Focus on the tax treaty between France and the Emirates – its impacts for individual residents of the U.A.E.
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France–UAE tax treaty: the reference guide for expatriates, entrepreneurs and investors
Moving to Dubai or the United Arab Emirates? Find out how the France–UAE tax treaty works, the rules on tax residence and double taxation, and the consequences for your income and assets.
France–UAE tax treaty: understanding the rules that apply to your move abroad
In recent years, moving to the United Arab Emirates has become a preferred option for many French entrepreneurs, executives, investors and employees. The country’s economic stability, international appeal and tax environment lead new taxpayers every year to consider transferring their tax residence to Dubai or Abu Dhabi.
This trend, however, comes with a recurring question: what will the tax consequences of settling in the United Arab Emirates be?
The answer can never be reduced to the absence of income tax in the Emirates.
In practice, transferring an international tax residence requires a simultaneous assessment of French tax law, the regulations applicable in the United Arab Emirates and the provisions of the tax treaty concluded between the two States.
Yet this treaty is often misunderstood.
It is common to think that obtaining a residence visa, setting up a company under UAE law or spending more than 183 days in Dubai is enough to end all taxation in France. Conversely, some taxpayers believe they will always remain taxable in France as long as they keep assets or economic interests there.
Neither of these statements can be accepted as a general rule.
The tax treaty between France and the United Arab Emirates is not intended to eliminate tax or to allow taxpayers to freely choose the State in which they wish to be taxed. Its role is to allocate taxing rights between the two States where the same situation has links with each of them, while avoiding double taxation and strengthening cooperation between the tax authorities.
Its application, however, rests on an essential preliminary step: determining tax residence.
Before examining the rules applicable to real estate income, dividends, employment income or capital gains, it is necessary to identify the State in which the taxpayer is considered a tax resident. The application of all the treaty provisions depends on this analysis.
This article explains how the France–UAE tax treaty works, the criteria used to determine tax residence, and the main consequences of the treaty for individuals, entrepreneurs and investors with interests in France and the United Arab Emirates.
Why is the France–UAE tax treaty essential?
The tax treaty between France and the United Arab Emirates was signed on 19 July 1989. It entered into force on 1 July 1990, was amended in 1993 and now applies taking into account the adjustments resulting from the OECD Multilateral Convention (MLI).
Its purpose is twofold.
On the one hand, it prevents the same income from being taxed twice where France and the Emirates may both exercise their taxing rights at the same time.
On the other hand, it lays down rules designed to prevent situations of non-taxation resulting from the improper use of differences between national laws, in line with the international standards developed by the OECD.
Contrary to a common misconception, the treaty therefore does not grant a stand-alone tax advantage.
It does not create a right to exemption and does not override the rules laid down by domestic law. It only applies where the same situation potentially falls within the scope of both States and it must be determined which of them has the power to tax an income, an asset or a capital gain.
This distinction is fundamental.
In practice, many disputes arise from confusion between the transfer of tax residence and the tax consequences of that transfer. Yet these two questions follow distinct legal reasoning.
In the event of dual tax residence, how does the treaty decide between the two States?
One of the main difficulties in international taxation lies in situations of dual tax residence. It is not uncommon for a person to meet both the residence criteria under French law and those applied by the United Arab Emirates at the same time.
This situation particularly concerns taxpayers who settle in Dubai while keeping significant ties in France: a spouse or children living there, substantial real estate assets, management positions within a French company, or an economic activity partly carried out in France.
In such a case, each of the two States could, under its domestic law, claim the person as a tax resident. Without a coordination mechanism, this situation could lead to particularly burdensome double taxation.
It is precisely to prevent this type of conflict that the France–UAE Tax Treaty provides tie-breaker rules.
Contrary to a widespread belief, this is not a choice left to the taxpayer. The France–UAE Tax Treaty sets out an order of analysis that must be followed.
The first criterion is the permanent home. The State in which the taxpayer has a dwelling allowing them to reside on a stable basis must be identified. If a permanent home exists in both countries, the analysis continues.
The France–UAE Tax Treaty then applies the centre of vital interests test, which is often the decisive factor. This requires an assessment of all the taxpayer’s personal and economic ties.
In practice, the tax authorities examine in particular:
where the spouse and children live;
the country in which the professional activity is mainly carried out;
the source of income;
where the assets are managed;
the location of the main investments;
the positions held within companies;
more broadly, all the factors that make it possible to identify the actual centre of personal and economic life.
This is not an exhaustive list. No single criterion is decisive on its own. The French administrative courts regularly point out that tax residence results from an overall assessment of the taxpayer’s situation.
