The exit tax applies to taxpayers who transfer their tax domicile outside France, provided they have had tax residency in France for at least six of the last ten years prior to the transfer. The tax targets latent capital gains on securities, partnership interests, and other intangible movable assets at the time of the transfer, with the possibility of deferring payment under certain conditions.
Who is subject to the exit tax
Individual taxpayers who transfer their tax domicile outside France—including to EU states and overseas territories—are liable for the exit tax if they have had tax residency in France for at least six of the last ten years prior to the transfer. For securities acquired during marriage under the communauté réduite aux acquêts regime, it is sufficient for just one spouse to meet the six-year requirement for all the couple’s securities to fall within the scope of the tax.
Exemptions for taxpayers of French nationality
Taxpayers of French nationality may be exempt from the exit tax if they demonstrate that they are subject in the destination country to a personal tax on all their income, the amount of which is at least equal to two-thirds of what they would have paid in France on the same taxable base. Additionally, if the transfer is motivated by professional imperatives and the tax domicile was continuously in France for the four years prior, they may be exempt for the first two years following the transfer.
When the tax applies
The exit tax has been in effect for transfers of tax domicile since March 3, 2011. The tax applies to latent capital gains on company shares, partnership interests, and other intangible movable assets. Latent capital gains may benefit from a reduction based on the holding period, if provided for under Article 150-0 D ter of the Code général des impôts (CGI).
Deferral of payment
Payment of the exit tax may be deferred if the transfer is to an EU Member State or to a state or territory with which France has entered into administrative assistance agreements to combat tax fraud and evasion, and mutual assistance agreements for tax recovery. The destination state or territory must not be classified as "non-cooperative" under Article 238-0 A of the CGI.
Declaration and deadlines
Latent capital gains subject to the exit tax must be declared in the year following the transfer, by the deadline set for income tax returns. No specific details are available on the procedures or supporting documents required.
Specific exceptions
The exit tax is not due if the securities are sold within two years of the taxpayer’s retirement.
Declaration of latent capital gains
Latent capital gains subject to the exit tax must be declared in the year following the transfer, by the deadline set for income tax returns.