Concept
A change of tax residency rarely occurs without costs. Many developed countries impose an exit tax on a departing resident: the state taxes the unrealized appreciation of assets as if they had been sold on the day of departure. The country where the capital grew seeks to retain the right to tax that gain when the owner changes tax residency.
Departure charges compared
Six of the jurisdictions below take a charge at the moment of departure. Several others levy no tax on departure but retain tax claims over subsequent events. The tax consequences of a move include assessments on the day of exit and tax claims retained by the former country of residence years later.
| Jurisdiction | Trigger | Residence test | Threshold | Rate | Deferral | Charge dropped if held | Tax consequences after departure |
|---|---|---|---|---|---|---|---|
| Germany §6 AStG | End of unlimited tax liability | 7 of the previous 12 years | Stake ≥1%; fund units 1% over five years or €500,000 cost (§19(3) InvStG); special-fund units no threshold (§49(5)) | Partial-income procedure: 60% of the gain at the personal rate | 7 equal annual instalments, interest-free, usually against security | No | — |
| France art. 167 bis CGI | Loss of French residence | 6 of the last 10 years | Shares above €800,000, or ≥50% of a company's profits | 31.4% (12.8% PFU plus social contributions) | Automatic sursis de paiement on a move inside the EU/EEA | Yes — after 2 to 5 years, by portfolio size | — |
| Spain art. 95 bis LIRPF | Loss of Spanish residence | 10 of the last 15 tax periods | Shares and fund units above €4m, or above €1m where the stake exceeds 25% | Savings-base scale | On request for EU/EEA moves and temporary postings | No | — |
| United States §877A | Renouncing citizenship or long-term green-card status | Green card in 8 of the last 15 years | Net worth ≥$2m, or 5-year average income tax above $211,000 (2026) | All worldwide property deemed sold; first $910,000 of gain excluded (2026) | Election available against security and a treaty waiver | No | §2801: 40% on the U.S. recipient of later gifts and bequests, with no end date |
| Norway | Emigration; also gifts and undervalue sales to persons abroad | — | Latent gain after a NOK 3,000,000 deduction | 37.84% (22% × 1.72 for 2025) | Pay now, instalments over 12 years, or full deferral for 12 years | No | The 12-year ceiling replaced open-ended deferral for moves from 20 November 2024 |
| Canada s. 128.1 ITA | Emigration | — | None | Ordinary capital-gains treatment of the deemed disposition | Until an actual sale, against security, interest-free | No | Canadian real estate and pension accounts stay taxable at source |
| Netherlands | Emigration with a substantial interest | — | Stake ≥5% in a company | Box 2 rate on the latent gain | Preserving assessment (conserverende aanslag) deferred on request | No — the ten-year lapse was withdrawn for departures from 15 September 2015 | Dividends and disposals after the move draw down the preserved claim |
| United Kingdom | No charge on departure | — | — | — | — | — | Temporary non-residence: an absence of five years or less, after UK residence in 4 of the previous 7 years, brings gains, close-company distributions and pension withdrawals into charge in the year of return |
| Italy | No charge on individuals | — | — | — | — | — | Corporate transfers of residence and assets are caught by art. 166 TUIR; for individuals the main issue is the residence test itself |
| Switzerland | No charge | — | — | — | — | — | Private capital gains on movable assets are untaxed, so there is no latent gain to accrue |
| Russia | No charge | — | — | — | — | — | The domestic holding exemption for shares is written for residents, so it is the change of status, not the departure, that changes the tax treatment |
The jurisdictions fall into two groups by threshold. Germany, France and Spain set thresholds for different types of owner: a founder with a real stake, an owner of a portfolio above a stated size, an owner with a shareholding concentrated in one company. A diversified portfolio with no single 1% position and no €800,000 line crossed is outside those rules in Germany and France — which is why the German fund-unit rules matter more than the 1% shareholding test, and why a holder of special-fund units is within scope however small the position. Canada takes a different approach: no threshold at all, the deemed disposition reaches almost everything, and the tax cost of leaving depends on portfolio size rather than of any single holding.