Where the centre of vital interests still does not settle the matter, the France–UAE Tax Treaty provides further successive criteria, notably the place of habitual abode and, as a last resort, nationality.
This method explains why obtaining a UAE residence visa or a Tax Residency Certificate is not necessarily enough to end French tax residence. These are important indicators, but they never replace a full analysis of the situation.
What income remains taxable in France after relocating to the United Arab Emirates?
Transferring your tax residence to the United Arab Emirates does not mean that all your income now escapes taxation in France.
One of the main contributions of the France–UAE Tax Treaty is precisely to determine, for each category of income, which State has the right to tax it.
It is therefore essential to distinguish tax residence from the place where income is taxed. A person may well be considered a UAE tax resident while remaining taxable in France on certain French-source income.
This distinction is often the source of many misunderstandings.
Real estate income
Income from real estate follows a particularly well-established principle of international tax law: it is, in principle, taxable in the State where the property is located.
Thus, a taxpayer based in Dubai who keeps a rented apartment in France will generally continue to be taxed in France on the rent received.
The France–UAE Tax Treaty does not call this rule into question. On the contrary, it confirms the taxing right of the State where the property is located.
This logic also applies to capital gains realised on the sale of real estate located in France, subject to the specific provisions of the France–UAE Tax Treaty and domestic law.
The reverse situation follows the same reasoning. A French tax resident who buys a rental property in Dubai falls under Article 5 of the France–UAE Tax Treaty: the rent is taxable in the United Arab Emirates, the State where the property is located. This income must nevertheless be declared in France (and it will count towards the marginal tax rate and overall French income), where the France–UAE Tax Treaty eliminates double taxation by granting a tax credit equal to the corresponding French tax.
For the real estate wealth tax (IFI), the logic differs depending on the direction of the investment:
- A French tax resident who owns property in the United Arab Emirates remains taxable in France on that property as soon as their worldwide real estate assets exceed €1.3 million. As the Emirates levy no wealth tax, there is no conflict of taxation here: France fully exercises its right to tax. The reverse situation is more subtle.
- A UAE tax resident who owns real estate in France may, in certain cases, escape IFI on that property. Article 16 of the France–UAE Tax Treaty provides that French real estate remains taxable in France unless its value is lower than that of certain French financial assets held by the same taxpayer.
Two nuances are worth noting. First, these financial assets must have been held for more than eight months during the previous year: an opportunistic holding, made just before the tax becomes chargeable, is not enough. Second, the taxpayer must be able to justify this in their wealth tax return.
For example, a UAE resident who owns a €2 million Paris apartment and has held a €3 million portfolio of listed French shares for several months may thus, under these conditions, not be subject to IFI on the property.
There is, however, a limitation: holding real estate through a company is not enough to escape this classification. The France–UAE Tax Treaty neutralises this type of arrangement by treating as real estate the shares of a company whose assets consist of more than 50% real estate, except where the property is used for the company’s own business.
Dividends, interest and other financial income
Investment income is treated in a more nuanced way.
The France–UAE Tax Treaty provides specific rules for dividends, interest and royalties to prevent the same income from being taxed in a way that is incompatible with the objectives pursued by the two States.
Depending on the nature of the income, its source and the status of the beneficiary, the right to tax may belong exclusively to the State of residence or be shared between the source State and the State of residence, within the limits set by the France–UAE Tax Treaty.
In practice, an individual analysis remains essential. It would be legally incorrect to claim that a UAE tax resident will never be taxed in France on French-source financial income, especially since a withholding tax on dividends (refundable under certain conditions) was introduced by the 2025 Finance Act, effective from 1 January 2026.
Reviewing these flows is part of the firm’s day-to-day work. The exact nature of the income, the status of the beneficial owner, and the interaction between domestic law and treaty provisions: each of these parameters may change the applicable tax treatment. Feel free to contact us for a review of your situation.
Employment and business income
Remuneration received from employment or self-employment requires particular attention.
In international matters, the employer’s place of establishment or the taxpayer’s nationality is not, on its own, enough to determine which State has the right to tax the income.
The actual conditions under which the activity is carried out, the length of presence in each State and the provisions of the France–UAE Tax Treaty must be examined.
Article 13 of the France–UAE Tax Treaty, on dependent personal services, sets out the following principle: an employee’s salary is in principle taxable in their State of tax residence (with the possibility, nonetheless, of directors’ fees being arranged on a case-by-case basis).
However, this rule changes when the employee physically carries out their work in another State. In that case, the country in which the work is actually performed may also have the right to tax the corresponding remuneration.
