French exit tax should be described as a targeted regime affecting certain unrealised gains on shares, securities and similar rights, together with certain earn-out claims and, where relevant, certain deferred gains. It should not be presented as a general departure tax on private assets as a whole. The tax liability arising from unrealised gains, earn-out claims and, where relevant, deferred gains is determined by reference to the tax rules applicable to the gains concerned at the date of the transfer of tax residence out of France. The effective tax burden depends on the exact nature of the gains, the taxpayer's situation and the rules in force at the time of transfer. An individualised analysis is therefore essential.
The French exit tax (Article 167 bis CGI) levies unrealized capital gains on securities and corporate rights upon transfer of tax residence out of France. The tax liability arising from unrealised gains, earn-out claims and, where relevant, deferred gains is determined by reference to the tax rules applicable to the gains concerned at the date of the transfer of tax residence out of France. The effective tax burden depends on the exact nature of the gains, the taxpayer's situation and the rules in force at the time of transfer. An individualised analysis is therefore essential. The distinction between statutory deferral under paragraph IV of Article 167 bis CGI (which operates by effect of law where the conditions prescribed by that paragraph are met) and on-election deferral under paragraph V of Article 167 bis CGI (which is available only upon express request, subject to the procedural and collateral framework set out by the CGI and its implementing texts, notably décret n° 2019-868 du 21 août 2019) depends on a case-by-case verification of the bilateral conventions effectively in force between France and the destination State at the date of the transfer and of the contemporaneous ETNC list maintained under Article 238-0 A of the CGI. No categorical statement can be made, in the abstract, that a given destination State is or is not within the scope of paragraph IV. Relief is granted after 2 years (portfolio under EUR 2.57M) or 5 years (portfolio EUR 2.57M or more) if securities remain unsold and annual Form 2074-ETD is filed during deferral.
Exit tax is a French mechanism for taxation of latent capital gains upon departure from France. It rests on a legal fiction: the taxpayer is deemed to have sold his assets on the eve of his actual departure, at market prices of the day, even if he does not actually sell them.
The tax liability arising from unrealised gains, earn-out claims and, where relevant, deferred gains is determined by reference to the tax rules applicable to the gains concerned at the date of the transfer of tax residence out of France. The effective tax burden depends on the exact nature of the gains, the taxpayer's situation and the rules in force at the time of transfer. An individualised analysis is therefore essential.
As context, the nominal PFU (Prélèvement Forfaitaire Unique) regime provides a flat rate structure composed of income tax and social levies, with potential additional levies for significant wealth. However, these rates are not universally applicable as THE exit tax rate; they serve as reference points only. Non-resident taxpayers departing France are subject to distinct treatment regarding social levies. Each taxpayer's actual burden must be calculated through comprehensive legal and tax analysis.
The calculation proceeds as follows:
The deemed disposition is valued at the day of your actual departure from France (last day of French tax residence).
Exit tax does not apply to all taxpayers or all assets. Its scope of application rests on strict thresholds and conditions.
If any one of these conditions is not satisfied (e.g., resident for fewer than 6 years out of 10, or participation under 50% and value under EUR 800k), exit tax does not apply.
Exit tax applies to unrealized capital gains on the following assets at departure (per Article 167 bis of the French Income Tax Code):
Explicit Exclusions (per Article 167 bis of the French Income Tax Code):
Article 167 bis CGI organises two distinct deferral regimes. Paragraph IV of Article 167 bis CGI sets out a deferral granted by effect of law (sursis de plein droit) where the conditions prescribed by that paragraph are satisfied: the word "automatic" is commonly used as shorthand, but it should not obscure the fact that declarative obligations (including the annual filing of Form 2074-ETD) remain applicable throughout the duration of the deferral. Paragraph V of Article 167 bis CGI, by contrast, provides for an on-election deferral, available only upon express request and subject to the procedural and collateral framework prescribed by the CGI and by its implementing texts, in particular décret n° 2019-868 du 21 août 2019.
Paragraph IV of Article 167 bis CGI should not be summarised as covering all jurisdictions that merely have a bilateral tax treaty with France. The legally accurate test is narrower and depends on the statutory conditions expressly set out in Article 167 bis CGI.
The statutory deferral under paragraph IV of Article 167 bis CGI applies, in the terms of the CGI, where the taxpayer transfers his tax residence to a State or territory that meets the conditions prescribed by that paragraph, which refer in particular to the existence of a mutual assistance convention in tax matters and of a mutual recovery convention with France, and to the absence of listing as a non-cooperative State or territory within the meaning of Article 238-0 A of the CGI.
The question whether the conditions of paragraph IV of Article 167 bis CGI are satisfied in respect of any given destination State requires a specific analysis of the bilateral conventions effectively in force between France and that State on the date of the transfer, and of the contemporaneous ETNC list. No categorical statement can therefore be made, in the abstract and independently of the facts, that a given State is or is not within the scope of paragraph IV.
Where paragraph IV applies, the deferral operates by effect of law, without any prior request addressed to the French tax administration, but the declarative obligations attached to the deferral — including the annual filing of Form 2074-ETD — remain applicable throughout its duration, and a failure to comply with those obligations may expose the taxpayer to the consequences prescribed by the CGI.
Where the taxpayer relies on the optional deferral mechanism under paragraph V of Article 167 bis CGI, the filing and guarantee requirements must be treated as substantive compliance steps. In particular, the proposal of guarantees must be submitted no later than ninety days before the transfer of tax residence abroad.
Where the conditions of paragraph IV are not met, paragraph V of Article 167 bis CGI allows the taxpayer, on express election, to request a deferral of payment. The procedural framework for such requests is set out by the CGI and by its implementing texts, in particular décret n° 2019-868 du 21 août 2019, which governs, among other points, the proposal of guarantees intended to secure payment of the tax.