Deferral terms determine cash flow. France defers automatically inside the EU/EEA and then cancels the tax if the securities are simply held for long enough, so for a French resident moving to Portugal the exit charge often remains an assessment without actual payment. Germany does not cancel the assessed tax: seven interest-free instalments are a cash-flow accommodation, not a relief, and security is usually demanded. Norway also does not cancel the tax, but twelve years is long enough that the decision turns on what happens to the asset in the meantime. Canada's deferral lasts until a real sale, which makes the Canadian charge closest in economics to ordinary capital-gains tax paid late.
The United Kingdom levies no tax on departure, and a departure of five years or less is not treated as a final departure under those rules: gains realised abroad, close-company distributions and pension withdrawals come back into charge in the year of return. A three-year secondment with a disposal in the middle produces a UK tax bill on a UK return filed years later. The consequences under the American rules differ in kind and have no end date: under §2801 a gift or bequest from a covered expatriate is taxed on the recipient, not the donor, at 40%. The Netherlands also retains its claim indefinitely, and draws it down through dividends rather than collecting it once.
Tax consequences by owner profile
| Profile | Main tax consequences | What to settle before the move |
|---|---|---|
| Founder with a stake above 1% in a German or French company | The deemed disposal on the day of exit, on a valuation nobody has tested | The valuation and the security for the instalments; in France, whether the holding period to the drop-off is realistic |
| Portfolio investor with no single large position | Usually nothing in Germany or France; everything in Canada; the fund-unit rules in Germany | Whether any unit holding is a special-fund unit, which carries no threshold |
| Leaving the UK for a posting of three to five years | No exit charge, but the temporary-non-residence rules on return | Whether disposals and close-company distributions can wait until the absence exceeds five years |
| US citizen or long-term green-card holder | The thresholds, not the move: the charge arises on renunciation, and §2801 concerns the family | Whether choosing US-resident recipients for future gifts is justified in view of the 40% tax |
| Moving from a jurisdiction with no exit charge | The residence test of the country being left, tested after the event | The evidence file, assembled on the dates of the move itself |
A worked example illustrates the difference between two European regimes. Take a founder resident for ten years who holds 8% of a company worth €12m, acquired for €2m. In Germany §6 AStG assesses a latent gain of €10m; under the partial-income procedure 60% of it enters the personal base, so at the top rate the charge lands near €2.85m, payable in seven annual instalments of roughly €407,000 and usually against security — and nothing about holding the shares afterwards reduces it. On the same numbers France assesses €3.14m at 31.4%, defers the whole amount automatically on a move to another EU/EEA state, and drops it entirely once the securities have been held for the statutory period. The German founder is choosing how to fund €2.85m; the French founder is choosing whether to sell early. If the same person were leaving the United Kingdom instead, the exit itself would cost nothing — and a sale two years into a four-year absence would be taxed on the UK return for the year of return.
Germany: Wegzugsteuer
Germany's Wegzugsteuer (§6 AStG) targets shareholdings in corporations. If a person who has been a German tax resident for at least seven of the previous twelve years holds at least 1% of a company's capital and leaves, they are deemed to have sold that stake at market value — and pay tax on the unrealised gain before receiving any proceeds from a sale. The 2022 reform abolished the old open-ended, interest-free deferral for moves within the EU/EEA: the tax may now be paid in seven equal annual installments without interest, though usually against security. Exit taxation now extends to units in investment funds as well, and two different rules apply there. Under §19(3) InvStG, for ordinary Chapter 2 funds the deemed disposal applies only where the aggregate computed gain is positive and, in addition, the investor either held at least 1% of the issued units at any point in the five years before departure or, at the moment of departure, holds units whose acquisition cost is at least €500,000. Under §49(5) InvStG, for units in special investment funds (Spezial-Investmentfonds, Chapter 3) there are no thresholds at all — the only condition is that the aggregate computed gain be positive. Both provisions come from the Jahressteuergesetz 2024 and apply first to cases where unlimited tax liability ends after 31 December 2024 (§57(10) InvStG), and both import §6 AStG, meaning the same seven-year instalment plan. A holder of a special-fund unit remains within scope however small the stake.
