You Kept the Apartment in Paris or Lyon. Who Taxes the Rent Now?
France does, from your first month in Israel. French property income is taxable in France whatever your country of residence1, so you keep filing a French return, you meet a minimum rate of 20% or 30% unless you prove a lower one, and you pay social levies. Israel exempting the same rent changes nothing on the French side.
Not advice
Almost every French oleh is blindsided by the same asymmetry, and it drives every number below. You hear that new immigrants get ten years of exemption on foreign income, you check that your Lyon apartment is foreign income, and you conclude the rent is now tax-free. It is not. It is Israel-tax-free. The French charge is untouched, and for someone insured by ביטוח לאומי (Bituach Leumi) rather than a European scheme, the French charge is actually heavier than it would be for a landlord who moved to Brussels. Exempt in one country is not exempt everywhere.
Is any of this a PFIC question?
No. This article is about an apartment you own directly and let out, which is not a pooled investment vehicle, so the United States PFIC regime does not apply to it and is out of scope here. If you hold the property through an SCI or any company wrapper, or you carry a US passport and hold French OPCVM, SICAV or assurance-vie funds, that is a separate engine covered in the PFIC and US-compliance articles on this site.
The French side: what does France charge a non-resident landlord?
France charges income tax on the net rent at a minimum rate, plus social levies on the same net figure. As a non-resident you are taxable on your French-source income subject to the treaty, and rental income sits squarely in that category. The filing does not disappear when you move: the French return is annual, online filing is the rule, and the Direction des impots des non-residents is the service that handles you1.
Which regime applies depends on the rent and the furnishing. Under 15,000 euros of gross rental income a year you fall into micro-foncier, with an automatic 30% allowance for expenses and no annex form. Above that, or by election, you file form 2044 on real expenses, and that election binds you for three years4. Letting the flat furnished moves the income into commercial income entirely, with its own social-levy rate3.
What is the minimum rate, and does the average-rate option help an oleh?
The minimum rate is 20% on French-source income up to 29,579 euros for income received in 2025, and 30% above that threshold12. You can opt instead for the average-rate calculation, which prices your French income at the rate your worldwide income would attract on the French scale, and France applies it only when it comes out lower2.
This is where standard French-language guidance inverts for an oleh. That guidance is written for retirees with modest worldwide income, whose average rate lands well below 20%. An oleh on an ordinary Israeli salary is the opposite case: the average rate often exceeds the 20% minimum, so the option buys nothing. Nor is it free. Claiming it means declaring your whole worldwide income to the French administration, with supporting documents translated into French, even though only the French-source part is taxed2. Israel-exempt income is not France-invisible.
Do the social levies still apply if Bituach Leumi insures you?
Yes, and at the full rate. Social contributions apply to French-source property income and property gains received by people domiciled outside France5. Since 1 January 2019 people affiliated to a compulsory social security scheme in an EEA state or Switzerland are exempt from CSG and CRDS and pay only the 7.5% solidarity levy, and UK residents kept that exemption after Brexit35. Israel is not in that list. An oleh insured by Bituach Leumi therefore pays the full social-levy rate on the same rent.
| Same flat, same rent | Landlord insured in an EEA state, Switzerland or the UK | Landlord insured by Bituach Leumi in Israel |
|---|---|---|
| Let unfurnished (revenus fonciers) | Solidarity levy of 7.5% only3 | Full social levies of 17.2%3 |
| Let furnished (commercial income) | Solidarity levy of 7.5% only3 | Full social levies of 18.6% on income received from 20253 |
| Selling the flat | Solidarity levy of 7.5% on the gain56 | Full social levies of 17.2% on the gain6 |
The Israeli side: the exemption years, and what changes after them
Israel gives new olim a ten-year exemption from Israeli tax on foreign-source income, and the 2026 reform did not repeal it9. Counted from your landing, roughly month 1 through month 120 your French rent carries no Israeli מס הכנסה (mas hachnasa). One point that catches French olim who read about the newer benefit: the graduated 0% exemption announced for arrivals from late 2025 applies to income from personal effort, salary and business, and explicitly not to passive income such as rent9. Your rental income rides on the ten-year rule, not on that one.
Reporting is the live change. Olim who arrived from 1 January 2026 must report income earned abroad9. Still exempt from Israeli tax during the window, no longer undeclared. If you made aliyah before that date, check your own position rather than assuming the older reporting relief still runs.
From about month 121, the exemption is spent and your French rent becomes ordinary foreign-source income in Israel. That is when the treaty stops being background reading.