The guarantees so proposed are subject to assessment and acceptance by the tax administration, in accordance with the applicable provisions. The on-election deferral is also subject to the declarative obligations applicable throughout its duration.
The deferral, whether under paragraph IV or paragraph V of Article 167 bis CGI, terminates upon the occurrence of certain events expressly identified by the CGI, including, in particular, the disposal of the securities concerned, the realisation of certain corporate operations and the return of the taxpayer to French tax residence, with the consequences prescribed by the CGI for each of those events. The exact effects of each terminating event depend on the text of Article 167 bis CGI and on the specific circumstances of the taxpayer.
Exit tax may be entirely relieved (cancelled) if certain conditions are satisfied after departure. Relief provides a favorable correction mechanism for taxpayers who return to France or who justify the absence of actual capital gain.
If you return to establish your tax residency in France, the exit tax imposed at departure is automatically relieved (entirely cancelled).
Condition: Become a French tax resident again (actual durable residence, family home, interests).
Relief Timeframe:
Important condition: Securities must not have been sold before the relief deadline expires. Any sale during the period forfeits relief. The taxpayer must file Form 2074-ETD annually during the deferral period.
Exit tax may be relieved, in the cases and under the conditions provided for by Article 167 bis CGI, where it is demonstrated that the latent capital gain has not in fact materialised. Typical supporting facts include:
You must submit a relief request with supporting evidence (subsequent sales at lower prices, new appraisals, market data).
Need expert guidance?
Free 15-minute initial call. Jonathan Sémon responds personally.
Book a consultationMany mistakenly believe that selling securities after departure would extinguish exit tax. This is false. Exit tax is imposed on the eve of departure, independently of any subsequent sale. Selling afterward does not reduce your French tax burden; it merely allows the new country to tax any capital gains realized under its law.
Estimating the value of unlisted corporate securities (SARL, SAS, holding companies) is complex. An inflated valuation artificially increases the latent capital gain and exit tax. However, the tax authority may challenge this valuation. An independent and conservative expert appraisal prior to departure is preferable.
Taxpayers subject to exit tax must report their assets on specific forms (2074-ETD for securities, ETS for property) to the DGFIP. Omission results in 40% penalty plus surcharges. Ensure your return includes explicit exit tax reporting.
Under the framework set out in particular by décret n° 2019-868 du 21 août 2019, the proposal of guarantees supporting an on-election deferral under paragraph V of Article 167 bis CGI must, as a rule, be lodged with the tax administration no later than ninety days prior to the transfer of tax residence out of France. Late submission exposes the taxpayer to the risk of immediate payment of the tax.
If you are in deferral and sell securities, you must notify the DGFIP; exit tax becomes immediately due. Failure to notify and assuming deferral continues exposes you to late-payment penalties.
Certain complex assets (stock options, retirement plans, life insurance contracts) have special regimes. Misclassification can result in unjustified exit tax (or conversely, forgetting required tax). Verify the tax treatment before departure.
A prudent presentation should avoid stating that a specific jurisdiction automatically falls within the paragraph IV deferral regime unless the statutory conditions and the relevant conventions have been verified in detail. The safer wording is to say that eligibility must be assessed by reference to Article 167 bis CGI and the conventions effectively applicable at the relevant date.
For a French tax resident contemplating a transfer of tax residence to the United Arab Emirates, the applicable deferral regime under Article 167 bis CGI — whether paragraph IV (statutory) or paragraph V (on-election) — therefore cannot be determined in the abstract. The analysis turns on the state of the bilateral conventions effectively in force between France and the UAE at the date of the transfer and on the contemporaneous ETNC list maintained under Article 238-0 A of the CGI, read in light of the administrative doctrine published by the French tax administration. A case-by-case verification, and where useful a ruling request, is indispensable before the transfer.
Whichever deferral regime ultimately applies, it is generally prudent, upon arrival in the UAE, to constitute a documentary record capable of substantiating the taxpayer's position, which may include, as the case may be, evidence of economic and personal ties in the UAE, appropriate residence documentation, and, where available, a Tax Residency Certificate (TRC) issued by the UAE Federal Tax Authority. The evidentiary weight of each element depends, however, on the underlying facts and on the text of the applicable rules.
Independently of the French exit-tax treatment, the taxpayer is subject to such UAE domestic tax obligations as apply to his situation, including, in particular, those arising under Federal Decree-Law n° 47 of 2022 on the taxation of corporations and businesses, where the conditions of that regime are met. The interaction between the French deferral obligations and the UAE domestic obligations must be managed consistently.
GEOTAX assists you in anticipating and managing exit tax before and after your departure from France.
We qualify the assets within the scope of Article 167 bis CGI (shares and corporate rights, other securities of the same nature, earn-out claims and, where relevant, deferred gains), estimate the latent capital gain and quantify, on a case-by-case basis, the tax liability and social levies potentially arising, by reference to the rules applicable at the date of the contemplated transfer.
Where an on-election deferral under paragraph V of Article 167 bis CGI is contemplated, we prepare the request and the proposal of guarantees within the framework set out in particular by décret n° 2019-868 du 21 août 2019, and we follow up with the tax administration through approval.
We examine options: sale before departure (if partial exit), restructuring of holdings, staggered departure, use of exemption thresholds.
If followed by a French accountant or UAE consultant, we coordinate actions and declarations.
Precise asset qualification, latent capital gain estimation, and deferral request require legal and tax expertise. GEOTAX manages each step to minimize your burden and secure your transition.