Canada: departure tax
Canada applies a deemed disposition (section 128.1 ITA): on emigration a resident is treated as having sold almost all assets at market value and immediately reacquired them, and the resulting gain is taxed as an ordinary capital gain. Part of the property — Canadian real estate and pension accounts, for instance — is carved out, and payment of the tax on the remaining assets can be deferred until an actual sale by posting security and without interest. In substance this is the same exit tax under a different name.
France: l'exit tax
France's exit tax (article 167 bis CGI) applies to those who have been resident for at least six of the last ten years and hold shares worth more than €800,000 or a stake of at least 50% in a company's profits. The unrealized gain on such holdings is taxed at the flat PFU rate: 12.8% income tax plus social contributions. After the rise in CSG on capital income the combined rate is 31.4% rather than the earlier 30%, and it is that figure which goes into the exit calculation. On a move to another EU/EEA country payment is deferred automatically (sursis de paiement), and if the securities are held long enough after departure — from two to five years depending on the size of the portfolio — the tax is dropped altogether.
Spain: article 95 bis LIRPF
Spain's exit charge is provided for by article 95 bis of Ley 35/2006 (LIRPF) and applies to anyone who has been Spanish tax resident for at least ten of the last fifteen tax periods. On loss of residency the unrealised gain on shares and fund units is taxed where the market value of those holdings exceeds €4 million, or €1 million where the participation in a given company is above 25%. Spain's residence-by-investment programme closed on 3 April 2025 (the twenty-first final provision of Ley Orgánica 1/2025 repealed articles 63 to 67 of Ley 14/2013), but article 95 bis continues to operate on statuses already granted: a Spanish golden visa holder who became tax resident and leaves later falls within it on ordinary terms. For the interaction between investor status and tax residency, see golden visas and tax residence.
USA: covered expatriate
The United States has its own version — the covered expatriate regime under §877A. It applies to anyone who renounces citizenship or long-term green-card status (held in eight of the last fifteen years) and crosses one of the thresholds: net worth of $2 million or more, or an average annual income tax over the past five years above the indexed amount — $206,000 for 2025 and $211,000 for 2026 (Rev. Proc. 2025-32). Such a person is then treated as having sold all their worldwide property at market value the day before departure, though the first tranche of gain is excluded — $890,000 for 2025, $910,000 for 2026. The American tax is triggered by giving up citizenship or a green card, whereas in Europe a change of tax residency is usually enough for an exit tax to apply.
There is a second difference: the American regime does not stop at the exit. Under §2801 a gift or bequest that a covered expatriate makes to a U.S. recipient after the exit is taxed on the recipient at the top rate of the §2001(c) table — 40% today — above an annual exclusion of $19,000, with no basic exclusion and no point at which the obligation automatically ends. Domestic trusts and electing foreign trusts are named as payers alongside individuals. The TD 10027 rules were published and took effect on 14 January 2025, their definitional provisions apply to receipts on or after 1 January 2025, and the statute's own reach starts on 17 June 2008; the first Form 708 covers calendar year 2025 and is due 15 June 2027. For the regime, see Section 2801: gifts and bequests from covered expatriates, and for pre-exit planning, see US expatriation and exit tax.
Norway: the twelve-year deferral limit
Norway has tightened its regime more than most jurisdictions, and the change that matters is to the timetable rather than the rate. On the Norwegian Tax Administration's guidance, for moves on or after 20 November 2024 a basic deduction of NOK 3,000,000 is deducted from the computed latent gain — the earlier threshold was NOK 500,000 — and instead of open-ended deferral the departing taxpayer chooses one of three options: pay the claim at once, pay in instalments over twelve years, or defer the whole liability for twelve years. Indefinite deferral is no longer possible.
The coverage runs wider than the familiar "shares in companies": shares, securities-fund units, share savings accounts, endowment insurance, options, partnership interests and financial instruments over those assets, and the regime also reaches gifts and undervalue sales to persons resident abroad. The rate is the one that applies to share income: 22% multiplied by the upward adjustment factor of 1.72, that is 37.84% for 2025. The remaining announced elements of the reform — a 70% coefficient on post-emigration dividends and the withdrawal of credit for foreign tax on gains — are not borne out by the administration's published material, and their status as of September 2026 needs separate checking.
