French exit tax: who pays when leaving France for the UK or the US, and how to reduce it

Are you leaving France for London, New York or elsewhere while holding company shares or a sizeable portfolio? Then one question comes first: does the French exit tax apply to you? Under Article 167 bis of the French General Tax Code (CGI), France can tax the unrealised gains on your shares when you move abroad, even though you have sold nothing^[1]. This guide explains who is caught, how the charge is calculated, what changes for a move to the United Kingdom or the United States, and how to reduce the cost lawfully.

What is the French exit tax?

The French exit tax is a departure charge. When you transfer your tax domicile out of France, the gains built up on certain shareholdings are treated as if realised, by reference to the value of the shares on the date of departure^[1].

Nationality is irrelevant: a British or American citizen who has lived in France long enough is exposed exactly like a French national.

The key point is that the exit tax is not always paid. It is often declared, placed under a deferral of payment (sursis de paiement) and later cancelled if the shares are kept long enough^[1]. Whether that deferral is automatic depends on your destination, which is why a move to the UK or the US needs particular care.

Who has to pay exit tax when leaving France?

For unrealised gains on shares, three conditions must be met on the date you stop being a French tax resident within the meaning of Article 4 B of the CGI^[2]. Our guide to French tax residency explains how that date is determined.

The residence test: 6 years out of the last 10

The exit tax only applies to people who have been domiciled in France for tax purposes for at least six of the ten years preceding their departure^[1][3]. A British executive who arrived four years ago is, in principle, outside its scope.

Taxpayers domiciled in France for tax purposes for at least six of the ten years preceding the transfer of their tax domicile outside France are taxable, upon that transfer, on the unrealised gains recorded on the corporate rights, securities, shares or rights […] held, directly or indirectly, by the members of their tax household on the date of that transfer […]

Article 167 bis of the CGI, I, 1, current version, unofficial translation ^[1]

Exit tax thresholds: €800,000 or 50% of profits

On the date of departure, you and your tax household must hold:

• shareholdings representing at least 50% of the profits of a company^[1]; or
• securities with a total value exceeding €800,000^[1].

All securities held by the household, directly and in some cases indirectly, are counted^[1]. For an unlisted company, a documented valuation is essential.

Which assets are subject to the French exit tax?

The charge covers:

• unrealised gains on company shares, securities and similar rights^[1];
• earn-out receivables arising from an earlier sale of shares^[1][3];
• gains on which tax was previously deferred, for example on a contribution of shares to a holding company^[1][3].

The conditions differ for these items. Earn-out receivables are caught under the 6-year residence test alone, whatever the value of your holdings, and gains previously deferred become taxable on departure whatever the length of your residence and the value of your holdings^[1]. By contrast, property held directly, cash and life insurance contracts (assurance vie) are not covered by Article 167 bis^[1].

How is the French exit tax calculated?

The unrealised gain is the difference between the value of the shares on the date of departure and their acquisition price or value. It bears income tax and social charges as a gain on the sale of securities^[1][3].

By default, the flat tax (prélèvement forfaitaire unique, or PFU) applies: 12.8% income tax^[4], plus social charges. Since the Social Security Financing Act for 2026, social charges on most investment income have risen to 18.6%^[5][6], bringing the overall flat tax rate to 31.4%^[4][5]. An election for the progressive income tax scale remains available^[4]. The exceptional contribution on high incomes (3% or 4% of reference income above €250,000 for a single person, €500,000 for a couple)^[16] and the differential contribution on high incomes^[17] are both calculated on reference income (revenu fiscal de référence), and the official commentary excludes unrealised gains taxed on departure from reference income for the year of departure, whether or not payment is deferred^[18]. These contributions therefore do not apply to the unrealised gains themselves. They can still apply to your other income of that year, the differential contribution now expressly applying in the year of departure from 2026 income^[17], and the exceptional contribution is charged, at a historic rate, on gains previously deferred on a contribution of shares to a holding company^[19]; the official return places that contribution under the same deferral of payment as the income tax^[23].

For example, shares bought for €10,000 and worth €1,500,000 on departure carry an unrealised gain of €1,490,000: at 31.4%, about €468,000 of tax, before any deferral.

Deferral of payment: EU destinations versus the UK and the US

Automatic deferral: the EU and countries with the right agreements

Deferral is automatic if you move to an EU Member State, or to another country that meets the conditions quoted below, including an agreement with France on the recovery of tax claims^[1][3]. You declare the tax but pay nothing until an event ends the deferral.

Payment of the tax […] shall be deferred where the taxpayer transfers their tax domicile outside France to a Member State of the European Union or to another State or territory that has concluded with France an administrative assistance agreement to combat tax fraud and evasion as well as a mutual assistance agreement on recovery with a scope similar to that provided for by Council Directive 2010/24/EU of 16 March 2010 […], and which is not a non-cooperative State or territory within the meaning of Article 238-0 A.

