Exit tax: automatic deferral reserved for the EU

The exit tax applies to unrealised capital gains on the securities of a person who transfers their tax domicile out of France, where their total value reaches more than €800,000¹ or they represent at least more than 50%² of a company's profits.

It applies to people who have been French tax residents for at least from 6 years³ during the ten years preceding the transfer.

Deferral of payment is granted as of right and automatically when the taxpayer settles in a member state of the European Union, or in another state of the European Economic Area that has concluded with France an administrative assistance agreement to combat tax fraud and evasion.

For any other destination, deferral requires an express application, the appointment of a tax representative in France and the provision of guarantees to secure collection.

And this application must be filed no later than from 90 days⁴ before the transfer of tax domicile, for departures since 22 November 2019.

The logic of this distinction is simple: the French tax authorities agree to waive guarantees when European law gives them the legal instruments to recover their claim in the host state. Outside that area, they require security because they have no reach.

This explanation has a practical consequence: what matters is not the host country's tax reputation but the existence of cooperation instruments. A high-tax state outside the European Economic Area falls under the same guarantee regime as a jurisdiction with no taxation.

The same assets, the same taxpayer, the same date: depending on whether they move to Lisbon or to Dubai, they have nothing to do or they must provide guarantees three months in advance.

Guarantees represent a real cost: a pledge of securities, a bank guarantee, a mortgage. They tie up part of the assets for the entire duration of the deferral, which is 2 years⁵ or 5 years⁶ depending on whether the value of the securities is below or above €2,570,000⁷.

Appointing a tax representative in France is an additional constraint, and it requires finding a person or body willing to accept that responsibility.

This asymmetry explains some of the choices observed. For a comparable life plan, a move within Europe is considerably simpler to organise, and that simplicity has a value that few rate comparisons take into account.

Deferral postpones payment; it does not cancel the tax. The tax is relieved, or refunded if it has been paid, when the taxpayer keeps their securities for the applicable period.

A sale during that period makes the tax definitively due, whatever deferral regime was applied. European automaticity changes nothing on this point.

In all cases, deferral also requires a declaration of unrealised capital gains in the year of departure, followed by an annual follow-up declaration. Failure to file may make the tax immediately payable.

We do not publish the list of European Economic Area states that have concluded the required agreement with France, the forms of guarantee accepted or the applicable tax rate: they do not appear in the extracts we have been able to verify.

1. Decide on the destination before taking any other step: it determines the deferral regime.
2. Value your securities holdings, both in value and as a percentage of company profits.
3. Outside the European Economic Area, file the application more than three months before the transfer.
4. File the declaration of unrealised capital gains in the year of departure, then the annual follow-up declarations.
5. Do not sell the securities before the end of the applicable relief period.

Finally, remember that the transfer of domicile is assessed under Article 4 B of the French General Tax Code — home, principal place of stay, professional activity, centre of economic interests. A poorly documented departure can be challenged, which makes the exit tax irrelevant but exposes the taxpayer to a reassessment of another kind, and generally a broader one.