Key Points: French Exit Tax (CGI Art. 167 bis)
The exit tax only applies to people who were French tax resident for at least 6 of the 10 years immediately preceding their departure (for unrealised gains and earn-out receivables). For deferred gains from past share-for-share exchanges, no minimum residence period applies — any departing resident triggers them.
It applies where the departing household holds securities valued at more than €800,000, or a stake representing 50% or more of any company’s profits. Below both thresholds, unrealised gains are not caught.
The taxable amount is the unrealised gain: fair market value on departure day minus acquisition cost. Each gain is taxed in isolation — losses on other positions cannot offset it.
Rate: 30% PFU (12.8% income tax + 17.2% social charges), frozen at the departure date. Progressive IR available on global opt-in.
Payment is automatically deferred (no cash due on departure) for moves to EU/EEA countries or to countries with both a French tax treaty and mutual recovery assistance. No guarantees required.
For moves outside EU/treaty countries: deferral requires a French representative, 90-day advance notice, and pledged guarantees equal to the full tax liability before departure.
The exit tax is automatically cancelled after 2 years if you still hold the shares (5 years if the portfolio exceeded €2.57M at departure), on your return to France, or on your death.

Why the Exit Tax Exists

If you hold a large equity stake in a French company and move to Belgium before selling, neither France nor Belgium will typically tax the capital gain — France because you are no longer resident, Belgium because capital gains on private share holdings are generally not taxable there. The exit tax was designed to close this gap. First introduced in 1999, then suspended for EU law reasons, it was reinstated in 2011 (Loi 2011-900) and has been refined several times since. The current rules for departures since 1 January 2019 are summarised here.

Who Is Caught: The Thresholds

The exit tax applies where all three of the following conditions are met at the date of departure:

  • You (and your household) have been French tax resident for at least 6 of the 10 years preceding the year of departure.
  • Your household holds, directly or indirectly, securities or financial instruments with a total value exceeding €800,000, or a stake in any company representing at least 50% of that company’s profits.
  • The securities in question generate an unrealised gain, a deferred gain (from previous share exchanges), or earn-out receivables.

Life insurance contracts and assurance-vie are expressly outside the scope. PEA plan securities and shares acquired through BSPCE (founder stock options) are also generally excluded. Shares in property-heavy companies (sociétés à prépondérance immobilière) are treated separately.

Exit Tax: Key Parameters at a Glance
Minimum residence condition 6 of 10 years preceding departure
Portfolio value threshold €800,000 total (household)
Shareholding threshold (alternative) 50% or more of a company’s profits
Tax rate 30% PFU (12.8% IR + 17.2% PS)
Automatic deferral EU/EEA + treaty + recovery assistance countries
Standard write-off period 2 years (if portfolio ≤ €2.57M)
Extended write-off period 5 years (if portfolio > €2.57M)

What Is Taxed

Three categories are caught:

  • Unrealised capital gains on shares and financial instruments (CGI Art. 150-0 A, I, 1): the difference between fair market value on the day of departure and the original acquisition cost. For listed securities, value is the last known price or the 30-day average. For unlisted securities, the same valuation approach as for gift/succession duty applies (fair market value).
  • Earn-out receivables (CGI Art. 150-0 A, I, 2): claims arising from price supplement clauses (clauses d’earn out) in previous share sales, regardless of any ownership threshold.
  • Deferred/rolled-over gains from past share-for-share exchanges (Art. 92 B, 150-0 B, 150-0 B bis, 150-0 B ter and 150-0 C): gains that were previously rolled over in a qualifying exchange and are still deferred at the date of departure. No minimum residence period applies to these — any departing taxpayer triggers them.
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Critical: No Loss Offsetting

Each unrealised gain is taxed in isolation. You cannot net your paper loss on one position against the paper gain on another. If you have a portfolio where some positions are up and others are down, only the profitable positions generate exit tax. Losses on other positions cannot reduce the taxable base. If you hold positions carrying large losses, consider selling them before departure to crystallise actual losses that can be offset under the ordinary rules.

Rate, Payment and Deferral

The Rate

The exit tax is computed at the 30% PFU rate (12.8% income tax + 17.2% social charges) in force on the date of departure. That rate is frozen — subsequent rate changes do not affect it. Alternatively, on a global opt-in, the progressive IR scale applies. The rate applied to a rolled-over gain is the rate that would have applied in the year the original exchange took place.

Automatic Deferral: EU and Treaty Countries

For departures to an EU or EEA country, or to any country that has both a tax treaty with France and a mutual recovery assistance agreement, payment is automatically deferred. No action is required, no guarantees, no advance notice. The tax is declared on the regular income tax return for the year of departure but not paid until a trigger event occurs. Annual declarations are required as long as the deferred tax is outstanding.

