France Exit Tax When Leaving France: Thresholds and Deferrals

France's exit tax, formally Article 167 bis of the Code général des impôts, treats the day a taxpayer transfers tax residency out of France as a taxable event for a specific group of shareholders. It fires on two independent triggers: aggregate qualifying equity stakes valued at €800,000 or more, or any single holding representing at least 50% of a company's profits. Once triggered, the mechanic is a deemed disposal — the shares are treated as sold at fair market value on the last day of French tax residency, and the notional capital gain enters the individual's final French return.

The regime has been reshaped repeatedly since it was reintroduced in 2011. The 2019 reform, in force for departures from 1 January 2019 onward, materially shortened the post-departure relief clock and reworked the deferral mechanics by destination. What used to be a fifteen-year post-departure exposure is now, in most cases, a two-year or five-year window. That reshape is why France's exit tax now sits somewhere between Germany's tightened seven-year instalment regime and the outright absence of exit tax in Italy or Spain — meaningful, but structurally manageable for shareholders willing to hold through the clock.

This article walks through Article 167 bis as it stands in 2026: who is caught by the €800,000 and 50% thresholds, how the deemed gain is calculated, when deferral is automatic versus discretionary, how the relief clock actually runs, and how treaty residency interacts with the trigger. It is research, not tax advice; French exit-tax positions turn on facts specific to the individual, the destination country, and the shareholding, and any real move should be structured with a qualified French adviser well before departure.

Who is caught: residency history, thresholds, and scope

Article 167 bis applies only to taxpayers who have been French tax residents for at least six of the ten years preceding departure. That six-out-of-ten test filters out short-term expats. A US executive who spent three years in Paris on assignment is generally outside the regime; a French national who has never left, or a foreign national ten years into a career in France, is squarely inside it.

Once the residency history is satisfied, two independent value tests bring the shares into scope:

• The €800,000 threshold. If the taxpayer's aggregate holdings in shares, corporate rights, and certain related securities are worth €800,000 or more on the departure date, the entire portfolio of qualifying securities is subject to the deemed disposal.
• The 50%-of-profits threshold. If the taxpayer holds any single equity position representing at least 50% of a company's profits — regardless of value — that holding alone triggers the regime.

The 50% test is what pulls founders of closely-held private companies into scope even where the accounting valuation is modest at departure. A founder who owns 60% of an early-stage SAS worth €500,000 on paper is caught. The €800,000 test is what pulls in the professional-investor cohort — senior employees with concentrated stock, family-office principals with diversified private-equity portfolios, and taxpayers with meaningful listed holdings.

Scope is broad: listed and unlisted shares in French and foreign companies, corporate rights, units in certain investment vehicles, and specified receivables can all fall within Article 167 bis. Real estate is not caught by exit tax; France retains taxing rights over French-situs real estate under the treaty network regardless of residency, so no separate exit-tax mechanic is needed for it.

How the deemed gain is calculated and taxed

The deemed gain equals the fair market value of the qualifying securities on the day French tax residency ends, minus their acquisition cost. The gain is then taxed under the standard French capital-gains regime that applies to disposals of shares:

• Flat rate (PFU). The prélèvement forfaitaire unique, or PFU, applies at 30% — 12.8% income tax plus 17.2% social contributions. This is the default treatment for most taxpayers.
• Progressive election. The taxpayer can elect out of PFU into the progressive personal income tax scale (up to 45%), plus the 17.2% social contributions, where doing so is more favourable.
• Exceptional contribution on high incomes. Taxpayers with a high reference fiscal income face an additional 3-4% contribution (contribution exceptionnelle sur les hauts revenus), which stacks on top of the base rate.

The effective rate on the deemed gain therefore lands in a broad range — roughly 30% for a straightforward PFU election, higher for taxpayers pushed into the top progressive bracket plus the high-income contribution. On a €5 million deemed gain, a PFU-based bill is around €1.5 million; on a €50 million founder position, it can materially exceed €15 million. Those numbers are why exit-tax planning starts years, not months, before departure.

Automatic versus on-request deferral: destination matters

Article 167 bis contains one of the most destination-sensitive deferral regimes in Europe. Whether the tax has to be paid on departure or can be automatically suspended depends on where the taxpayer goes next.