Nevertheless, where an employee resident in one State works temporarily in another State, their salary may remain taxable only in their State of residence if three conditions are met:
- they stay in the other State for less than 183 days during the period provided for by the France–UAE Tax Treaty;
- their salary is paid by an employer who is not resident in the State in which they are temporarily working;
- the cost of their remuneration is not borne by a permanent establishment or local structure of their employer located in that other State.
This principle does, however, have exceptions.
The first is commonly presented as the 183-day rule. It keeps taxation in the employee’s State of residence alone where three conditions are cumulatively met: the stay in the other State does not exceed 183 days in the tax year concerned, the remuneration is paid by an employer who is not resident in that other State, and it is not borne by a permanent establishment or fixed base that the employer has there. If just one of these conditions is not met, taxation reverts to the State where the activity is carried out.
Other exceptions are provided for, notably for teachers and researchers, who are taxed in their State of origin for a maximum of twenty-four months, and for remuneration from employment on board a ship or aircraft operated in international traffic. Pensions, government service remuneration and payments received by students and trainees are covered by separate provisions.
The situation is often even more complex for company directors and entrepreneurs.
Setting up a company in the United Arab Emirates does not, on its own, rule out all French taxation. The tax authorities assess the reality of the economic activity (the well-known economic substance or permanent establishment): where strategic decisions are taken, where clients are located, whether management functions are actually performed, and whether there is a permanent establishment.
These issues are now among the main audit topics in the area of international mobility.
The most common mistakes when expatriating to the United Arab Emirates
Over the years, the tax attractiveness of the United Arab Emirates has given rise to many misconceptions. Some are maintained by incomplete information, others by a misinterpretation of international tax treaties.
In practice, most of the difficulties encountered by taxpayers do not originate in the France-UAE Tax Treaty itself, but in a misunderstanding of how it works or how it is applied in relation to French domestic law.
Thinking that a residence visa is enough to become a French non-fiscal resident
This is probably the most common mistake.
Obtaining a residence visa or an Emirates ID is an administrative condition to live in the United Arab Emirates. It does not, on its own, determine tax residence under French law.
The French tax administration does not look only at administrative documents. It examines the reality of the taxpayer's situation.
Thus, a person who keeps their family home in France, continues to carry out an essential part of their professional activity there, or maintains the center of their economic interests there may remain considered a French tax resident, regardless of their administrative or internal tax status in the Emirates.
In other words, tax residence is a matter of facts, not formalities.
Confusing the absence of tax in the Emirates with the absence of taxation in France
The United Arab Emirates does not levy income tax on individuals.
This characteristic sometimes leads some taxpayers to believe that a transfer of tax residence automatically results in a total exemption from their French tax obligations.
The reality is more nuanced.
A tax resident of the Emirates may well remain taxable in France on certain French-source income, including real estate income or, in certain situations, investment or professional income.
The absence of tax in the State of residence does not have the effect of suppressing the right to tax granted to France by the France-UAE Tax Treaty and/or French domestic tax law.
Retaining the center of economic interests in France
The concept of center of economic interests is often underestimated.
Yet, it occupies an essential place in audits concerning expatriations.
The administration may notably examine:
the primary source of income;
the location of the main investments;
corporate mandates and their place of exercise ;
the companies actually managed;
the place where important economic decisions are made;
the taxpayer's habitual financial flows.
In some cases, a person materially resides in Dubai for several months of the year while continuing to manage all of their economic activities from France. Such a situation can lead the administration to question the reality of the transfer of tax residence.
It is therefore not enough to move your place of life; it is also necessary for the asset and professional organization to be consistent with this expatriation.
Neglecting to prepare for departure
An expatriation is not just about the day the plane takes off.
Tax consequences and declarations are often prepared several months in advance.
Departure can have an impact on tax returns, the management of French companies, the holding of real estate assets, financial investments, life insurance contracts, or the application of specific mechanisms such as the Exit Tax.
As every situation is different, anticipation generally helps to avoid costly adjustments or subsequent litigation.
Why are tax audits related to expatriation increasing?
International mobility has been growing steadily for several years. At the same time, tax administrations have increasingly powerful cooperation tools at their disposal.
The automatic exchange of information between administrations, particularly banking institutions, enhanced reporting obligations, and international standards developed under the impetus of the OECD now allow States to have a much more complete view of taxpayers' wealth and tax situations.
In this context, expatriations to low-tax jurisdictions naturally receive particular attention.
This obviously does not mean that an expatriation to the United Arab Emirates is suspicious or irregular.
On the other hand, when a taxpayer claims to have transferred their tax residence, the administration has the right to verify that this claim corresponds to an economic, family, and personal reality.
