Concept
Changing tax residency is rarely free. Many developed countries see off departing residents with an "exit tax": the state taxes unrealized appreciation of assets as if you sold them on the day of departure. The logic is simple: the country where the capital grew does not want to lose the right to tax that appreciation just because the owner changed address.
Germany: Wegzugsteuer
The German Wegzugsteuer (§6 AStG) targets shares in corporations. If a person who has been a German tax resident for a sufficient period (after the 2022 reform—at least 7 of the last 12 years) owns at least 1% of a company's capital and leaves, they are deemed to have sold that share at market value—and pay tax on the "paper" gain, even without receiving any money. Since 2025, investment fund units have also fallen under exit taxation. Deferral is possible, but the conditions have been tightened.
Canada: Departure Tax
Canada applies deemed disposition: upon emigration, a resident is deemed to have sold certain assets at fair market value and immediately bought them back. The resulting gain is taxed as ordinary capital gain. Some assets (for example, Canadian real estate) are excluded from this, and payment of tax on certain assets can be deferred with security. In essence, this is the same exit tax under a different name.
France: L'exit Tax
The French exit tax applies to those who have been residents for at least 6 of the last 10 years and own shares worth more than €800,000 or more than 50% of a company. Upon relocation, unrealized gains on such shares are subject to tax. But there is an important relief: when moving to another EU/EEA country, payment is automatically deferred, and with sufficiently long ownership after departure, the tax may not be levied at all.
USA and General Logic
The USA has its own version—the covered expatriate regime: upon renunciation of citizenship or long-term green card status, a wealthy individual pays mark-to-market tax on all worldwide assets. The general conclusion for planning: exit needs to be calculated in advance. Sometimes it is more profitable to realize gains before relocation, sometimes to structure assets through a holding company, sometimes to choose a "softer" destination. Exit tax does not cancel relocation, but requires a pre-calculated, planned exit.
💡 Exit tax taxes unrealized gains at the moment of departure: Germany (share from 1%), France (more than €800k or more than 50%), Canada (deemed disposition), USA (covered expatriate). The main rule—calculate exit tax in advance, before relocation.
This material is for informational and analytical purposes only and does not constitute individual tax or legal advice.
Key Factual Claims
- The German Wegzugsteuer (§6 AStG) targets shares in corporations.
- The French exit tax applies to those who have been residents for at least 6 of the last 10 years and own shares worth more than €800,000 or more than 50% of a company.
- Related links: Exit tax in the USA (expatriation), tax residency: 183 days, loss of Russian tax residency, CRS: automatic exchange, holding structures, five flags theory.