French Wealth Tax (IFI): What Gulf Investors Need to Know

French real estate remains a highly attractive investment for Gulf-based high-net-worth individuals, offering prestige, stability, and long-term value. But alongside the benefits, investors must be aware of France’s real estate-specific wealth tax: the Impôt sur la Fortune Immobilière (IFI).

In this article, we explain what the IFI is, how it applies to non-resident investors from the Gulf region, and strategies to optimize your real estate investment from a legal and tax standpoint.

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What Is the French Wealth Tax (IFI)?

The Impôt sur la Fortune Immobilière (IFI) is a yearly tax on real estate assets located in France with a net taxable value above €1.3 million. This tax replaced the former ISF (Impôt de Solidarité sur la Fortune) in 2018 and is more narrowly focused: it targets real estate only.

✅ Key Point: Only French-situated real estate is taxable for non-resident individuals, including Gulf investors. Financial investments (e.g. shares or bonds) held outside France are excluded.

Who Has to Pay IFI?

If you are a non-resident of France — for instance, a citizen or resident of the UAE, Saudi Arabia, Qatar, Bahrain, Oman, or Kuwait — you are liable to the IFI only if:

• You own French real estate (directly or indirectly),
• Your net real estate assets in France are valued above €1.3 million on January 1st of the tax year.

The tax applies per household, and various deductions (such as mortgages or property debts) are allowed.

How Is the IFI Calculated?

The IFI is progressive, with rates ranging from 0.5% to 1.5%, depending on the net value of the French real estate portfolio.

Tax Bracket (Net Value)	Tax Rate
€0 – €800,000	0%
€800,001 – €1,300,000	0.5%
€1,300,001 – €2,570,000	0.7%
€2,570,001 – €5,000,000	1.0%
€5,000,001 – €10,000,000	1.25%
Above €10,000,000	1.5%

Example: If you own an apartment in Paris worth €3 million and have a mortgage of €500,000, your net taxable base is €2.5 million, and you will be taxed accordingly.

Holding Real Estate Through a Company (SCI, SARL de famille…)

Gulf investors often acquire French real estate via legal structures like an SCI (Société Civile Immobilière) or foreign companies. Be aware:

• Transparent companies (like SCI) do not shield you from IFI.
• Opaque companies (e.g., foreign companies without transparency) may be partially exempt, but recent tax reforms have narrowed the exemptions.

Important: If you or your family use the property for personal purposes (e.g. a pied-à-terre in Paris), the tax authorities may still consider it taxable.

Tax Treaties and IFI for Gulf Countries

France has signed tax treaties with several Gulf countries (e.g., the UAE, Qatar, and Kuwait), but most of these do not prevent the application of the IFI, since it is not classified as an income tax.

Therefore, even if you are not taxed in your home country, your French real estate may still trigger IFI in France.

How to Optimize or Reduce Your IFI Exposure

Some strategies include:

• Deducting qualifying debts (mortgages, property renovation loans).
• Avoiding luxury personal use of the property (which can trigger full taxation).
• Considering alternative investment vehicles (e.g. real estate funds or shares).
• Estate structuring via professional legal and tax advice.

A tailored approach is essential. The earlier you plan, the more you can save.

Get Expert Legal & Tax Guidance for French Wealth tax optimisation

At Sassi Law Firm, we assist Gulf investors in structuring their real estate investments in France efficiently. We help you navigate:

• IFI declarations and exemptions
• Ownership via legal structures
• Cross-border asset protection
• Residency and tax risks

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Contact us today to protect your assets and optimize your tax situation:
 

Email: wealth@sassi-avocats.com
Website: www.sassi-avocats.com
Phone: +33 7 71 58 58 58

 

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

luxury@sassi-avocats.com

Tel 07.71.58.58.58

 

The following links may be of assistance:

 

• The General Tax Code (CGI) refers to the comprehensive set of regulations and laws that govern the taxation system within a certain jurisdiction. It encompasses the many provisions and guidelines that dictate the assessment

 

• The provided link directs to the official website of Legifrance, which is the French government

 

• The subject of discussion pertains to the doctrine of tax administration within the Ministry of Budget.

 

• The provided URL leads to the official website of the French tax administration.

 

• The provided link directs to the official website of the French tax administration, specifically to the section

 

• The Ministry of Economy and Finance is a governmental institution responsible for overseeing and managing economic and financial matters within a certain jurisdiction.