French Exit Tax
This page outlines
- Exit Tax
The Sarkozy government created a French Exit Tax on significant individual shareholdings - focused on entrepreneurs who build up companies whilst in France and then sell with a large capital gain once safely in a tax-haven outside France.
The tax currently applies to all share portfolios over 800k€, including unit trusts / mutual funds.
The tax also applies to all shareholdings in excess of 50%.
The purpose is to levy a provisional tax on unrealised gains at the time of departure - equivalent to the tax which would be due if the company/shares were sold at that time.
The tax only applies to those who have been French resident for 6 out of the last 10 years.
The objective is to tax the unrealised gain (valued on the day of departure) at the appropriate tax rate (normally the 30% Flat Tax introduced by President Macron). The tax is due at the time of leaving France - unless moving to another European country (or with specific approval) in which case the payment would be due only at the time of the real disposal of the shares.
The capital gain is recalculated at the final date of disposal - and any reduction in value is taken into account as well as any standard exemptions available. Any foreign taxes paid are deductible from the French tax due.
If tax was paid at the time of leaving France, reimbursement occurs at the date of disposal if tax has effectively been “overpaid”.
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