The treaty side: what the France-Israel convention actually does
The convention hands the taxing right on property income to the country where the property sits. Article 6 paragraph 1 of the consolidated France-Israel convention states that income from immovable property is taxable only in the contracting state where the property is situated, and paragraph 3 extends that to income from letting it. Article 13 paragraph 1 assigns gains on a sale to that same state, but in the sharing form, "taxable in", rather than the exclusive "taxable only in" that article 6 uses for rent. The convention was signed on 31 July 1995 and is read together with the multilateral instrument both states signed in 20178.
Article 23 paragraph 2 is Israel's relief mechanism: subject to Israeli domestic law on credits, French tax paid on French-source income is allowed against the Israeli tax on that income, capped at the Israeli tax attributable to it8. The ceiling on your relief is the Israeli tax, never the French tax. During your exemption years there is nothing to credit at all, so the French charge is simply your cost. From year 11 the credit does real work, and the interaction between an article reading "taxable only in France" and a general credit article is the point to settle with a cross-border adviser before the year-11 cliff, not after it.
Worked example: a Lyon two-bedroom let unfurnished at 1,100 euros a month
Take an oleh who landed 14 months ago and kept a two-bedroom flat in Lyon, let unfurnished at 1,100 euros a month, so 13,200 euros of gross rent a year. That is below the micro-foncier threshold, so the automatic 30% allowance applies and the taxable revenu foncier is 9,240 euros4.
France then charges income tax at the 20% minimum rate on that 9,240 euros, which is 1,848 euros1, and social levies at 17.2% on the same figure, which is 1,589 euros3. The French bill is 3,437 euros, leaving 9,763 euros net. At the Bank of Israel representative rate of 3.4653 shekels to the euro10, that is roughly 33,800 shekels landing in an Israeli life against 45,700 shekels of gross rent. Israel takes none of it this year9.
Now run the same flat for a landlord who moved to Belgium. Their social levy is 7.5%, or 693 euros, so their French bill is 2,541 euros and their net is 10,659 euros. The aliyah costs about 896 euros a year on identical rent, roughly 3,100 shekels, purely because Bituach Leumi is not an EEA scheme3. The figures are illustrative, assume this is your only French income and ignore the taxe fonciere and management fees. The shape is the lesson.
Hold or sell: what each route costs across the two clocks
Selling as a non-resident is its own tax event, not a wind-down of the rental one. The gain bears a levy of 19% plus social levies of 17.2% for a seller resident outside the EU, the EEA and Switzerland, after holding-period reductions that clear income tax at 22 years of ownership and social levies at 30 years. You file form 2048-IMM-SD, the notaire pays at completion, and above a sale price of 150,000 euros an Israel-resident seller must appoint an accredited French fiscal representative6.
A separate 150,000 euro figure exists, and confusing the two is expensive. Article 150 U II 2 of the CGI exempts up to 150,000 euros of net gain for a non-resident who is a national of an EU or EEA state, which a French oleh who kept French citizenship still is. It is capped at one dwelling per taxpayer, needs two continuous years of past French tax domicile, and must be used by 31 December of the tenth year following the year you transferred your tax domicile out of France. There is a second route with no deadline at all, open where you have had free disposal of the property since at least 1 January of the year before the sale, but letting the flat out is precisely what defeats it7. For a landlord, the ten-year deadline is the one that binds. One number is a sale price triggering a representative; the other is a slice of gain that escapes tax.
| Route | French tax and levies | Israeli tax | Credit available | Net euro yield | Net shekel yield |
|---|---|---|---|---|---|
| Hold and let, months 1 to 120 after aliyah | 20% minimum rate on net rent plus 17.2% social levies13 | None; exempt under the ten-year rule, reportable if you arrived from 1 January 20269 | Nothing to credit, since Israel is not taxing it | 9,763 euros on 13,200 euros gross | About 33,800 shekels |
| Hold and let, month 121 onward | Unchanged French charge13 | Israeli domestic law reaches it once the exemption is spent, subject to article 6's exclusive wording89 | Israeli credit for the French tax, capped at the Israeli tax on that income8 | 9,763 euros before any Israeli tax | About 33,800 shekels before any Israeli tax |
| Sell by 31 December of the tenth year after leaving French tax domicile | 19% plus 17.2% on the gain after holding-period reductions, with up to 150,000 euros of net gain exempt for an EU national meeting the conditions67 | None if the sale falls inside your ten-year window9 | Nothing to credit | One-off proceeds, no further rent | Converted once, at the rate on the day |
| Sell after that deadline | Same 19% plus 17.2%, but the 150,000 euro exemption window has closed67 | Israeli capital-gains treatment if you are also past month 1209 | Israeli credit for the French tax, capped at the Israeli tax8 | One-off proceeds, reduced by the lost exemption | Converted once, at the rate on the day |
Run the net yield before you decide
What French olim get wrong
- Reading the Israeli exemption as a global one. Ten years of Israeli exemption on foreign income says nothing about France. The French return and the French bill continue throughout.
