Tax treaty between France and the United Arab Emirates: what property investors need to know
Investing in real estate in the United Arab Emirates can offer many opportunities for French residents. However, it is important to understand the tax implications of such investments. The tax treaty signed between France and the United Arab Emirates aims to avoid double taxation and provide a clear tax framework for investors. Find the official tax treaty below, followed by an analysis of the document.
Avoiding double taxation
The tax treaty between France and the United Arab Emirates ensures that the same income is not taxed twice in both countries. This applies in particular to property income, dividends and capital gains.
Taxes concerned
The taxes covered by this agreement are :
- In France: income tax, corporate income tax, wealth tax (ISF), inheritance tax, and all other withholding taxes.
- In the United Arab Emirates: corporate income tax, tax on individual or corporate income, including gains from the disposal of real estate.
Tax residence
To determine a person's tax residence, several criteria are used, including :
- Habitual residence and center of economic interests.
- In case of uncertainty, the person's nationality is taken into account.
Real estate income and capital gains
Income from real estate located in the Emirates may be taxed in the Emirates, even if you are resident in France for tax purposes. This income includes :
- Rental income from the leasing of real estate.
- Capital gains from the sale of these properties.
Capital gains
Gains from the disposal of real estate located in the Emirates are also taxable locally, but the agreement stipulates that these gains will not be taxed a second time in France, thus avoiding double taxation.
Dividends, interest and royalties
Dividends paid to French residents by companies based in the Emirates may be subject to tax in the Emirates. However, a tax credit is granted in France to avoid double taxation.
Interest and royalties follow the same principles: although they may be taxed in the Emirates, France grants a tax credit to offset taxes already paid in the other country.
Elimination of double taxation
To avoid double taxation, the treaty provides for the following methods:
- Tax exemption: France exempts certain income taxed in the United Arab Emirates.
- Tax credit: for income such as interest and royalties, a tax credit is applied to French taxes, depending on what has already been paid in the Emirates.
Tax non-discrimination
French residents should not be subject to more burdensome taxes or tax obligations than those imposed on UAE residents in similar circumstances, ensuring fair tax treatment for all.
Conclusion
For French residents investing in real estate in the United Arab Emirates, this tax treaty provides a solid framework for avoiding double taxation and protecting your investments. By understanding the tax rules and taking advantage of tax credits, you can optimize your returns while remaining compliant with the tax regulations of both countries.
