French Real Estate Wealth Tax (IFI): What UAE Investors Should Know in 2025

French Real Estate Wealth Tax (IFI): What UAE Investors Should Know in 2025

France remains one of the top destinations for luxury real estate investment, and UAE-based investors — including private clients, family offices, and sovereign entities — continue to show strong interest in French assets, particularly in Paris, the Côte d’Azur, and Alpine regions.

However, any real estate investment in France valued over €1.3 million may be subject to the French Real Estate Wealth Tax (Impôt sur la Fortune Immobilière, or IFI) — even for non-residents.

This article outlines what UAE nationals and residents need to know about the IFI in 2025 — including who is liable, what is taxed, and how to structure assets efficiently and legally.

What Is the IFI?

The Impôt sur la Fortune Immobilière (IFI) is a French annual tax on real estate wealth, introduced in 2018. It replaced the previous wealth tax (ISF), but now applies only to real estate assets, not financial investments.

Two key thresholds:

• Only applies if your net real estate assets in France exceed €1.3 million.

• The tax is progressive, with marginal rates from 0.5% to 1.5%, based on value.

Does the IFI Apply to UAE Investors?

Yes. UAE nationals and residents are considered non-residents under French tax law, but still liable for IFI on their French-based real estate.

Key points:

• The France–UAE tax treaty, signed in 1989, does not override IFI obligations, as the treaty covers income and capital gains, not wealth taxes.

• Holding property through a UAE company does not guarantee exemption, especially if the structure is considered transparent.

What Types of Property Are Taxable?

The IFI applies to a wide range of real estate assets in France, including:

✔️ Directly owned real estate (apartments, villas, land)

✔️ Rental properties or secondary homes

✔️ Shares in French or foreign companies that hold French property (e.g., SCIs)

✔️ Property rights (usufruct, bare ownership)

Not taxable:

✖️ Real estate used exclusively for professional purposes

✖️ Financial assets or overseas real estate

✖️ Certain debts may be deducted (e.g., qualifying mortgages)

How to Reduce or Optimize IFI Exposure

UAE-based investors often work with legal and tax advisors to optimize their real estate holdings in France. Common strategies include:

• Debt planning: Using mortgage loans to reduce the net taxable base

• Valuation discounts: For co-ownership, tenanted properties, or dismembered ownership (usufruct/nue-propriété)

• Holding structures: Using Société Civile Immobilière (SCI) to facilitate estate planning and optimize taxation — though not exempt from IFI

• Professional use exemption: If the property is used within a genuine commercial operation

Important: French tax authorities have increased scrutiny of offshore holding structures, particularly if they lack real substance.

How to File IFI from the UAE

As a non-resident, you are required to file a Form 2042-IFI, alongside the French income tax return — even if you don’t generate income in France.

Filing options:

• Online at impots.gouv.fr (non-resident access)

• By paper, depending on your situation

Payment:

• Via international wire transfer

• Or by online credit card payment through the French tax system

The annual deadline usually falls between April and June.

FAQs – Common Questions from UAE Investors

I own my French villa via a Dubai holding company. Am I exempt?

→ Not automatically. If the company is seen as a shell or fiscally transparent, the tax may apply at the shareholder level.

My property is rented. Do I still owe IFI?

→ Yes. Rental income and wealth tax are separate. You may deduct related debts, but the property value remains taxable.

Can a UAE-based trust or foundation help avoid IFI?

→ Possibly, but France often “looks through” such structures. Professional advice is essential.

 

Why Legal Advice Is Essential

Investing in France offers attractive returns and lifestyle value — but navigating French tax law as a non-resident is complex.

A qualified French tax and business lawyer can help you:

• Structure acquisitions efficiently

• Limit tax exposure while staying compliant

• Prepare for audits and prevent reputational risk

• Coordinate your legal strategy with UAE advisors

Conclusion

If you’re a UAE-based investor with real estate in France — or planning to acquire property in 2025 — now is the time to review your structure and tax exposure.

A proactive legal strategy will help you protect your wealth, your reputation, and your legacy.

 

Mabrouk SASSI

International Tax & Business Lawyer – Paris

 

Looking to invest in luxury real estate in France? I offer high-level legal and tax support to help you secure the right property with complete peace of mind — from due diligence to ownership structuring and all related tax implications.

 

I am not a real estate agent. As an independent lawyer, I work exclusively in your best interest, with no ties to brokers or developers.

 

With over 30 years of experience advising high-net-worth individuals and international clients, I also assist with complex tax matters, including aggressive tax audits, tax fraud investigations, and anti-money laundering compliance.

 

The extensive history of implementing tax and legal law sector has contributed to the development of a strong reputation, as demonstrated by the frequent appearances of Mr. SASSI, a legal professional, in many respected media outlets such as L’Express, Les Échos, L’Expansion, L'Entreprise, and BFM Radio, among others.

 

Our clients comprises both domestic entities, comprising firms and persons as well as international entities, including companies and individuals situated in regions such as Asia, the Middle East, Maghreb, and Africa. 

 

Please feel free to reach out to us for any inquiries or requests for assistance.

 

Contact:

 

Mabrouk SASSI, lawyer Paris Bar

32 avenue Carnot – Paris 17th - France

infos@sassi-avocats.com

Tel 07.71.58.58.58