Leaving France: exit tax, final return and foreign accounts

Two conditions apply cumulatively. First, you must have been a French tax resident for at least from 6 years¹ during the ten years preceding the transfer.

Second, you must hold shares, securities or rights with an overall value of at least more than €800,000², or representing at least more than 50%³ of a company’s profits.

The second threshold is the one people forget. A manager holding a majority stake in a modest-sized company falls within the scope of the regime even if the value of the shares remains far below the first threshold. This is the most common case of late discovery.

The tax base consists of **unrealised** capital gains: gains not yet realised, on securities that have not been sold. This is what distinguishes the exit tax from an ordinary tax, and what explains the deferral mechanism that comes with it.

A move to a European Union State, or to a European Economic Area State bound to France by an administrative assistance agreement, opens an automatic deferral, with no security to provide.

A move to any other State makes the tax payable immediately in principle. Deferral remains possible on request, but it requires declaring the capital gains, appointing a tax representative and providing security — before the transfer, not after.

This distinction governs the project timetable. Settling in Dubai, Singapore or the United Kingdom requires prior steps that a move to Portugal or Spain does not. Discovering them after the move means having to pay up front.

The deferred tax is relieved at the end of a period that depends on the value of the securities concerned: 2 years⁴ when that value is below €2,570,000⁵, and 5 years⁶ above it.

Relief requires that the securities not have been sold in the meantime, and that the company not have undergone a buy-back, cancellation or liquidation. A sale during the period makes the tax payable.

The deferral is not a matter of being forgotten: it has to be maintained. An annual return keeps it alive, and failing to file one can cost you the benefit of the deferral. It is the most frequently neglected obligation, because it arises years after departure, once the file has been closed.

We do not publish the exact time limit available to someone leaving to appoint a tax representative and provide security before the transfer: the official page we consulted does not set it, and we do not reproduce a time limit read elsewhere. It must be established with the competent tax office before the departure date is set.

Nor do we publish the rates applicable to the exit tax base: they follow the ordinary regime for capital gains on securities, which has its own options and its own thresholds, and readers will find them in our section on French taxation rather than under a single figure that would be wrong for half of all situations.

• The shareholding threshold counts as much as the value threshold: a majority stake in a small company is enough.
• The destination determines whether the deferral is automatic, and therefore the timetable of the steps to take.
• The deferral is maintained through an annual return; forgetting it can cancel the deferral.
• Foreign accounts remain reportable for as long as French tax residency has not ended.
• The end of residency has to be proven: keeping available housing or a centre of economic interests in France is enough to call it into question.