What happens to a French portfolio when you make aliyah?
Moving from France to Israel does not just change your address, it can trigger a French exit tax on gains you have not even realised, strand your assurance-vie and PEAin wrappers Israel does not recognise, and leave a French home exposed to a wealth tax and to French tax on its rent. France is the second-largest Western source of olim, yet almost every part of a typical French saver's balance sheet interacts awkwardly with the move. This guide walks the four pressure points, exit tax, the savings wrappers, IFI on property, and the 1995 treaty, and flags where the Israeli 10-year holiday and, for French-Americans, the US PFIC rules quietly change the answer.
Not advice
When does France treat you as having left for tax purposes?
France stops treating you as resident when your domicile fiscal moves, and the decisive tests are your foyer / centre of life (where your home and family are) and your centre des intérêts économiques (where your main income and assets are managed)1. Aliyah usually shifts both at once: your family relocates, you take an Israeli קרן פנסיה (Keren Pensia) and salary, and your economic centre follows you to Israel. The date France fixes as your departure matters, because it is the moment the exit tax is measured and the moment your French wrappers change character.
In the US you stay taxable on worldwide income by citizenship no matter where you live; France, by contrast, is a residence system, once you are genuinely Israeli-resident, France taxes you only on French-source income and on the assets it specifically retains (property, certain securities). The hard part is the handover year, when both countries can claim a slice and the treaty decides who wins.
What is the French exit tax, and does aliyah trigger it?
The exit tax (article 167 bis of the Code général des impôts) taxes the unrealised gains on your securities the moment you move your tax residence out of France. It applies only if you were French tax-resident for at least 6 of the 10 years before leaving and you hold securities worth at least €800,000 or representing at least 50% of a company's profits1. Below those thresholds it does not apply at all. Above them, France calculates tax as if you had sold on departure day.
The rate is the single flat levy (prélèvement forfaitaire unique): income tax of 12.8% plus social levies3. The crucial relief is the sursis de paiement (payment deferral): because Israel is a treaty country with an exchange-of-information agreement, the deferral is automatic, you do not pay on departure, you report and defer1. And the deferred tax is wiped out entirely if you simply do not sell the securities for 2 years (or 5 years if your securities exceed €2,570,000)1. Sell inside that window, redeem, or liquidate the company and the deferred exit tax becomes due.
| Element | Rule |
|---|---|
| Residence trigger | French tax-resident at least 6 of the last 10 years before departure1 |
| Holding threshold | Securities worth ≥ €800,000, or ≥ 50% of a company's profits1 |
| What is taxed | Unrealised gains on securities, earn-out receivables, and certain deferred gains1 |
| Rate | 12.8% income tax + social levies (the PFU)3 |
| Deferral on move to Israel | Automatic sursis de paiement (treaty country), report, do not pay on departure1 |
| Relief if you do not sell | Tax cancelled after 2 years (5 years above €2,570,000)1 |
The exit tax is about timing, not punishment
What happens to an assurance-vie after aliyah?
Your assurance-vie can stay open after you leave France, but Israel does not treat it as a tax-sheltered wrapper the way France does, so during your first decade in Israel it is the Israeli 10-year exemption, not the French contract, that keeps its growth untaxed here. Inside France the assurance-vie is the country's flagship savings product: after 8 years you get an annual gains abatement of €4,600 (€9,200 for a couple) and a reduced rate of 7.5% on gains from premiums up to €150,0004. Notably, the social-levy increase to 18.6% that took effect on 1 January 2026 for most investment income left assurance-vie and capitalisation contracts at the old 17.2% rate4.
For Israel, none of that French wrapper logic carries over. Israel sees an assurance-vie as a foreign investment policy; its annual growth and any payout are foreign-source income. While you are inside the 10-year holiday they are exempt from Israeli tax, but after year 10 the gains can be taxed in Israel as ordinary investment income, and the French 8-year clock buys you nothing on the Israeli side. Many French olim use the exemption window to decide, deliberately, whether to keep the contract or unwind it before the holiday ends.
Can you keep a PEA when you move to Israel?
Yes, moving your tax residence abroad does not automatically close a plan d'épargne en actions (PEA), unless you move to a non-cooperative state or territory, and Israel is not one2. The plan stays open; a withdrawal from a PEA that is more than 8 years old will not close it but does block any further contributions2. (If you ever did move to a non-cooperative jurisdiction the plan must close, with income tax on gains if it is under 5 years old and social levies regardless2, not your situation in Israel, but worth knowing the rule exists.)
