France–Luxembourg — Tax Treaty

1One convention from 2018 — and a protocol whose property point is not about your property

The convention of 20 March 2018, signed at Paris, entered into force on 19 August 2019 and applies from 1 January 2020, the date on which the convention of 1958 ceased to have effect. It has been amended twice: on 10 October 2019 and on 7 November 2022, the second published in France in April 2025. Article 2 covers income AND fortune, and it is worth reading the French list closely: the income tax, the corporation tax and the contributions on it, THE CSG AND THE CRDS BY NAME, and the wealth tax. Few conventions in this collection name the social levies; fewer name a wealth tax; and the administration's own commentary reads that listing as covering the current French wealth tax expressly.

The protocol, and the point that looks relevant and is not

The convention carries a protocol of three numbered points, stated to form an integral part of it, and read end to end at this edition. Point 1 concerns real-estate investment vehicles: where one state applies to a permanent establishment the exemptions its own law gives such vehicles, nothing in the convention limits that state's right to tax the immovable income the establishment is treated as distributing. Point 2 concerns collective investment undertakings and their access to the dividend and interest articles. Point 3 is the cross-border employment rule — a resident working in the other state who spends no more than 34 days a year working in their own country or in a third state is treated as having worked in the other state throughout, a threshold raised from 29 days by the 2022 amendment and extended to public-service pay.

Point 1 is the one that sounds as though it matters here, and it does not: it is about collective real-estate investment vehicles and what they are treated as distributions, not about a family that owns a house. NOTHING IN THE PROTOCOL TOUCHES ARTICLE 6, 13 OR 21. Saying that plainly is more useful than either silence or a bare denial, because a reader who sees "real-estate" in a protocol heading is entitled to know why it does not reach them.

Who counts as a resident

Article 4 runs the familiar cascade where both states claim a person: permanent home, centre of vital interests, habitual abode, nationality, then agreement between the two administrations. Its §5 is newer and sharper: a person who receives income or holds fortune merely in appearance, while another person actually benefits, is not treated as the beneficiary — the trustee and the fiduciary are named. French domestic law asks its own prior question through CGI article 4 B.

What each side does with the tax

Article 22 §2 a has Luxembourg EXEMPT income and fortune that France may tax, keeping only the right to set the rate on the rest — the credit method at §2 b is reserved for dividends, royalties and directors' fees. So for an owner the French charge is the charge, and the Luxembourg return carries a rate effect rather than a second tax. France runs its own credit machinery at §1, rewritten in part by the 2019 amendment.

Sources considered: 2018 convention (official consolidation carrying both amendments) arts. 2, 4, 22, 28, 30 and protocol points 1–3; the mutual agreement on the 34-day threshold; BOI-ANNX-000306 (29 April 2026), Luxembourg row read verbatim; BOI-INT-CVB-LUX chapeau and -10 §280 — texts read. Scope note: Luxembourg domestic law is stated at orientation level only and never carries a conclusion.

Reviewed as at 11 August 2026 · 2018 convention arts. 2, 4, 22 + protocol points 1–3; BOI-ANNX-000306; BOI-INT-CVB-LUX — texts read

2What you pay to buy a property in France, and the one silence worth knowing about

Buying is priced by French law and takes no notice of where the buyer lives. On the Cannes median of €4.9M, the transfer duties at 5.81% come to €284,526 and the notaire's scaled fee to roughly €61,250 — about €345,776 before any survey, agency or financing cost.

The wealth tax, named in the treaty

Above €1,300,000 of taxable French real-estate assets, CGI article 964 institutes the annual wealth tax; for a person not domiciled in France the base takes in property located in France and the fraction of any company's shares that stands for such property (article 965, 2°). On this pair the treaty does not merely tolerate that charge — article 2 names the wealth tax in its French list, the administration reads the listing as the current one, and article 21 §1 makes fortune consisting of immovable property taxable where the property stands. Luxembourg then exempts it under article 22 §2 a while keeping the rate. The value declared each year is the owner's own detailed estimate of real market value (CGI article 973 I), which is why a dated written valuation resting on comparable sales is worth holding.

And the silence: shares in a company that holds the property

Article 21 lists what it makes taxable where the property stands, and the list is short: §1 immovable property, §2 the movables of a permanent establishment. Paragraph 4 then leaves ALL OTHER elements of a resident's fortune taxable only where that resident lives. There is NO clause for shares in a property-rich company — the German, Algerian and Colombian texts each have one and this does not, and the administration's own commentary lists only §§1 and 2 as taxable where the property stands. Meanwhile French domestic law reaches the property fraction of those shares under article 965, 2°. How the domestic charge meets that residual is a real question, framed by article 6 §2, which lets the country the property stands in define what counts as immovable, by the principal-purpose test of article 28, and by the abuse-of-law line described in § 3. THIS BRIEF STATES IT AS A QUESTION FOR COUNSEL ON BOTH SIDES AND NOT AS A PLANNING POSITION, because on this pair above all others the difference between those two things has been expensive.