Moves inside the EU/EEA (with cooperation clause)

For a move to another EU member state, or to an EEA state that has signed an administrative cooperation and mutual recovery agreement with France, deferral is automatic. No prior authorisation is needed, no security has to be posted, and no bank guarantee has to be negotiated. The taxpayer files the required exit-tax return, declares the deemed gain, and the assessed tax is deferred by operation of law until either the shares are sold or the relief clock expires. This treatment covers moves to Germany, the Netherlands, Belgium, Luxembourg, Portugal, Ireland, Italy, and the EEA states of Norway and Iceland, among others.

Moves outside the EU/EEA

For any other destination — including Switzerland (which is neither EU nor EEA but has its own bilateral arrangements with France), the United Kingdom (which has been outside the EU since 2020), the UAE, Singapore, Hong Kong, and every non-European jurisdiction — deferral is available on request but not automatic. The taxpayer must apply within a defined window before departure, appoint a French fiscal representative, and post security for the assessed tax. Security typically takes the form of a bank guarantee or a mortgage over French-situs assets. The economic cost of maintaining that guarantee across the relief period is a real expense that has to be modelled alongside the tax itself.

A separate carve-out treats certain destinations with particularly cooperative bilateral instruments more favourably, and administrative practice does shift over time. Verify the destination-specific rule with a French adviser as of 2026 before assuming a particular treatment.

The relief clock: two years or five years

The 2019 reform materially shortened the post-departure exposure period. Since departures from 1 January 2019, the exit tax is generally forgiven — and any assessment cancelled — once the taxpayer has held the relevant securities abroad for:

• Two years, where the aggregate value of the shareholdings at departure fell below a specified threshold under the current administrative interpretation.
• Five years, where the aggregate value was above that threshold.

If the shares are sold, gifted, or otherwise disposed of during the applicable window, the deferred exit tax on the proportion disposed of becomes immediately due. If the shares survive the clock intact, the assessment is extinguished. The taxpayer still has to comply with annual reporting during the deferral period; missing the reporting can convert a deferred liability into a payable one.

This is the design feature that separates the French regime from the German one. Germany's post-2022 seven-year instalment plan collects the tax regardless of whether the shares are sold; France's mechanism collects only if a disposal happens inside the clock. For a founder relocating to a lower-tax jurisdiction and willing to hold private-company equity through the window, the French exit tax can wash out to zero cash cost — subject only to the fiscal-representation and, for non-EU destinations, security-posting overhead during the period.

Interaction with treaty residency

The exit-tax trigger is departure from French tax residency — a concept determined by both the domestic Code général des impôts and, where relevant, the applicable double-tax treaty. Domestic French rules make an individual tax resident where they have their principal home, centre of economic interests, or spend most of the calendar year in France. Treaties override with tie-breaker rules where two states both claim residency.

Three interactions matter in practice:

• Treaty tie-breakers can shift the trigger date. A taxpayer who becomes non-resident under a treaty tie-breaker — because their centre of vital interests moves to Lisbon or Milan — is treated as ceasing French tax residency from that date, which is the Article 167 bis trigger. See our dual tax residency tie-breaker guide for how these run.
• Destination step-ups do not neutralise the French tax. A country that grants a step-up in cost basis on arrival — some Swiss cantons and various inbound regimes do — resets the base for future host-country tax but does not refund or credit the French exit tax. The two events happen in different tax systems and do not offset.
• Post-departure French-source income is separate. Article 167 bis captures the shareholding gain to the point of departure. Ongoing dividends, subsequent French-source income, and gains on French real estate remain subject to France's normal source-country taxation under the relevant treaty. The exit-tax mechanism is a one-time event.

For the broader treaty framework, the double taxation treaties guide covers how treaties allocate taxing rights on gains and how tie-breakers actually decide the residency question.

Trigger events beyond a simple relocation

Physical relocation is the classic trigger, but Article 167 bis also captures several less obvious events:

1. Transfer of tax domicile — the standard case, whether or not the taxpayer physically moves the family home.
2. Gratuitous transfer to a non-resident — a gift or inheritance of qualifying securities to a beneficiary who is not a French tax resident. This is a common trap in family wealth transfers where children have already moved abroad.
3. Contribution of shares to a foreign holding company — where the effect is to remove France's future taxing rights over the eventual gain. Restructurings that shift the tax nexus outside France can be a deemed disposal even without any physical move by the individual.