Article 167 bis of the CGI, IV, current version, unofficial translation ^[1]

Moving from France to the UK: exit tax after Brexit

Since the Brexit transition period ended on 31 December 2020, the UK is outside the EU, so it must meet the non-EU conditions. The 2008 France-UK tax treaty provides for exchange of information, but contains no article on assistance in the collection of taxes^[7]. That assistance comes instead from the OECD and Council of Europe Convention on Mutual Administrative Assistance in Tax Matters, under which HMRC states that it helps other countries recover tax debts^[21]. The French tax authorities list the UK among the countries with which France has a recovery assistance clause for income tax, a clause they require for Article 167 bis^[20], and the official notice to form 2074-ETD names the UK among the States where deferral is automatic for departures since 1 January 2025^[19]. A move to the UK therefore qualifies for automatic deferral.

The list is published in the notice for each year of departure, so check the edition that covers yours^[19]. For the wider picture, see our article on the tax treaty between France and the UK.

Moving from France to the US: what the treaty says

The France-US tax treaty includes an article on assistance in collection (Article 28)^[8], and the official notice to form 2074-ETD names the United States among the States where deferral is automatic, without any distinction based on nationality^[19]. Article 28 nevertheless provides that this assistance is not given in respect of nationals, companies or other entities of the State receiving the request^[8], so the United States is not bound to help collect French tax from a US citizen. No official text says how this exclusion affects automatic deferral for an American citizen returning home: on the texts, that point is assessed case by case.

Deferral on request: tax representative, guarantees and the 90-day deadline

Where deferral is not automatic, it may be granted on express request. You must declare the gains, appoint a representative established in France and provide guarantees to the tax authorities before you leave^[1]. The amount of those guarantees is set at 12.8% of the total gains and receivables concerned^[1].

Timing is critical. For departures since 22 November 2019, the request, made on form 2074-ETD with a proposed guarantee, must be filed at least 90 days before the transfer of domicile^[3]. Decide in June, leave in July, and the window has already closed. Without deferral, the tax is payable under the ordinary rules.

What ends the French exit tax deferral?

Deferral ends, and the tax becomes payable, on the sale, buy-back, redemption or cancellation of the shares^[1]. For residents of countries outside the automatic-deferral list, a gift of the shares also ends the deferral, unless you show that the gift was not made mainly to avoid the tax^[1]. If you later move again, for instance from Lisbon to London, you must inform the French non-residents’ tax office within two months, and a new request may be needed^[3].

French exit tax and UK or US taxation: avoiding a double charge

Your new country will also look at the gain when you eventually sell. Under both treaties, gains on ordinary shareholdings are, as a rule, taxable only in the country where the seller is resident^[7][8]. The France-UK treaty nevertheless preserves each State’s right to tax, under its own law, gains made by a person who has been resident there at any time during the previous six fiscal years (Article 14, paragraph 6)^[7]. If you sell within that period after moving to the UK, France keeps its right to tax the gain only by reason of that paragraph, and Article 24, paragraph 4(a), then requires France, not the UK, to eliminate the double taxation, as if the gain arose in the UK^[7][22]. French law provides the mechanism in Article 167 bis: tax paid in your new State of residence on the sale is credited first against the French social charges and then against the income tax on the gain, in proportion to the share of the foreign tax base that the French gain represents, and never beyond the French tax due^[1].

5. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4 shall be taxable only in the Contracting State of which the alienator is a resident.

France-UK double taxation convention of 19 June 2008, Article 14, paragraph 5 (official English text) ^[7]

In the UK, capital gains tax is currently charged at 18% or 24% depending on your income, with an annual exempt amount of £3,000^[10]. Since 6 April 2025, individuals arriving in the UK after at least 10 consecutive tax years of non-UK residence may claim relief on foreign gains for up to four tax years^[9]. Claiming it has consequences, such as losing the annual exempt amount^[9]. The French and UK calendars must be modelled together.

The France-US treaty lets the United States tax its citizens and residents as if the treaty did not exist, subject to exceptions that include relief from double taxation^[8]. An American leaving France may thus face French exit tax and, on a later sale, US tax on the same shares. On the French side, the same Article 167 bis credit applies to the US tax paid on that sale, within the same limits^[1].

How to reduce the French exit tax legally

There is no universal solution, but these avenues deserve examination before you leave:

• Keep the shares: the tax on the unrealised gains is cancelled (or refunded, if you paid it on departure) if you still hold the shares 2 years after departure, or 5 years if their total value exceeds €2.57 million^[1][3]. This cancellation does not extend to the tax on earn-out receivables or on previously deferred gains^[1].
• Return to France: if you come back while still holding the shares, the tax relating to them can be cancelled^[1].
• Rely on a fall in value: if the shares are eventually sold for less than their value on departure, the tax is recalculated downwards^[1].
• Secure the valuation: a documented valuation of unlisted shares reduces the risk of challenge.
• Plan the timing: the residence test, the thresholds and the 90-day deadline can all turn on a few months.