The Netherlands: taxation of actual returns
The proposed regime is formally not an exit tax, but also provides for taxation of gains before realisation. The Wet werkelijk rendement bill moves the Dutch box 3 from a deemed yield to the actual one: the base rule taxes regular income together with realised and unrealised changes in value each year at 36%, with a tax-free result of €1,800 per taxpayer, while real estate and start-up shares stay on a realisation basis. Status as of September 2026: passed by the Tweede Kamer on 12 February 2026, not passed by the Eerste Kamer, with intended entry into force on 1 January 2028. For anyone weighing the Netherlands as a country of arrival this changes the tax consequences of holding a portfolio after the move, not the tax cost of leaving the previous jurisdiction.
ATAD: exit tax for companies
Exit taxation was devised not only for individuals. The EU Anti-Tax Avoidance Directive (ATAD, Article 5) has, since 2020, required Union states to tax unrealized gains when a company moves assets, a permanent establishment, or its very tax residency abroad. The value of the transferred property is fixed at market price and the difference from its book value is taxed as corporate profit. On a move within the EU/EEA a company may spread the payment over five equal annual installments. The logic is the same as for personal exit tax: the state takes tax on the gain created on its territory before it leaves its jurisdiction — and holding structures are especially sensitive here.
CJEU case law on exit tax
The CJEU once almost precluded the application of personal exit tax. In de Lasteyrie du Saillant (C-9/02, 2004) the CJEU held that immediate collection of the tax on departure was a disproportionate restriction on freedom of movement. Subsequent cases developed the position: National Grid Indus (C-371/10, 2011) allowed the tax to be assessed at the moment of exit but barred collecting it there and then; DMC (C-164/12, 2014) accepted that a five-year installment plan was proportionate. Of particular significance is Wächtler (C-581/17, 2019): a German entrepreneur moved to Switzerland, and the court held that under the EU–Switzerland free-movement agreement he could not be subjected to rules harsher than those for a move within the EU. This case law forced Germany to replace lump-sum collection with a seven-year installment plan.
Residence presumptions
No exit tax applies on its own: it is triggered by the fact of a change of residency, and that fact is tested separately, and after the event, by the administration of the country being left. A formal move without a shift in the centre of vital interests is expressly classified as simulation. Spain's tax control plan for 2026 (BOE-A-2026-5843) places "simulación de la residencia fiscal fuera del territorio español" and the unwarranted use of double tax treaties among the most damaging patterns in its large-wealth analysis block. The Italian version of article 2 TUIR in force since 2024 defines domicilio through "relazioni personali e familiari", which makes family a substantive criterion rather than a circumstantial one.
The change of residency is tested against the facts of the move itself; the same evidentiary framework applies in corporate residence disputes; see also corporate tax residence.
| Step of the move | Evidence supporting the change of residency | Evidence refuting the change of residency |
|---|---|---|
| Status in the new country | A tax residence certificate from the tax administration for each year in dispute, and resident returns actually filed there | Municipal registration or a residence permit alone, with no return ever filed |
| Housing | The former home sold or let to a third party on market terms; in the new country a lease or purchase with utility accounts in the person's own name | The former home stays available at any moment: let to a relative or kept "ready on request" — the first tie-breaker step stays with the old country |
| Family | Spouse and children moved, school and health cover changed; where a delay is unavoidable, a documented reason and actual reunification by the stated date | Spouse and minor children stay put — in Spain a direct presumption of residence under article 9 LIRPF, in Italy a direct criterion of domicilio |
| Financial infrastructure | CRS self-certification updated at every institution on the date residency changes; the address matches at the bank, the broker, the insurer and in the registers | The address held by the bank or broker does not match the declared residency — the discrepancy is transmitted through automatic exchange without the taxpayer's involvement |
| Business surroundings | Management of the companies where the person is central moves with them; meetings and decisions take place in the new jurisdiction | A "retained headquarters" in the old country: companies, office and team in place, decisions taken where they always were |
| Chronology | Decision, document, payment and accounting entry run in that order and are dated by external marks — notary, register, bank payment | A restructuring executed after the departure date but dated before it; asset valuations produced after the event and without an independent opinion |
Planning the exit
Exit tax does not cancel a move, but it requires its consequences to be calculated in advance. Sometimes it is cheaper to realize the gain before leaving, while the departure country's rate still applies; sometimes to wait after the move for the period required for relief to apply; sometimes to transfer the assets to a holding company in advance or change the composition of the portfolio. Direction matters too: jurisdictions with favorable regimes for new residents — the Italian flat tax or the Swiss lump-sum tax — reduce the tax burden on arrival where the country of departure has already collected tax. But even such a jurisdiction does not cancel the exit tax on the departure side, so the exit is planned with both countries in mind. For a comparison of taxes in the country of departure and regimes in the country of arrival by jurisdiction, see the relocation matrix.