Deferral on Request: Other Countries

For departures to a country not covered by automatic deferral (non-EU, no recovery treaty), deferral is available on request, but requires:

  • Designation of a French-based representative authorised to receive all tax communications;
  • Advance notice to the tax authority at least 90 days before departure;
  • Constitution of guarantees (pledge, mortgage, bond, etc.) equal to 12.8% + 17.2% of the unrealised gains, submitted and accepted before departure.
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Where Automatic Deferral Applies

EU/EEA countries (including Belgium, Germany, the Netherlands, Spain, Italy, Luxembourg) benefit from automatic deferral as a matter of EU law. Switzerland, the UK and the US benefit because each has both a French tax treaty and a mutual recovery assistance agreement with France. The practical consequence for most high-net-worth French departures is that no cash outflow occurs on departure day — the exit tax is a contingent liability that expires if the shares are held long enough.

When the Deferred Tax Becomes Due

While the gain is deferred, tax falls due in full (or in part) on any of the following:

  • Sale, buyback, redemption or cancellation of the relevant securities (the classic event: you sell the position).
  • Donation of the securities while domiciled outside the EU/treaty area — unless you can demonstrate that the donation’s principal purpose is not to avoid the exit tax.
  • Failure to file the annual declaration of deferred amounts.
  • Death (but see “automatic cancellation” below).

When one of these events occurs, the gain is recalculated: the taxable base is capped at the actual gain (sale price minus acquisition cost). If the actual gain is smaller than the exit-tax gain (the share fell after departure), the tax is reduced accordingly. If the actual gain is larger, the exit-tax gain remains the ceiling. Any foreign tax paid on the actual gain is credited against the French exit tax due.

Automatic Cancellation

The exit tax is automatically cancelled — with refund if already paid — in three situations:

  • You return to France while still holding the securities. The exit tax is wiped out and you are treated as though you never left.
  • You still hold the securities after 2 years from departure (for unrealised gains). If the total value of the taxed portfolio exceeded €2.57 million at departure, the write-off period extends to 5 years.
  • Your death: the exit tax on unrealised gains is cancelled entirely. For donated securities (where the donation triggered the deferral to expire), the cancellation applies if the donor was domiciled in an EU/treaty country.

These cancellation provisions mean that the exit tax is, for most people moving within the EU, a temporary friction rather than a permanent cost. If you move to Belgium, hold your shares for 2 years without selling, and then sell — the exit tax is gone; you pay nothing in France and nothing in Belgium on those gains.

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The Belgium Strategy: How the Write-Off Works in Practice

A taxpayer holds a €1M equity portfolio with €400,000 in unrealised gains. They move to Belgium. Exit tax declared: €120,000 (30% × €400,000). Automatic deferral applies — no payment on departure. After 2 years, the shares are still held: exit tax cancelled entirely. The taxpayer then sells in year 3: no French tax (exit tax cancelled); no Belgian tax (private portfolio gains exempt in Belgium). Total tax on the gain: zero. The strategy works legally — but requires genuine Belgian residence, real severance of French ties, and patience.

Declaration Obligations

The exit tax must be declared on the income tax return for the year of departure (filed in the year following departure), alongside the declaration of income for the partial year of French residence. For residents of non-deferral countries, the declaration (and any guarantees) must be filed before departure.

As long as deferred gains remain outstanding, an annual declaration must be attached to the return for French-source income, listing each deferred gain still in deferral. Missing this declaration terminates the deferral and makes the full deferred tax immediately payable. Upon the occurrence of a write-off or trigger event, a specific declaration must be filed in the year following the event, with evidence. Every change of domicile must be notified to the French tax authority within two months, with the new address.

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Warning: Missing the Annual Declaration Kills the Deferral

Each year while deferred tax is outstanding, you must file an annual declaration listing each deferred position. This obligation is absolute — there is no grace period. A missed filing terminates the deferral in its entirety and makes the full exit tax immediately payable. For taxpayers holding large deferred gains, this is one of the most common and costly compliance errors.

Severing French Tax Residence: What You Must Actually Do

The exit tax presupposes a genuine departure. French tax law does not tax people based on nationality — only on residence. But the French definition of tax residence (CGI Art. 4 B) is very broad. Just one of the following criteria is enough to establish French residency:

  • Your foyer (where your family habitually lives);
  • Your principal place of stay (more than 6 months in France, even discontinuously);
  • Your main professional activity;
  • The centre of your economic interests (principal investments, main income sources).