Debt, and what it does to the base

Acquisition debt owed to a bank is deductible from the wealth base under CGI article 974, while financial assets sit outside that base altogether. Three limits apply. A loan repaying capital only at term is treated as if it were being repaid gradually, the deduction declining over the loan's life — by one twentieth a year where no term is fixed. Where taxable property exceeds €5M and the debt exceeds 60% of that value, the excess counts only for half. And debt owed to the owner's own company or family is admitted only on proof that the loan is genuine and normal.

The local charges, and the 3% tax

The annual local property tax (taxe foncière) follows the deed at communal rates; a surcharge can apply to furnished second homes in tension zones. Separately, CGI articles 990 D to 990 E charge 3% of market value each year on entities holding French property, and they reach through interposed entities whatever the length of the chain. An entity established in the EU is exempt on filing, which a Luxembourg company is — a declaration to make rather than a cost to carry, lost by a missed filing rather than by any change in the facts. Article 990 F names the entity closest to the property as the debtor and makes the chain jointly liable.

Our agency prepares a free valuation for owners at valuation.elenaagueeva.com. An agent contacts you within 48 hours to arrange a visit.

It rests on the same official records a French property valuer (expert immobilier) works from: the government's register of recorded sale prices, the cadastre, and the planning permits granted on the parcel. The agent then visits to appraise the view, the garden, and the quality of the construction and the finishes. The valuation report (avis de valeur) is produced within 48 hours of the visit.

The same figure carries your French filings. Wealth tax, the 3% company tax and gift duty are all declared at the property's market value. The law takes that value from your own detailed estimate (articles 761 and 973 of the tax code), and asks no particular valuer to produce it. A court-appointed expert (expert judiciaire) belongs to litigation, not to a declaration. If the administration challenges your figure, a dated, written valuation resting on comparable sales is what supports it.

The first valuation of a property is free for its owner or seller. A repeat valuation of the same property, or one commissioned by a family office, a bank or another adviser for a client, is a billable engagement — ask us for terms.

Sources considered: 2018 convention arts. 2, 6 §2, 21 §§1, 2 and 4, 22 §2 a, 28; BOI-INT-CVB-LUX-10 §280 and -20 §450; CGI arts. 964, 965 (incl. 2°), 973 I, 974, 990 D–990 F; the notarial scale; DVF — texts read. Scope note: the treatment of property-rich shares under article 21 is an open question settled when our agency takes the file; the figures are the statutory scales applied to a median, not a quotation for a particular deed.

Reviewed as at 11 August 2026 · 2018 convention arts. 2, 21, 22; BOI-INT-CVB-LUX-10 §280, -20 §450; CGI arts. 964, 965, 973 I, 974, 990 D–F — texts read

3Five ways to own a French property — and why the old way is gone

No pair in this collection has a clearer history than this one, and it is a history of closures. It is set out with dates because a structure built under the old rules is still out there, and its owner needs to know which year ended it.

What the gap was

Under the 1958 convention, business profits were taxable only where the enterprise had a permanent establishment. The Conseil d'État, sitting in its plenary tax formation, stated the consequence in terms: the gain made by a Luxembourg enterprise with no permanent establishment in France on the sale of a French building was not taxable in France (25 October 2017, n° 396954). Luxembourg's own courts read their side in a way that sent the income to France — so it could be taxed in neither. That is the gap the whole arc closes, and the Luxembourg half of it is reported here at orientation level only.

The three closures, with their dates

The amendment of 24 November 2006 rewrote the business-profits article so that the exploitation and the sale of a business's immovable property went to the country the property stands in; it applied from 1 January 2008. The amendment of 5 September 2014 added gains on shares of entities drawing more than half their value from French property, directly or through any chain of entities; it was first applied on 1 January 2017. And the convention of 2018, effective 1 January 2020, completed the work: a 365-day property-rich test at article 13 §4, a principal-purpose test at article 28, the wealth tax and the social levies named in article 2, and the apparent-beneficiary rule at article 4 §5.

