THE END OF SECRECY FOR REAL ESTATE HELD ABROAD: Is a Tax Regularisation Necessary?
Until now, certain properties located abroad — such as a flat in Spain or a house in Italy — could fly under the radar of the French tax authorities, for income tax, real estate wealth tax (IFI) and inheritance/gift tax alike. This last "secret" is about to disappear.
For several years, the OECD has already organised the automatic exchange of information between countries on bank accounts and, more recently, crypto-assets. Concealing a foreign account has become very difficult, and a large-scale regularisation campaign for foreign accounts took place from 2013 to 2017. One area remained less closely watched: that of real estate located outside France, because no international system yet allowed countries to share this information systematically.
An agreement of 4 December 2025, adopted by OECD States, aims to combat "real estate" tax fraud, and there is no doubt that the automatic exchange of information on real estate will be in place by 2030.
1. A new turning point: real estate joins the scope of tax transparency
Most countries now have powerful information-gathering systems that can bring together all the data relating to a property. Tax authorities are the primary collectors of this data, through sales or inheritance transactions, or simply through the local taxes paid. It is therefore now easy for each foreign tax authority to transfer data automatically to other States. One click is enough…
On exchange of information, a major agreement was announced in December 2025: 25 States and one territory, including France, Spain, Italy, Portugal, Germany and the United Kingdom, declared their support for a new international agreement to lift the secrecy of real estate held abroad. It is a safe bet that further States will join this initial list.
Its objective is clear: to automatically exchange the real estate information already available in each country (land registers, tax data, etc.). This agreement, known as AMAC RBI (Multilateral Competent Authority Agreement on Real Estate Information), is being finalised. It should enter into force between 2029 and 2030. The signatory States are also inviting other countries to join the initiative, to complete the framework already in place for bank accounts and crypto-assets.
In practical terms, what will change?
The objective is simple: to give each tax authority a complete and reliable view of the real estate held by its residents, even abroad.
Each year, countries should exchange information such as:
- the address and location of the properties,
- the value of the property,
- the identity of the owners, individuals or companies,
- information on the beneficial owner,
- rental income received,
- any sales or capital gains realised,
- any gifts made.
This data already exists within local authorities; the agreement will simply allow it to be transmitted automatically to the owner's country, as already happens for bank accounts.
What impact for French owners?
For French nationals owning a property abroad (for example in Spain or Portugal), this means that:
- the French tax authorities will automatically know the property exists,
- they will be able to check the consistency between the data received and the returns filed (rental income, IFI, capital gains, gifts, etc.),
- omissions will become much harder to justify.
France has already launched more than 50,000 audits over the past 5 years for undeclared foreign real estate, with an average reassessment of €30,000 per file.
Beyond the tax aspect, it should also be recalled that criminal penalties are possible under the Act of 10 October 2018 on combating tax fraud, which broadens the scope of established presumptions of fraud and authorises the use of the judicial tax investigation procedure. It redefines the aggravating circumstances of the offence of tax fraud and strengthens the applicable penalties.
This new agreement on the automatic exchange of information on real estate will greatly increase the French tax authorities' detection capacity. We encourage taxpayers to voluntarily regularise their undeclared real estate abroad to protect themselves against tax and criminal risk.
It should also be recalled that such undeclared properties, if rented out, are often linked to a foreign account that is also undeclared. The risk of reassessment then becomes twofold and exponential.
2. How a French owner can regularise foreign real estate
In 2013, for foreign accounts, the tax authorities launched a regularisation campaign through the "Cazeneuve Circular", encouraging taxpayers to regularise while reducing penalties only very slightly. It is quite conceivable that the French tax authorities will proceed in the same way again for real estate, leaving little room for negotiation.
To date, in order to avoid a tax reassessment or a "forced and strict" regularisation campaign, it is strongly advised to file a voluntary tax compliance submission with the help of a tax lawyer.
Regularisation would therefore take place under current law, with room for negotiation, and could have the tax consequences set out below.
As a general rule, a French resident has an unlimited reporting obligation, both for income tax (worldwide income) and for wealth tax (French and foreign assets). He or she must also declare all accounts held abroad, possibly linked to the property, on pain of heavy penalties.
This reporting obligation covers both a property held directly by the individual and shares in a company holding real estate, since the automatic exchange will target the beneficial owner. Holding through a "shell" company will therefore be just as risky as holding the property directly.
Income tax and social contributions on income from renting or selling the property
The tax authorities' reassessment right runs until the end of the third year following the year for which the tax was due where reporting obligations were not met (unfurnished letting). This period may be extended to 10 years in the case of an undisclosed commercial activity, notably if the property is let as seasonal furnished accommodation, or to 6 years if the authorities establish fraudulent conduct or use international administrative assistance.
In a voluntary regularisation, catching up on rental or furnished-letting income returns could be limited to 3 years by negotiating with the authorities. Amended income tax returns would then have to be filed for the last 3 years. For example, if you file a regularisation in 2026, the income concerned would be that of 2023, 2024 and 2025.
If you have sold this property abroad, the sale is normally taxable where the property is located. However, some tax treaties also give France the right to tax the capital gain, after deduction of the tax paid abroad (notably in the case of Switzerland). The capital gains from the sale of the foreign property must then be regularised.
IFI and other registration duties (gift or inheritance tax)
The tax authorities' reassessment period may run until 31 December of the sixth year following the year in which the liability to tax or duties relating to real estate held abroad was not sufficiently disclosed in the return, the registered document or the document submitted for registration.
The risk of reassessment concerns in particular the real estate wealth tax (IFI), with the authorities able to add the value of the foreign property back into the taxable base, over a period of 6 years.
In a voluntary regularisation, catching up on IFI returns could be limited to 3 years instead of 6 by negotiating with the authorities. For example, if you file a regularisation in 2026, the IFI returns concerned could be IFI 2023 to 2026. Amended wealth tax returns would then have to be filed for the last 3 years.
In our view, the greatest risk of reassessment arises where the property has been transferred free of charge (death or gift):
- On death: if the death occurred more than 6 years ago, the authorities' right to reassess inheritance tax on the value of the property is time-barred. If the death is more recent, the authorities will apply inheritance tax to the full value of the property not declared at the time of death. An amended inheritance tax return must be filed, also allocating any split or undivided rights in the property.
- On gift: the foreign property may have been gifted abroad before a notary outside France. Yet a gift not disclosed in France is not time-barred until the French tax authorities become aware of it. Once the gift is disclosed, the gift tax due on the property will have to be paid.
Penalties on additional tax assessments
In addition to the principal tax due, the tax authorities may claim:
- late-payment interest at 0.2% per month of delay,
- a 40% surcharge for deliberate breach (automatic where a return has been omitted) or 80% for fraudulent manoeuvres (knowingly attempting to conceal the property through structuring)
Voluntary regularisation makes it possible to negotiate these penalties down, up to a remission of half the late-payment interest or a full remission of the surcharges. This is not automatic and requires the file to be presented in good faith by a tax lawyer.
In summary
Owners still have 2 or 3 years to check that they are correctly declaring their property located abroad and, failing that, to regularise their situation with the tax authorities with the help of a tax lawyer to negotiate the penalties due.
The undeniable advantage of voluntarily regularising a foreign property is finally being able to dispose of it freely: to sell it or pass it on to one's children without fear of a tax audit.
It is therefore urgent to anticipate the entry into force of the future exchange of information on real estate to avoid a "very hefty tax bill".
Eve d'Onorio di Méo
Lawyer, Certified Specialist in Tax Law
Member of the Marseille Bar (France) and of the Geneva Bar Register (Switzerland)
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