Q/A
I'm moving to Singapore — which taxes does my home country still charge me after I leave?
Three kinds survive departure: an exit tax on unrealised gains (if your country has one), tax on home-source income (rent, local business, often employment income sourced at home), and trailing regimes — temporary-non-residence rules (UK), citizenship-based taxation (US), and CFC attribution where the relevant regime's taxpayer, control and other conditions continue to be met. (Sources: EU: ATAD; FNS: CFC; HMRC: CFC).
I hold 1% of a German company and I am leaving. Must I pay before I sell?
Assessed at departure, but no longer collected as a lump sum. §6 AStG catches a stake of 1% or more where you were German tax resident for seven of the previous twelve years, and taxes the unrealised gain. Since the 2022 reform the amount is payable in seven equal annual installments without interest, though usually against security. Fund units are caught too for departures after 31 December 2024, but on two different tests: §19(3) InvStG keeps the 1%-over-five-years and €500,000 acquisition-cost thresholds for ordinary funds, while §49(5) InvStG applies to units in special investment funds with no threshold whatever.
Can the French exit tax fall away if I simply keep the shares?
Yes. Article 167 bis CGI taxes the unrealised gain at the flat PFU rate — 12.8% income tax plus social contributions, 31.4% combined after the CSG increase — but a move to another EU/EEA country defers payment automatically (sursis de paiement), and holding the securities long enough after departure — two to five years depending on portfolio size — drops the tax altogether. It applies only after six of the last ten years of French residency, on holdings above €800,000 or a 50% profit stake.
Spain has closed its golden visa. Does article 95 bis still apply to me?
Yes, on statuses already granted. The residence-by-investment programme closed on 3 April 2025, when Ley Orgánica 1/2025 repealed articles 63 to 67 of Ley 14/2013, but article 95 bis LIRPF continues to apply: a former holder who was Spanish tax resident for ten of the last fifteen tax periods is caught on leaving where shares and fund units exceed €4 million, or €1 million where the stake in a company is above 25%.
Does the US exit tax trigger when I move abroad?
No. The covered expatriate regime under §877A is set off by renouncing citizenship or long-term green-card status held in eight of the last fifteen years, not by a change of tax residency as in Europe. It then applies above one of two thresholds — net worth of $2 million, or average annual income tax over five years exceeding $206,000 for 2025 and $211,000 for 2026.
Which countries in the table charge nothing on departure?
The United Kingdom, Italy, Switzerland and Russia take no exit charge from individuals. The absence of a British exit charge does not exclude subsequent tax consequences: an absence of five years or less brings gains, close-company distributions and pension withdrawals into charge in the year of return. In Italy and Switzerland there is no such tax liability to accrue — Switzerland does not tax private capital gains on movable assets at all — so the issue concerns the residence test of the country being left.
I hold a diversified portfolio, no position above 1%. Am I outside all of this?
Outside Germany's and France's share tests, yes, and outside Spain's unless the portfolio itself exceeds €4 million. Two exceptions matter. Canada applies no threshold at all: the deemed disposition on emigration reaches almost every asset regardless of size. And in Germany the fund-unit rules run on their own tests — §19(3) InvStG catches ordinary fund units at 1% over five years or €500,000 of acquisition cost, while §49(5) InvStG catches units in special investment funds with no threshold whatever.