France and Spain share one of the most significant migration corridors in Europe. Thousands of French nationals retire to Spain, relocate for work, or hold assets across both countries. The 1995 Spain-France double taxation convention (CDI España-Francia, BGS 1995) provides the framework for allocating taxing rights, but several French savings and pension vehicles — the assurance-vie, the PEA, and the PER — are not recognised by Spain in the way French taxpayers might expect.
Treaty Overview and Residency Tie-Breaker
The treaty follows the OECD model structure. The residency tie-breaker (Article 4) allocates exclusive treaty residence to one country using the same cascade as most OECD treaties: permanent home → centre of vital interests → habitual abode → nationality → mutual agreement. France applies aggressive residency rules (the 183-day rule plus professional, economic and family ties), so French nationals living in Spain should formalise their Spanish residency clearly and sever demonstrable ties with France.
Employment Income (Article 15)
Employment income is taxable in the state of work (Spain, for a Spanish resident working in Spain). Frontier workers — those who live in one country and work in the other, returning home daily or weekly — have a special rule under Article 15(5): income of frontier workers is taxable only in the state of residence (Spain), not in France, subject to conditions about residence near the border. This is a frequently misapplied provision: the frontier worker exception applies only where the employee lives within a defined border zone.
French Assurance-Vie: No Spanish Tax Deferral
The French assurance-vie is one of France's most popular tax-advantaged savings vehicles. In France, withdrawals from an assurance-vie held for more than 8 years benefit from a significant tax reduction (abattement) and a flat tax rate of 7.5%. However, a Spanish tax resident cannot claim French tax on assurance-vie withdrawals — the treaty allocates the taxing right to Spain (the residence country) for investment income and insurance policy gains.
More importantly, Spain taxes assurance-vie policies in the same way as any other investment — with no recognition of the French tax deferral structure. A Spanish resident holding a French assurance-vie:
- Is not taxed annually on growth within the policy (as long as no withdrawal is made)
- Is taxed on withdrawals as savings income at 19–28% in Spain (the gain on the withdrawal over the premium allocated to it)
- Must declare the policy on Modelo 720 if the surrender value exceeds €50,000
- Cannot benefit from the French 8-year abattement — that is a French domestic provision inapplicable to Spanish residents
PEA (Plan d'Épargne en Actions): Not Tax-Free in Spain
The Plan d'Épargne en Actions is a French account that allows tax-free growth and withdrawals on investments in European equities, provided the account is held for at least 5 years. Like the UK ISA, Spain does not recognise the PEA's tax-free status. A Spanish tax resident holding a PEA must:
- Declare dividends and gains within the PEA on their Spanish IRPF return as savings income
- Declare the PEA on Modelo 720 if the account value exceeds €50,000
- Accept that the French PEA advantages are effectively lost once Spanish residency is established
French Dividends (Article 10)
Where a Spanish resident receives dividends from a French company:
- 5% WHT in France if the recipient holds at least 25% of the company's capital
- 15% WHT in all other cases
- Spain taxes the dividends as savings income (19–28%) and credits the French WHT
- France's standard domestic dividend WHT is 30% — the treaty caps it at 5%/15% as above
French Property Income and IFI vs Spanish IP
Rental income from French property (Article 6) is taxable in both France (as source state) and Spain (as residence state) — with Spain crediting the French tax. For high-value French property owners, two wealth taxes may apply simultaneously:
- French IFI (Impôt sur la Fortune Immobilière): Applies to French real estate assets above €1.3 million held by French non-residents — which includes Spanish residents. IFI is charged at progressive rates of 0.5–1.5%.
- Spanish IP (Impuesto sobre el Patrimonio): Spanish residents pay IP on their worldwide assets, including French property, above the personal threshold (€700,000 plus the habitual residence exemption of up to €300,000). The French IFI paid may be creditable against the Spanish IP charge under domestic rules and the treaty, but the interaction is complex and must be calculated carefully.
Pensions from France (Article 18)
French private pensions — including the Assurance Retraite (Caisse Nationale d'Assurance Vieillesse — CNAV) and most private pension plans — fall under Article 18 and are taxable exclusively in Spain for a Spanish resident. French civil servant pensions paid by the French state or local authorities fall under Article 19 (government service pensions) and are taxable exclusively in France, following the same logic as the Beamtenpension in the Germany treaty.
PERP/PER (French Pension Plans) in Spain
Spain may not recognise contributions to French PER (Plan d'Épargne Retraite) plans as deductible for IRPF purposes — contributing from after-tax Spanish income (no Spanish deduction) and paying Spanish tax again on distributions creates potential double taxation on the contribution element. The treatment of PER distributions in Spain under the treaty requires specialist advice, as the treaty's pension articles may not align perfectly with the PER's hybrid nature.
The Inheritance Article: A Rarity
Unlike many tax treaties (including the Spain-Germany treaty), the Spain-France treaty includes an inheritance and gift tax article (Article 24). This is relatively unusual and provides important relief for Franco-Spanish cross-border estates. The key provision: where both countries would tax the same inheritance, the treaty provides that the decedent's residence country has primary taxing rights, with the other country granting a credit for the tax paid in the residence country. For practical purposes, this means a Spanish resident's estate should primarily be subject to Spanish ISD, with France granting a credit for Spanish ISD against any French succession duties. However, the article's application to specific asset categories and its interaction with regional ISD regimes requires careful analysis.
SCI (Société Civile Immobilière)
Many French nationals hold Spanish or French property through an SCI — a French civil real estate partnership. Spain may characterise an SCI as a transparent entity and attribute SCI income directly to the Spanish-resident shareholder, rather than treating the SCI as a separate taxable entity. This can create Spanish tax obligations on French rental income routed through an SCI, even where the SCI itself is opaque for French tax purposes. Professional advice is essential for Spanish residents with SCI structures.
| Income / Asset Type | Treaty Article | Taxable In (Spanish Resident) | Key Notes |
|---|---|---|---|
| French salary (work in Spain) | Art. 15 | Spain | French employer may still withhold |
| French property rental income | Art. 6 | Both (France + Spain with FTC) | French income tax + Spanish IRPF; FTC in Spain |
| French property capital gain | Art. 13 | Both (France primary) | France taxes; Spain credits French tax |
| French dividends (<25%) | Art. 10 | Both (15% WHT + Spain savings income) | FTC in Spain for French WHT |
| Assurance-vie withdrawals | Art. 24 / general | Spain (savings income) | No Spanish recognition of French 8-year abattement |
| PEA gains | General | Spain (fully taxable; no PEA recognition) | Modelo 720 if >€50k |
| French private pension (CNAV) | Art. 18 | Spain only | Declare on IRPF return |
| French civil servant pension | Art. 19 | France only | Progressivity reservation in Spain |
| Inheritance (Franco-Spanish estate) | Art. 24 | Spain primary; France credits Spanish ISD | Unusual — one of few treaties covering inheritance |
French Expat in Spain? Get the Treaty Analysis Right
From assurance-vie to inheritance planning, the France-Spain treaty has important nuances. Jacob Salama provides specialist advice for French nationals resident in Spain.
Book a Consultation →Disclaimer: This article is for general informational purposes only and does not constitute legal or tax advice. Spanish tax law changes frequently. Always consult a qualified tax lawyer before making any decisions. SALAMA LEGAL SLP — Colegiado nº 11.294 ICAMálaga.