On expiry of a period of two years following the transfer of tax domicile outside France […], the tax […] relating to the unrealised gains […] shall be cancelled automatically […] where the securities […] remain, on that date, in the taxpayer’s assets. By way of derogation, this period is extended to five years where the total value defined in the first paragraph of 1 of I of this article exceeds €2.57 million on the date of the transfer of the taxpayer’s tax domicile outside France.

Article 167 bis of the CGI, VII, 2, current version, unofficial translation ^[1]

An arrangement whose only purpose is to escape the exit tax can be set aside under the abuse of law procedure, with heavy penalties^[14].

French exit tax 2026: what has changed?

The 2019 framework still applies. The Finance Act for 2026 (Law no. 2026-103 of 19 February 2026) left Article 167 bis of the CGI unchanged^[1][11]: the 2-year and 5-year periods remain for 2026 departures.

The real change for 2026 is the cost: higher social charges make the exit tax more expensive^[5][6], and the differential contribution on high incomes now expressly applies to taxpayers on their income for the year of departure^[17]. Check the text in force on your exact departure date.

French exit tax reporting obligations after you leave

In the year after departure, you file form 2074-ETD with your French income tax return^[3][12]. While the deferral runs, follow-up returns are filed with your income tax return: form 2074-ETS3 for any year in which an event ends the deferral or allows the tax to be cancelled (for example the end of the 2-year or 5-year period), and otherwise, in most cases, the simplified form 2074-ETSL. For departures since 2019, the official notice exempts you from the simplified form in years without any such event where you only hold unrealised gains under full deferral^[3][13].

These obligations are often forgotten abroad. Failing to meet them can cost you the benefit of the deferral and make the tax immediately payable, with penalties^[1][15].

Why take advice from a French tax lawyer before leaving France?

The exit tax rarely stands alone: the date of your change of residence, the applicable treaty, your remaining French income and the rules of your new country all interact with it. Taking advice before leaving France helps you measure the real cost of leaving and secure each step, from valuation to follow-up returns.

Alexis Germe, tax lawyer at the Bordeaux Bar, advises business owners and individuals moving abroad, in person or remotely.

Is a departure from France on the horizon? Discuss your plans with Alexis Germe, in complete confidence, before you set your departure date: an overview of your shareholdings and portfolio is enough for a first exchange.

Sources and reference texts

1. Article 167 bis of the French General Tax Code (CGI), current version (Légifrance)
2. Article 4 B of the French General Tax Code (CGI), current version (Légifrance)
3. Je quitte la France, suis-je concerné par l’Exit Tax ? (impots.gouv.fr, updated 10 March 2026)
4. Article 200 A of the French General Tax Code (CGI), current version (Légifrance)
5. Article L. 136-8 of the French Social Security Code, current version (Légifrance)
6. Law no. 2025-1403 of 30 December 2025 on the financing of social security for 2026, Article 12 (Légifrance)
7. 2008 UK and France Double Taxation Convention, in force (GOV.UK)
8. France-US convention of 31 August 1994 on income and capital, consolidated version as amended by the protocols of 8 December 2004 and 13 January 2009, Articles 13, 28 and 29 (impots.gouv.fr)
9. HMRC Capital Gains Manual, CG26400, Relief for new residents on foreign gains (from 6 April 2025) (GOV.UK)
10. Capital Gains Tax: rates and allowances (GOV.UK)
11. Law no. 2026-103 of 19 February 2026, Finance Act for 2026 (Légifrance)
12. Form 2074-ETD, return on the transfer of tax domicile outside France (impots.gouv.fr)
13. Form 2074-ETS3, exit tax follow-up return (impots.gouv.fr)
14. Article L. 64 of the French Tax Procedure Code (LPF), current version (Légifrance)
15. BOFiP, BOI-RPPM-PVBMI-50-10, gains and receivables on the transfer of tax domicile outside France (published 31/10/2012, commentary predating the reform introduced by the Finance Act for 2019)
16. Article 223 sexies of the French General Tax Code (CGI), exceptional contribution on high incomes, current version (Légifrance)
17. Article 224 of the French General Tax Code (CGI), differential contribution on high incomes, current version (Légifrance)
18. BOFiP, BOI-RPPM-PVBMI-50-10-20, unrealised gains on departure: tax base, § 110 (reference income) (published 31/10/2012, version in force)
19. Notice 2074-ETD-NOT for departures in 2025, list of States where deferral is automatic and historic rate of the exceptional contribution (impots.gouv.fr, 2026 edition)
20. BOFiP, BOI-ANNX-000508, provisions requiring an exchange of information or recovery assistance clause, and list of countries with such clauses (published 08/10/2025)
21. HMRC Debt Management and Banking Manual, DMBM560205, Mutual Assistance in the Recovery of Debt under the OECD and Council of Europe Convention (GOV.UK)
22. BOFiP, BOI-INT-CVB-GBR-10-20, France-UK convention: gains made by a former resident, § 220 to 240 (published 18/06/2013)
23. Form 2074-ETD for departures in 2025, section 7, gains and receivables under deferral of payment (impots.gouv.fr, 2026 edition)