 183 days

• Employees (Article 15): The exception to taxation in the State of exercise applies if the stay does not exceed 183 days in total over any twelve-month period, if the employer is not a resident of the other State and if the expense is not borne by a permanent establishment or a fixed base (sliding window).
• Liberal professions and other self-employed activities (Article 14): The other State may tax the portion of income attributable to a regular fixed base, or derived from activities carried out during a stay of 183 days or more "during the relevant fiscal year". The relevant period is the fiscal year.

Article 20 § 1 adds a two-year rule for teachers and researchers residing in the other State.

Pensions: the state of residence alone imposes them

Article 18 reserves pensions, annuities, and similar remuneration to the beneficiary's state of residence, subject to Article 19, paragraph 2. This article assigns public pensions to the paying state, unless the beneficiary resides in the other state, holds its nationality, and does not possess the nationality of the paying state. Article 24, paragraph 5, provides for a reduction in contributions to a pension scheme established in the other state, limited to six years and subject to the approval of the competent authority.

Eliminating double taxation: the tax credit

France applies the tax credit method (Article 23 § 1 a), which distinguishes between different cases. For dividends, interest, and royalties, as well as for other income referred to in (ii) (in particular, gains from Article 13 §§ 1 and 2 and Article 14 § 1 b), the credit is equal to the Israeli tax actually paid, without exceeding the corresponding French tax. In the general case referred to in (i), the credit is equal to the French tax. § 1 e provided for a ten-point increase in the tax deemed paid for certain dividends exempt or taxed at a reduced rate in Israel, for seven years from the entry into force of the convention; according to the BOFiP (French Official Tax Bulletin), this provision ceased to apply on July 18, 2003. Israel deducts the French tax paid on income from French sources (§ 2).

Inheritance and gifts: no distribution is provided for in this agreement.

The official list does not include the letter S or D for Israel, and we found no rules regarding the allocation of inheritance or gift taxes in the articles we consulted. Article 24, paragraph 6, addresses exemptions from gift and inheritance taxes: it makes them reciprocal between the two states, including for non-profit organizations. Our page on inheritance treaties lists the countries that have one.

Fortune, information and framework clauses

• Fortune. Article 2 mentions the wealth tax but not the IFI (French real estate wealth tax): its application is not established. Article 22 categorizes assets: real estate is taxable in the state where it is located, and a participation of at least 25% of the company's profits in that state is also taxable; shares in companies whose assets consist primarily of real estate, the assets of a permanent establishment or fixed base, and ships and aircraft have their own rules, not detailed here; all other assets are taxable only in the state of residence.
• Information. Article 26 organizes the exchange. The BOI-ANNX-000508 list (October 8, 2025) contains for Israel an exchange clause for income tax, corporate tax and IFI, none for VAT and inheritance tax, and no clause for assistance in recovery.
• Right to benefits. Since the MLI, a benefit is denied if one of its main purposes was to obtain it, unless there is proof of conformity to the object and purpose of the agreement.
• Disputes and duration. Amicable procedure within three years of the first notification (article 25); termination possible after five calendar years, with six months' notice (article 30).

Businesses (articles 5, 7, 9) and Israeli domestic law are not addressed here.

Participation of 11 %: numerical example (fictitious profile)

Situation. A fictional entrepreneur, resident of Israel, sells shares in a French company that is not a family business. He owns 7 shares; his spouse owns 4 shares (hypothetically), making them a related party within the meaning of Article 13 § 2 b ii. The gain is €500,000 (hypothetically).

Issue. He wants to know if Article 13 § 2 applies and to what extent the state tax on the company is limited.

Strategy. He adds up his own shares and those of his spouse over the twelve months preceding the sale, then compares to the threshold of 10 %.

Result. The total is 11 % (7 % + 4 %): the threshold of 10 % in Article 13 § 2 is reached. If French domestic law levies tax on this gain, it could not exceed 18 % of the gain, i.e., €90,000 (18 % × €500,000). This ceiling does not mean that tax is due: as a general rule, the BOFiP (BOI-RPPM-PVBMI-10-30-20) addresses the taxation of non-residents when the transferor and their family group held more than 25 % of the rights to social benefits at some point during the five preceding years (it provides for a separate regime for a domicile in a non-cooperative state). At 11 %, this page therefore establishes no French taxation under this regime; Other domestic legal regimes are not addressed. Without the spouse, the total would be 7 %: the threshold of 10 % would not be reached, and Article 13 § 5 would only allow the transferor's state of residence to be imposed. The ceiling is a limit, not a forecast.

France-Israel Convention: What changes depending on your situation

• Your residence as defined in Article 4, on the date of the income.
• Your share of the capital and that of your relatives over the last twelve months.
• The number of days spent in each State, over a rolling twelve-month period for salaries, in the fiscal year for Article 14.

No result is guaranteed in advance.