And the policing of the years in between

The most important holding for anyone still carrying an old structure is that the Conseil d'État has confirmed that the abuse-of-law procedure can withdraw a treaty benefit EVEN WHERE THE TREATY ITSELF CONTAINED NO ANTI-ABUSE CLAUSE, in the case of a Luxembourg company interposed with no non-tax purpose. Further decisions of 2017 examined Luxembourg development companies and the permanent-establishment analysis, and the line has continued into 2023 and 2024 on the old text. The arc is finished; the litigation about the years before it closed is not.

What the routes do now

DIRECT OWNERSHIP is simple and taxed at every French stage, with Luxembourg exempting. A FRENCH PROPERTY COMPANY changes the paperwork and not the country: the wealth tax reaches the property fraction of the shares in any event, article 13 §4 keeps a share sale French on the 365-day test, and CGI article 750 ter, 2° counts a family holding through any number of interposed entities as held directly at death. A LUXEMBOURG OR OTHER EU COMPANY adds the 3% filing discipline and removes no French charge. A TRUST OR FIDUCIARY ARRANGEMENT meets French law on its own terms — reporting under CGI article 1649 AB, the levy of article 990 J — and article 4 §5 of the convention is written to see through an apparent beneficiary. SPLITTING OWNERSHIP between generations is a French civil mechanism with statutory values (CGI articles 669 and 751); it is a gift, and no gift convention exists on this pair.

Sources considered: 1958 convention as consolidated to 28 April 2017, art. 3 and its amendment footnotes; 2018 convention arts. 4 §5, 13 §4, 28; CE plén. 25 October 2017, n° 396954; CE 31 March 2017, n° 389577 and n° 389573; CE 18 September 2023, n° 466868 and n° 466871; CE 26 April 2024, n° 466062 — decision texts read; CGI arts. 750 ter 2°, 990 D–990 F, 990 J, 1649 AB, 669, 751. Scope note: the Luxembourg case law of the old era is stated at orientation level and no French-side conclusion rests on it; structures are presented for analysis, never as recommendations.

Reviewed as at 11 August 2026 · 1958 convention art. 3 + amendments; 2018 convention arts. 4 §5, 13, 28; CE n° 396954, n° 389577, n° 389573 — decision texts read

4What you pay when you sell — and the clause that follows you for five years

France taxes the gain because the property stands in France (article 13 §1), and CGI article 244 bis A charges it: 19% income tax, plus the social levies, plus the surcharge of article 1609 nonies G on the larger gains. The taxable gain falls with holding time under CGI article 150 VC — the income-tax component clearing at 22 years, the social-levy component at 30. Works and acquisition costs enter the calculation on evidence, which is the practical argument for keeping invoices from the first year of ownership. Luxembourg exempts the gain under article 22 §2 a while keeping the right to set the rate on the rest.

Selling the company instead

Article 13 §4 sends the gain to France where the shares or comparable interests drew more than half their value, directly or indirectly, from French property at any time in the 365 days before the sale, with property the entity uses for its own business carved out. The look-back is the operative part: restructuring shortly before a sale does not escape it, and the principal-purpose test sits over any arrangement whose main object was the treaty advantage.

The clause that follows a departure

Article 13 §5 is easy to miss and expensive to miss. A gain on a substantial holding — a quarter or more of the profit rights — realised by someone who has left one of the two states remains taxable in the state they left, for five years after the departure. It runs in both directions and it is independent of France's own exit tax (CGI article 167 bis), which concerns securities and company rights held on departure by a person leaving French residence after at least six of the previous ten years. A family planning a move and a sale in the same period sequences them with counsel on both sides.

The two costs an EU seller does not carry

Because Luxembourg is an EU member state, the accredited tax representative required of third-country sellers is dispensed with under CGI article 244 bis A. And the solidarity levy falls below the full 17.2% for a seller affiliated to a social-security scheme within the European coordination regulation — a fact about affiliation rather than nationality, evidenced at the deed rather than assumed.

Sources considered: 2018 convention arts. 13 §§1, 4 and 5, 22 §2 a, 28; CGI arts. 244 bis A (incl. IV bis), 150 VC, 150 UB, 200 B, 1609 nonies G, 167 bis; BOI-RFPI-PVINR-20-20 — texts read. Scope note: the Luxembourg computation is orientation only.

Reviewed as at 11 August 2026 · 2018 convention art. 13; CGI arts. 244 bis A, 150 VC, 200 B, 1609 nonies G, 167 bis

5Renting before you buy, and renting your property out

A family often rents on the coast for a season before buying, and the two positions are not symmetrical. As a tenant of a furnished seasonal let, you are a customer: the rent carries no French tax consequence for you, the deposit and inventory are governed by the lease, and the tourist tax is collected by the landlord.

