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 if you own more than 50% of the capital.
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 unrealised gain is valued on the day of departure and the appropriate tax rate (normally the 30% Flat Tax) is applied. The capital gain is then recalculated at the final date of disposal - and any reduction in value is taken into account as well as any exemptions available. Any foreign taxes paid are deductible from the French tax due.
The provisional Exit Tax is normally due at the time of leaving France - but if you move to another EU country - or any country that has a dual tax treaty with France - no payment is required until the shares are actually sold.
By retaining ownership of the shares for 2 years after departure (5 years if total financial assets exceed 2.57M€ on the day of departure), the Exit Tax is automatically cancelled and any provisional payments are reimbursed. This is a signficant change introduced by Macron via the Loi des Finances 2019 - compared to the previous exemption only after 15 years.
The tax only applies to those who have been French resident for 6 out of the last 10 years.
Given the complexities of the Exit Tax rules - and the opportunities to eliminate this tax - you should take advice from a French avocat fiscaliste before leaving France if you believe you might be liable to the Exit Tax. We would be glad to recommend an appropriate expert.