- Assuming the CSG and CRDS exemption travels. It is tied to being insured in an EEA state, Switzerland or the UK, not to being a French national or an expatriate3. Moving to Israel moves you out of it.
- Ticking the average-rate box reflexively. It only applies when it is lower than the minimum rate, and it obliges you to lay your Israeli income before the French administration2. Model it before you claim it.
- Letting the flat furnished without repricing it. Furnished letting is commercial income with a different social-levy rate3, so a higher headline rent can arrive with a higher charge attached.
- Confusing the two ten-year clocks. The Israeli exemption runs from your aliyah date; the French capital-gains exemption runs from the transfer of your French tax domicile79. A departure in December and a landing in January are two different years.
- Ignoring the currency leg. Rent arrives in euros and your costs are in shekels, so מטבע חוץ (matbea chutz) movement can swing the real yield more than the tax does.
Quick check
You made aliyah 18 months ago and kept an unfurnished flat in Bordeaux. A friend who moved to Lisbon has an identical flat at an identical rent. Why is your French bill larger?
A French apartment you keep after aliyah stays taxable in France. You file an annual French return on the rent, and France applies a minimum rate of 20% on French-source income up to 29,579 euros for 2025 income and 30% above it, unless the average-rate option on your worldwide income comes out lower. Social levies are where olim lose out: the CSG and CRDS exemption is reserved for people insured in an EEA state, Switzerland or the UK, so an oleh covered by Bituach Leumi pays the full 17.2% on unfurnished rent rather than the 7.5% solidarity levy alone. Israel exempts the same rent for ten years from your aliyah date, and olim who arrived from 1 January 2026 must report it even while it is exempt. Article 6 of the France-Israel convention puts property income in the state where the property sits, and article 23 gives Israel a credit for French tax capped at the Israeli tax on that income. Selling as a non-resident costs 19% plus 17.2% on the gain after holding-period reductions.
No. It means the rent is free of Israeli tax for ten years from your aliyah date. France taxes French property income regardless of where you live, so the French return and the French bill continue throughout the window. Olim who arrived from 1 January 2026 must also report the foreign income to the Israel Tax Authority even while it stays exempt from Israeli tax.
The French scale applies with a minimum rate: 20% on French-source income up to 29,579 euros for income received in 2025, and 30% above that threshold. If the scale itself produces a higher rate, the scale wins. You can opt for the average-rate calculation based on your worldwide income, and France applies it only if it comes out lower than the minimum rate.
Model it first, because the usual advice is written for people with low worldwide income. An oleh drawing a normal Israeli salary often has a worldwide average rate above 20%, in which case the option changes nothing. Claiming it also means declaring your entire worldwide income to the French administration, with supporting documents translated into French, even though only French-source income is taxed.
Because the CSG and CRDS exemption is tied to being affiliated to a compulsory social security scheme in an EEA state or Switzerland, and UK residents kept it after Brexit. Israel is not on that list, so an oleh covered by Bituach Leumi pays the full social-levy rate on the same rent. It is the single largest cost difference aliyah makes to a French landlord.
Article 6 of the consolidated convention says income from immovable property is taxable only in the state where the property sits, and article 13 assigns gains on a sale to that state too, though without the word "only". Article 23 paragraph 2 lets Israel credit French tax against Israeli tax on the same income, capped at the Israeli tax attributable to it. During your exemption years there is nothing to credit, because Israel is not taxing the rent.
A non-resident sale bears a 19% levy plus 17.2% social levies on the gain, after holding-period reductions that clear income tax at 22 years of ownership and social levies at 30 years, declared on form 2048-IMM-SD with the notaire paying at completion. Above a 150,000 euro sale price you must appoint an accredited French fiscal representative, and short holding periods do not escape that.
Potentially, because it turns on nationality rather than residence: a non-resident who is a national of an EU or EEA state can exempt up to 150,000 euros of net gain on one dwelling. The conditions are two continuous years of past French tax domicile and a sale by 31 December of the tenth year following the transfer of your tax domicile out of France. A second route drops the deadline entirely where you have had free disposal of the property since at least 1 January of the year before the sale, but letting the flat out defeats that, so a landlord is held to the ten-year clock. That clock is separate from your Israeli ten-year clock.