Audits then focus less on the existence of a visa or a lease agreement than on the overall coherence of the situation: where does the person actually live? Where do they work? Where do they make their decisions? Where are their main interests located?
This approach is in line with the logic adopted by the tax treaty itself, which always favors the reality of the facts over appearances.
The France-UAE Tax Treaty never replaces a personalized analysis
The tax treaty between France and the United Arab Emirates constitutes an indispensable legal framework to prevent double taxation situations. However, it does not automatically resolve every situation encountered in practice.
Each expatriation has its own specific features.
The applicable tax treatment depends, in particular, on the composition of the wealth, the nature of the income, the activities carried out, the companies held, the family organization, or the ties maintained with France.
Two taxpayers living in the same building in Dubai may thus fall under completely different tax situations.
It is precisely for this reason that an individualized analysis remains essential before any expatriation or wealth reorganization project.
Legal and tax anticipation not only secures the transfer of residence, but also identifies any potential reporting obligations, risks of recharacterization, and the consequences associated with retaining interests in France.
At Expats Law Firm, we assist individuals, entrepreneurs, and investors daily in their international mobility projects. Our approach is not to search for standardized solutions, but to build a strategy in compliance with the applicable laws, the Franco-Emirati tax treaty, and the financial objectives of each client.
Frequently asked questions about the tax treaty between France and the United Arab Emirates
Does a Frenchman living in Dubai still pay taxes in France?
Not necessarily, but they do not automatically cease to be taxable in France solely because of their relocation to the United Arab Emirates.
It must first be determined whether the taxpayer has indeed transferred their tax residence within the meaning of French law and the tax treaty. Next, the nature of the income received must be examined. Certain French-sourced income, particularly real estate income, may continue to be taxed in France even when the taxpayer is a tax resident of the Emirates.
Is spending more than 183 days in Dubai enough to become a tax resident of the Emirates?
No.
The 183-day threshold is often presented as a general rule, whereas it is only one factor among others.
The determination of tax residence depends on the criteria provided by domestic laws as well as, where applicable, the tie-breaker rules provided by the tax treaty. Family situation, economic ties, and the actual organization of personal life remain decisive factors.
Does an Emirati residency visa guarantee the loss of French tax residence?
No.
The residency visa allows for legal stay in the United Arab Emirates, but it has no automatic effect on the qualification of tax resident in France.
The French tax administration assesses the situation in light of the criteria set by Article 4 B of the General Tax Code and, in the event of a conflict of residence, the provisions of the tax treaty.
Can I keep real estate in France after my expatriation?
Yes.
Owning real estate located in France does not, on its own, prevent someone from becoming a tax resident of the Emirates.
On the other hand, the income generated by this property as well as certain real estate capital gains remain liable to be taxed in France in accordance with the treaty provisions.
However, each situation must be assessed in light of the taxpayer's overall assets and the ties maintained with France.
Do dividends paid by a French company remain taxable in France?
The tax treatment depends on several parameters, notably the provisions of the tax treaty, the status of the beneficiary, and the nature of the distributed income.
It is therefore impossible to provide a general answer without examining the specific situation concerned.
A prior study makes it possible to precisely identify the respective taxing rights of France and the United Arab Emirates.
Can the French authorities audit an expatriation to Dubai?
Yes.
The transfer of tax residence can be subject to an audit, like any other situation involving tax stakes.
The administration can ask the taxpayer to justify the reality of their expatriation by means of various elements: effective residence, family organization, professional activity, asset management, or even the center of economic interests.
The mere production of a visa or a lease agreement is not always sufficient to demonstrate the actual transfer of tax residence.
Is a company created in Dubai enough to stop being taxed in France?
No.
The creation of an Emirati company does not automatically result in the transfer of its director's tax residence, nor does it guarantee the absence of taxation in France.
Tax administrations notably examine the place where strategic decisions are made, where the activity is actually carried out, and where the effective management of the company is located.
An international structuring must therefore always be analyzed as a whole.
Why get support before expatriating?
An expatriation raises questions that go far beyond a mere change of country of residence.
It can have consequences for income tax, asset taxation, inheritance, holding of companies, real estate investments, reporting obligations, and even the application of the Exit Tax.
An analysis carried out beforehand secures the project, anticipates potential tax risks, and organizes the expatriation in compliance with French and Emirati laws.
Cited case law
Conseil d'État, January 26, 2011, No. 308996.
Conseil d'État, January 27, 2010, No. 304995.
Conseil d'État, July 7, 2004, No. 243679.
Conseil d'État, November 9, 2015, No. 370054
Read also: Tax residence: when a simple TRC is not enough · Conseil d’État ruling of 20 March 2023 on tax treaties