As an owner renting the property out

Article 6 §1 makes income from immovable property taxable in the country where the property stands, and §2 lets that country's own law define what counts as immovable property — usufruct included. Paragraph 4 extends the rule to the immovable property of an enterprise, which is the gap the 2006 amendment closed and this convention keeps closed. France taxes under its own rules: the progressive scale with a 20% minimum rate up to the second bracket ceiling and 30% beyond, unless a lower worldwide rate is demonstrated (article 197 A), with the social levies at the reduced solidarity rate for a Luxembourg-affiliated owner.

Luxembourg then exempts the income under article 22 §2 a and may use it only to set the rate on the rest. So a Luxembourg owner files in France for the tax and declares in Luxembourg for the rate; the filing mechanics there belong with advisers on the spot.

Furnished renting, and the rules that came with it

Renting furnished is a different French regime from renting unfurnished, with its own thresholds and its own allowances, and short-term seasonal renting on the coast now sits under communal registration and quota rules that vary from one commune to the next. Cannes, Antibes and Saint-Tropez do not answer the same way. The rules bear on the yield rather than on the deed, so they are checked before a purchase made for rental return, not after.

Sources considered: 2018 convention arts. 6 §§1, 2 and 4, 22 §2 a; CGI art. 197 A; BOI-INT-CVB-LUX-20; BOI-RFPI-PVINR-20-20 — texts read. Scope note: the Luxembourg return is stated at orientation level; communal registration rules change by commune and by year.

Reviewed as at 11 August 2026 · 2018 convention arts. 6, 22; CGI art. 197 A

6What happens to the property when you die, or give it away

Here the modern convention stops being any help at all, and the contrast with everything above is the point. This is one of the most up-to-date treaties in the collection on income and fortune — and it covers neither succession nor gifts. The administration's treaty list records the relationship for income and fortune only. So nothing divides a death charge between the two states, and no treaty credit exists to claim.

The French charge

French duty attaches to the property because it stands in France, whatever the owner's domicile, for estates and for lifetime gifts alike, and it reads through interposed companies — a property held through entities in which the deceased or donor, together with spouse, ascendants, descendants or siblings, holds more than half the interests is taxed as if it were held directly, whatever the number of interposed entities (CGI article 750 ter, 2°). The scale of article 777 runs to 45% in the direct line after the allowance of article 779 — €100,000 per child, renewing every fifteen years — and the surviving spouse is exempt. Where the deceased was French-domiciled, or an heir has been French-resident for six of the ten years before the transmission, French duty reaches the worldwide estate instead.

The credit of CGI article 784 A is confined to those worldwide cases. In the ordinary situation of a Luxembourg-resident owner taxed on the French property alone, there is no French credit at all — the article does not reach that case, and the Luxembourg position is answered in Luxembourg.

Who inherits, which is a different question

French forced heirship reserves a share of the estate for the children (Code civil articles 912 and 913), and it is not displaced by a will made under a law that allows free disposal. European Regulation 650/2012 lets a person choose the law of their nationality to govern the succession, which changes who inherits and in what shares; it does not move the tax. Whether the compensatory levy of Code civil article 913, al. 3 could operate depends on whether the chosen law leaves the children unprotected, which is a question of that law rather than of French law.

The gift

A gift of the property, or of its bare ownership, bears French gift duty because the property is in France, on the same scales, with the splitting values of article 669 fixed by the giver's age and article 751 answering the case where both halves are held in one family. No convention covers gifts, so what Luxembourg does with the same transfer is a separate question asked at the same time.

Sources considered: BOI-ANNX-000306 (29 April 2026), Luxembourg row read verbatim; CGI arts. 750 ter (incl. 2°), 777, 779, 784 A, 669, 751; Code civil arts. 912–913 (incl. 913, al. 3); EU Regulation 650/2012 — texts read. Scope note: the Luxembourg treatment of an estate or a gift is a question for counsel there; civil law runs before tax law in this section.

Reviewed as at 11 August 2026 · CGI arts. 750 ter, 777, 779, 784 A; Code civil arts. 912–913; EU Reg. 650/2012 — texts read

7The eight questions Luxembourg owners ask most

Is Luxembourg still a route into French property?

No, and the closures are dated: the business-property rule from 1 January 2008, the property-rich share rule from 1 January 2017, and the 2018 convention from 1 January 2020 with its 365-day test and its principal-purpose test. The Conseil d'État has also held that abuse of law can withdraw a treaty benefit even where the treaty carried no anti-abuse clause.

Does a Luxembourg resident pay French wealth tax?

