Form 2074-ETD: don't miss the departure return

The exit tax, provided for in Article 167 bis of the French General Tax Code (code général des impôts), taxes unrealised capital gains on securities held by a person who transfers their tax domicile outside France.

It applies to persons who have been French tax residents for at least from 6 years¹ during the ten years preceding the transfer.

The tax applies when the shares, securities or rights held reach a total value of at least more than €800,000², or when they represent at least more than 50%³ of a company's profits.

These two limbs are alternative, which is often misunderstood: a company director holding half the profits of a company of modest value is caught, even if their portfolio remains well below the value threshold.

The tax base covers unrealised capital gains, but also earn-out receivables and certain capital gains under tax deferral — a wider scope than people imagine.

A useful point: the reporting obligation exists as soon as the thresholds are crossed, regardless of the applicable deferral regime. A move to the European Union, which benefits from automatic deferral, does not exempt you from it — it only exempts you from the guarantees and the tax representative.

The return declaring unrealised capital gains is filed in the year of departure, together with the corresponding income tax return. It lists the securities, their value and the unrealised gain recorded.

It is followed, every year for as long as the deferral runs, by a follow-up return that allows the tax authorities to confirm that the securities are still held.

Failure to file this follow-up can make the tax immediately payable, even though the taxpayer meets all the substantive conditions and has sold nothing.

This is the most unfair pitfall of the scheme, because it penalises administrative oversight rather than conduct. It is also the most frequent, as the follow-up stretches over several years after a departure one has stopped paying attention to.

We do not publish the exact form references, the filing deadlines or the amount of the applicable penalties: they do not appear in the extracts we were able to verify, and they must be confirmed with the tax authorities.

If the destination is outside the European Economic Area, a request for deferral of payment must be filed no later than from 90 days⁴ before the transfer of tax domicile, with the appointment of a tax representative and the provision of guarantees.

Deferral is, however, automatic for a move to a European Union Member State or to another State of the European Economic Area bound to France by an administrative assistance agreement.

The tax is relieved, or refunded if it has been paid, after 2 years⁵ when the total value of the securities is below €2,570,000⁶, and after 5 years⁷ above that.

A sale during this period makes the tax definitively payable, whatever deferral regime has applied.

1. More than three months before departure: value your securities portfolio and determine whether the thresholds are crossed.
2. At least from 90 days⁴ before the transfer: file the deferral request if the destination is outside the European Economic Area.
3. In the year of departure: file the return declaring unrealised capital gains.
4. Every following year: file the follow-up return for as long as the deferral runs.
5. At the end of the period: request relief or a refund.

One final substantive remark. The exit tax does not penalise departure: it draws the consequences of it for gains built up during the French period. A taxpayer who keeps their securities for a few years after settling abroad is fully relieved of it. This scheme is therefore less a barrier than a timing constraint — and its hard cut-offs are all reporting-related.