The catch is the same as for the assurance-vie: the PEA's French tax exemption is a French-resident benefit. Israel does not mirror it. During the 10-year holiday the PEA's gains are exempt as foreign income; afterwards, Israel can tax them. The PEA shell survives the move, but the shelter that made it worthwhile is the Israeli exemption, not the French plan.
PFIC: the assurance-vie and PEA trap for French-American olim
What about a French home you keep after aliyah, the IFI?
If you keep French real estate, it can pull you into the impôt sur la fortune immobilière(IFI), France's real-estate wealth tax, once your net taxable French property exceeds €1,300,0005. As a non-resident you are taxed under the IFI only on property located in France (residents are taxed worldwide), so the apartment in Paris or the house in the Marais counts, but a flat you later buy in Tel Aviv does not. The tax is declared with your income return between April and June each year5.
Two more French claims survive the move. Rent from a French property stays French-source and France keeps the primary right to tax it; and when you eventually sell, France retains the right to tax the real-estate gain, because the 1995 treaty allocates immovable-property gains to the country where the property sits. The Israeli 10-year exemption can still shelter the Israeli side of these, but it does not switch off the French tax on French land.
How does the 1995 France-Israel treaty allocate income, and where does it fail olim?
The France-Israel double-taxation convention, signed in Jerusalem on 31 July 1995 (in force since 1996), is your main protection against being taxed twice, but its pension rule contains a trap that has actually caught olim6. Under Article 18, pensions and similar payments to a resident of one state are taxable only in that state, so a French private pension paid to an Israeli resident should be taxable only in Israel, not France6. Dividends and interest are taxed in the residence state with a capped source withholding, and immovable-property income and gains stay with the country where the property is.
Here is the failure mode. French administrative case law has read a "subject-to-tax" logic into the relief: France has refused to give up its taxing right on French pensions when the oleh paid no Israeli tax on them because they fell inside the 10-year exemption7. In other words, the very Israeli holiday that makes the income tax-free can be the reason France keeps taxing it, you are "not subject to tax" in Israel, so the treaty exemption France would otherwise grant can be denied. This is the single most important France-Israel wrinkle, and it is why a French pension is not automatically France-free during your first ten years.
| Asset / income | French treatment | Israeli treatment (10-yr holiday) | Treaty / catch |
|---|---|---|---|
| Securities portfolio (large) | Exit tax on unrealised gains, deferred1 | Foreign income, exempt for 10 years | Deferral wiped after 2/5 yrs if unsold |
| Assurance-vie | 8-yr abatement + 7.5% rate (resident benefit)4 | Growth exempt for 10 years | PFIC if French-American; taxable in Israel post-year-10 |
| French pension | Art. 18: should be Israel-only | Exempt for 10 years | "Subject-to-tax" case law can let France keep taxing it7 |
| French property (rent / sale) | French-source rent + IFI over €1,300,0005 | Israeli side exempt for 10 years | France keeps tax on French land and gain |
Does the 2026 reform change the 10-year exemption for French olim?
Not the tax break itself, but the paperwork around it. Israel's 10-year exemption on foreign-source income still applies, interest, דיבידנד (dividend), pensions, rent and capital gains from outside Israel stay exempt from מס הכנסה (Mas Hachnasa) for a decade8. But for anyone becoming Israeli-resident from 1 January 2026, the old reporting exemption is gone: the income is still tax-exempt, yet you must now declare your foreign income and assets to the Israel Tax Authority, typically through an annual return and, in many cases, a capital declaration8. It is report-but-still-exempt, not report-and-pay.
For French olim this reporting shift is double-edged. The good news: a clean, declared Israeli record of your foreign income and your מטבע חוץ (matbea chutz) holdings is exactly the kind of evidence that helps you argue, against the French "subject-to-tax" case law, that you are a genuine Israeli resident with disclosed worldwide income. The complication: more disclosure on both sides means the two administrations can see more of the same picture, so consistency between your French and Israeli filings matters more than ever.
Knowledge Check
A French oleh with a large securities portfolio moves to Israel, qualifies for the exit tax, and gets the automatic deferral. What lets the deferred exit tax disappear entirely?
What should a French oleh sequence, and when?
Treat the months around your aliyah date as the planning window, most of these levers close once France fixes your departure date or once your Israeli 10-year clock starts.