Yes above €1.3M — and unusually, the treaty names the tax: article 2 lists it and article 21 §1 gives France fortune consisting of French property. Luxembourg exempts it while keeping the rate.

What about shares in the company that holds the property?

French domestic law reaches the property fraction of the shares. The treaty is silent: article 21 has no property-rich fortune clause and its §4 leaves other fortune to Luxembourg. That is a question for counsel on both sides, and this brief does not turn a silence into a plan.

Is there a succession treaty?

No. The relationship covers income and fortune only. French duty runs to 45% in the direct line after the €100,000 allowance per child, family companies counted in, and the credit of article 784 A does not reach the ordinary non-resident case at all.

I am moving. Does anything follow me?

Yes. Article 13 §5 keeps a holding of a quarter or more of the profit rights taxable in the state you left for five years after leaving, in both directions — separately from France's own exit tax.

Do I need a tax representative to sell?

No. Luxembourg is in the EU, so the requirement that applies to third-country sellers is dispensed with.

Is my French rent taxed in Luxembourg too?

No. France taxes it where the property stands, and Luxembourg exempts it under article 22 §2 a while keeping the right to set the rate on your other income.

Does the protocol affect me?

No. Its three points concern real-estate investment vehicles, collective investment undertakings, and the 34-day cross-border employment rule. The first sounds relevant and is not: it is about collective vehicles and what they are treated as distributing, not about a family that owns a house.

Sources considered: 2018 convention arts. 2, 6, 13, 21, 22 + protocol points 1–3; CE plén. n° 396954; CGI arts. 964, 750 ter, 777, 779, 244 bis A, 784 A — texts read. Scope note: these answers condense the sections above and inherit their scope notes.

Reviewed as at 11 August 2026

8The court decisions, the sources and the sales behind this brief

Every legal statement in this brief was checked against the text it comes from, in the Chiron Legal Corpus, at the date on each section stamp. The 2018 convention, its protocol, both amendments and the superseded 1958 text were read end to end at this edition.

What the protocol re-reading established

Three points, all integral, and none of them reaching articles 6, 13 or 21. Point 1 is the one worth naming precisely, because it concerns real-estate investment vehicles and would otherwise look as though it applied to any property holding; it does not. Across the pairs migrated in this pass the protocol question has now produced five distinguishable answers: no protocol (France–Singapore, France–Ireland); a protocol carrying a rule that moves rates (France–India); a protocol that exists and is silent on property (France–Poland); a protocol that is load-bearing but narrower than the rule it is cited for (France–Belgium); and here, a protocol with a property-adjacent point that does not reach a private owner. The only way to know which is to read it, which is why the step is run on every pair.

What the courts have decided

This pair has the richest case law in the collection, and all of it concerns the old text. The plenary decision of 25 October 2017 (n° 396954) both describes the gap and holds that abuse of law can withdraw a treaty benefit absent any anti-abuse clause. Two decisions of 31 March 2017 (n° 389577 and n° 389573) examined Luxembourg development companies and the permanent-establishment analysis. The line continued into 18 September 2023 (n° 466868 and n° 466871) and 26 April 2024 (n° 466062). That is the epilogue of a closed arc rather than a live question about the current convention.

The market figures

The sales figures come from DVF, the French government's register of property transactions, covering twelve years. The observatory of ownership our agency maintains reports positions as proportions rather than counts where a national sample is thin, because a count would suggest more precision than the data carries.

What this brief is not

It states the general position on the French side and reads the Luxembourg side at orientation level only. It is not advice on a particular file, and it does not replace a notaire, a French tax counsel or an adviser in Luxembourg — which matters most on the fortune question of § 2, where the treaty is silent and the silence should not be read as an answer. Write to us directly for a file-specific reading.

Sources considered: 2018 convention (official consolidation carrying the amendments of 10 October 2019 and 7 November 2022) and its protocol; the 1958 convention as consolidated to 28 April 2017; the mutual agreement on the 34-day threshold; BOI-ANNX-000306 (29 April 2026); BOI-INT-CVB-LUX chapeau, -10, -20 and -30; BOI-RFPI-PVINR-20-20; CE n° 396954, n° 389577, n° 389573, n° 466868, n° 466871, n° 466062 — decision texts read; the CGI and Code civil articles cited in each section; DVF. Scope note: the administration's commentary on this pair is unusually fresh, having been written for this convention, and is followed except where a treaty text says otherwise.

Reviewed as at 11 August 2026 · 2018 convention + protocol + both amendments; 1958 convention; CE n° 396954 and the 2017–2024 line — decision texts read; DVF

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