The scope of "removal of French taxing rights" is fact-specific. Contribution of shares to a French holding, or a restructuring that keeps a French permanent establishment in the picture, is generally not caught. A move to a genuinely offshore holding structure without a French PE typically is.

Comparison: France against Portugal and Italy as destinations

Portugal and Italy appear frequently in the same planning file as France, because they have historically been the two most-used European destinations for French residents seeking a materially lower personal tax posture. Neither imposes a general exit tax on individuals, so the entire tax cost of the move sits on the French side.

Two observations follow. First, a French resident moving to Portugal or Italy benefits from Article 167 bis's automatic EU deferral — no security to post, no fiscal-representative overhead, and the relief clock runs quietly in the background. Second, the destination-side upside varies sharply. Portugal's original NHR is closed to new applicants; the narrower IFICI regime covers only qualifying scientific, research and innovation activities and is described in the Portugal IFICI guide. Italy's €300,000 lump-sum HNWI regime, raised in the 2026 Budget Law from the previous €200,000, remains attractive for taxpayers with substantial foreign-source income; details in the Italy HNWI flat-tax guide.

Planning windows before departure

Meaningful planning happens in the years — plural — before the departure date. Once the exit is imminent, most of the useful levers have already closed. Options that are commonly discussed in the French advisory literature:

Time the six-out-of-ten residency test

If a foreign national has been French tax resident for only five of the last ten years and is planning to leave, moving before the sixth year of residency accumulates avoids Article 167 bis entirely. This is a bright-line rule; a move a few months too late means the full deemed disposal applies.

Prefer EU destinations for the automatic-deferral mechanics

The administrative and financial overhead of the on-request regime for non-EU destinations — French fiscal representative, security posting, annual reporting — is not trivial. A shareholder who could work equally well from Lisbon, Milan, or Amsterdam has a materially cleaner post-departure life than one heading to Dubai or Singapore, even before the destination-side tax posture is considered.

Realise before the trigger where the domestic rate is competitive

The PFU 30% flat rate applies whether the gain is realised before departure or captured by the deemed disposal on departure. Where the domestic-realisation rate matches the exit-tax rate and the taxpayer would otherwise sell in the near term anyway, realising before departure removes the deferred-tax overhang and the reporting obligations that come with it.

Restructure below the €800,000 threshold — carefully

Selling down aggregate holdings below the €800,000 line before departure removes the value trigger, but does not remove the 50%-of-profits trigger for any single position. Founders with concentrated positions typically cannot restructure around Article 167 bis this way; portfolio investors sometimes can. Any pre-departure restructuring has to survive anti-abuse scrutiny; artificial reductions immediately before a move are not respected.

Model the disposal clock realistically

The two-year and five-year windows only cancel the assessment if the shares are actually held through the window. For an early-stage founder facing a likely acquisition within two or three years of departure, the exit tax crystallises on disposal regardless of destination. The relief clock is most valuable to holders whose exit horizon on the shares themselves is genuinely long-term.

Practical filing and reporting

The exit tax is not self-executing. The taxpayer must file specific forms with the departure return, supported by a defensible valuation of the qualifying securities. For unlisted shares, this typically requires an independent business valuation. Aggressive undervaluation invites adjustment; conservative valuation locks in a higher exit tax that becomes difficult to revise later.

During the deferral period, annual reporting is required. The taxpayer must confirm the securities are still held and provide any information the French tax administration requests. Failure to report on time can convert a deferred, contingent liability into an immediately payable one. For non-EU destinations, the fiscal representative maintains the reporting channel with the French administration on the taxpayer's behalf.

Where the regime still has open questions

Several aspects of Article 167 bis remain subject to administrative interpretation as of 2026. The exact application of the two-year versus five-year clock to mixed portfolios, the treatment of specific EEA and Swiss situations under the deferral rules, and the interaction with certain treaty tie-breakers all produce fact-specific outcomes. Verify current status with a French adviser before committing to any move whose economics depend on a particular reading, and expect further refinement in future finance laws.

Where to go next

For the underlying regime mechanics across jurisdictions, see the TaxAtlas exit taxes explained guide and the tax residency framework. For destination-side analysis, review the France profile, Portugal profile and Italy profile, or run a side-by-side on the compare tool. Related reading includes the Germany exit tax guide for comparison against the tightened post-2022 German regime. General departure-planning questions are covered in the FAQ.