The French administration will scrutinise departures, particularly of high-net-worth individuals, and will attempt to establish residency on any of these grounds if the facts support it. The safest position is to satisfy none of them. If you retain ties (a family home, a spouse in France, French business income), you will need to rely on a bilateral tax treaty to rebut French residence — and only if you can establish genuine residence in the destination country on a non-source-limited basis.

United Kingdom
Residence but Not Domicile
Key advantage: Non-dom residents taxed on foreign income only if remitted to the UK. Foreign capital gains not taxed if not brought into the UK.
Remittance basis charge: £30,000/yr after 7 years; £60,000/yr after 12 years. Not available after 15 years (deemed domiciled).
French gains: French-UK treaty gives France a temporary right of pursuit on share gains (Art. 14 §6). UK CGT rate: 20% (28% on residential property).
Watch: CE accepted remittance basis taxpayers qualify as UK residents for treaty purposes (CE 27-7-2012). No French-equivalent wealth tax. Exit tax: automatic deferral applies (UK has recovery assistance treaty with France).
Belgium
No Capital Gains on Private Portfolios
Key advantage: Capital gains from managing a private portfolio are generally exempt in Belgium. Only speculative gains or sales of substantial stakes (25%+) to non-EU buyers are taxable.
Dividends/interest: 30% précompte mobilier withholding, liberatory (final). Reduced rates for qualifying SME shares.
Succession: No estate duty between spouses in Brussels. Rates up to 30% in direct line. Manual gifts exempt if donor survives 3 years.
Watch: France-Belgium treaty gives Belgium the right to tax gains; Belgium generally exempts them. Exit tax applies but 2-year hold wipes it out (EU automatic deferral).
Switzerland
Lump-Sum Taxation (Forfait)
Key advantage: Non-Swiss nationals can be taxed on a forfait (lump sum based on 7× annual rent or CHF 400,000 minimum), covering IR and wealth tax. Capital gains on private portfolios generally exempt.
Conditions: No Swiss employment; first Swiss residence or 10-year absence; residence permit required (>55 or flexible criteria).
Watch: Since 2012, persons on a purely rent-based forfait no longer qualify as Swiss residents under the France-Switzerland treaty (Art. 4 §6). The forfait must exceed treaty income tests to confer treaty protection.
Succession: No estate duty in direct line in Geneva, Vaud, Valais. Exit tax: automatic deferral applies (CH has a recovery assistance treaty with France).
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Practical Checklist: Leaving France with a Large Portfolio

Before departing: (1) document the cost basis of every share position carefully; (2) determine whether the €800,000 / 50% threshold is crossed; (3) if moving outside the EU/treaty area, file the declaration and guarantees at least 90 days before departure; (4) sell any positions carrying large losses before departure — they cannot be netted against exit-tax gains after you leave; (5) check whether any deferred gains from past share-for-share exchanges are still outstanding; (6) ensure your French property or business ties are genuinely severed or clearly accounted for.

After departing: file your exit-year return with the exit tax declaration; file annual declarations as long as the deferred tax is outstanding; notify the French tax authority of any change of domicile within 2 months.

Summary: Exit Tax — Key Rules to Remember
The exit tax is a declaration obligation, not an immediate cash cost for most EU-bound departures. It becomes a real liability only if you sell within 2 years (or 5 years for portfolios over €2.57M).
No loss offsetting: sell underwater positions before departure. After you leave, each gain is taxed in isolation regardless of other losses.
Annual declarations are mandatory for as long as deferred tax is outstanding. A missed filing terminates the deferral and makes the full tax immediately due — no exceptions.
Severing French residence genuinely matters: retain a family home, principal stay or economic centre in France and the exit tax may never apply — because you never legally left.
Deferred gains from past exchanges are always caught, regardless of residence duration. If you have ever done a share-for-share exchange with a deferred gain, check whether it is still outstanding before any move.
Switzerland and the UK: both qualify for automatic deferral. The Swiss forfait must exceed the treaty income tests to confer treaty protection; the UK non-dom remittance basis was accepted as qualifying for UK residence under the CE 27-7-2012 ruling.
Planning to Leave France with a Significant Equity Portfolio?

Our French law practice advises on exit tax compliance, deferral mechanics, guarantee structures, domicile severance planning and the choice of destination jurisdiction from a French law perspective.

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Legal Notice. This article reflects the exit tax rules as they apply to transfers of domicile from 1 January 2019. The rules changed significantly in prior years and may change again. This is general information only and does not constitute legal or tax advice. Always consult a qualified French tax lawyer before taking any action in connection with a departure from France.