Before you leave France
- Establish whether the exit tax even applies (the €800,000 / 50% threshold and the 6-of-10 year test) and, if it does, secure the automatic deferral rather than paying on departure1.
- Decide deliberately what to do with the assurance-vie and PEA. They survive the move, but their French shelter does not follow you to Israel, and for French-Americans the underlying funds are PFICs9.
- Map your French pensions against Article 18 and the "subject-to-tax" case law, do not assume a French pension is automatically Israel-only during the holiday7.
- If you keep French property, value your net French real estate against the €1,300,000 IFI threshold and plan for ongoing French tax on the rent and the eventual gain5.
After arrival in Israel
- Keep a French bank account for pensions, rent, and any deferred-tax administration with the DGFiP.
- Build a clean, declared Israeli record of your foreign income and assets, required from 2026 even though the income stays exempt, and keep it consistent with your French filings8.
- Use the 10-year exemption window to decide, on purpose, whether to unwind French wrappers before Israel can tax their growth in year 11.
A French portfolio interacts awkwardly with aliyah at four pressure points. France's article 167 bis exit tax hits unrealised securities gains, but only if you were French tax-resident for at least 6 of the last 10 years and hold securities worth at least 800,000 euros (or 50% of a company); a move to Israel grants an automatic payment deferral, and the deferred tax is cancelled if you hold for 2 years (5 years above 2,570,000 euros) without selling. Your assurance-vie and PEA can stay open but Israel does not recognise them as tax shelters, so their growth is sheltered only by Israel's 10-year exemption, and for French-Americans the funds inside are PFICs. A French home over 1,300,000 euros can trigger the IFI wealth tax, and France keeps the right to tax French rent and the eventual sale gain. The 1995 treaty allocates most pensions to Israel under Article 18, but French "subject-to-tax" case law has denied that relief to olim who paid no Israeli tax during the 10-year holiday. From 1 January 2026 foreign income stays exempt for 10 years but must now be declared to the Israel Tax Authority. This is general education, not advice; consult a cross-border professional who works both the French and Israeli sides.
Only if you cross both gates: French tax-resident for at least 6 of the last 10 years, and securities worth at least 800,000 euros (or 50% of a company). Below those thresholds it does not apply. Even above them, the move to Israel grants an automatic payment deferral, and the deferred tax is cancelled if you hold the securities for 2 years (5 years above 2,570,000 euros) without selling.
No. A PEA is not automatically closed by moving abroad, as long as you are not moving to a non-cooperative state, and Israel is not one. An assurance-vie can also stay open. The real question is not whether you can keep them but whether you should: Israel does not recognise either as a tax shelter, so their growth is sheltered here only by the 10-year exemption, and for French-Americans the funds inside are PFICs.
Article 18 of the 1995 treaty says private pensions are taxable only in your country of residence, which after aliyah is Israel. But French case law has denied that relief to olim who paid no Israeli tax because the pension fell inside the 10-year exemption, the so-called subject-to-tax argument. So the safe answer is to confirm the allocation for your specific pension before assuming France will stop taxing it.
No. The 10-year exemption removes Israeli tax on foreign-source income. The exit tax is a French tax charged on your departure from France, so the Israeli holiday is irrelevant to it. What protects you on the exit tax is the French payment deferral and the 2/5-year hold-and-relieve rule, not anything on the Israeli side.
Three things. The rent stays French-source and France taxes it first. Your net French property can trigger the IFI wealth tax once it exceeds 1,300,000 euros. And when you sell, France keeps the right to tax the real-estate gain under the treaty. The Israeli exemption can shelter the Israeli side of these, but it does not switch off French tax on French land.
Yes, on reporting. For anyone becoming Israeli-resident from 1 January 2026, foreign income stays exempt for 10 years but must now be declared to the Israel Tax Authority; the old reporting exemption was removed. Separately, French social levies rose to 18.6% on most investment income from the same date, though assurance-vie and capitalisation contracts kept the 17.2% rate.
The PFIC rules on your assurance-vie and PEA. To the IRS, the SICAVs and FCPs inside those wrappers are passive foreign investment companies, each potentially subject to punitive section 1291 tax and an annual Form 8621. The French wrapper provides no US shelter, because the IRS looks straight through to the funds. Sorting this out before aliyah is far cheaper than unwinding it afterwards.
