The Exit Tax 2026 targets unrealized capital gains on company shares held by a taxpayer at the time of their transfer of tax residence outside of France, provided that their securities assets exceed €800,000 or their participation reaches 50% of the capital of a company (Article 167 bis of the General Tax Code).
The applicable rate is a flat tax of 30% (12.8% income tax and 17.2% social security contributions), with the option to choose the progressive tax scale. Deferral of payment is automatic for transfers to the European Union or the European Economic Area with an assistance agreement, and optionally with guarantees elsewhere.
The deferral becomes final after fifteen years for the shares held. For an executive, the effective exit tax depends less on the nominal rate than on the subsequent disposal strategy: in properly structured cases, the average effective cost is between 0 and 15% of the theoretical cost.
Summary of the guide on the’exit tax 2026
- 1. The mechanism: who is involved, when, and on what
- 2. Detailed calculation: tax base, rates, special cases
- 3. Payment deferral: automatic, optional, duration, expiry
- 4. Reporting obligations: 2074-ETD, 2074-ETSL, schedule
- 5. Optimization levers: contribution-sale, gift, division of ownership rights
- 6. Case study with figures: manager selling their SME in 2027 after expatriation in 2026
- 7. Extractable FAQ
1. The mechanism: who is involved, when, and on what
The exit tax is a tax freezing mechanism. When a taxpayer ceases to be a French tax resident (Article 4 B of the French General Tax Code), the tax authorities calculate the capital gain that would have been realized if the securities had been sold at their market value on the date of departure. This capital gain is called a latent capital gain. It is taxed according to the rules applicable to capital gains on securities, even though there has been no actual sale. The mechanism aims to neutralize tax evasion through prior transfer of residence.
Three conditions must be met for the scheme to apply: status as a French tax resident for six of the ten years preceding the transfer (Article 167 bis I of the CGI), holding securities that meet one of the two alternative thresholds (securities assets exceeding €800,000 OR direct or indirect participation equal to or greater than 50% of a French company), and effective transfer of residence abroad as determined by the administration.
Securities included in the tax base
All securities representing equity interests are included: shares, partnership interests, convertible bonds, exercised share warrants, and securities held in PEA or PEE accounts that have already been allocated. Securities held indirectly through an intermediary company are also included (tax transparency applies at the 50% threshold). The following are excluded from the tax base: unit-linked assurance-vie policies, directly held real estate, SCPIs (real estate investment trusts) that do not primarily consist of real estate, and capitalization contracts.
Transfer effective date
The tax authorities use the date on which the taxpayer effectively ceases to meet the criteria of Article 4 B. This date is not necessarily the date of the physical move: it corresponds to the date on which none of the four alternative criteria is met (home, principal residence, principal activity, center of economic interests). In practice, the tax authorities use the date of registration with the consular register or tax registration in the host country.
2. Detailed calculation: tax base, rates, special cases
The tax base is the unrealized capital gain, calculated as the difference between the market value of the securities on the date of transfer and their acquisition price. For securities received following a contribution-sale (article 150-0 B ter), the contribution value serves as a reference. For securities acquired by inheritance or gift, the acquisition price is the value retained at the time of the transfer free of charge.
For listed securities, the market value is the closing price on the day of the transfer. For unlisted securities, valuation is carried out using methods accepted by legal doctrine: sector multiples, discounting of future cash flows, mathematical value.
| Component | Rate |
| Income tax (flat-rate component) | 12,8 % |
| Social security contributions (CSG, CRDS, solidarity levy) | 17,2 % |
| Total PFU | 30 % |
Option for the progressive scale. Taxpayers can opt out of the flat tax rate (PFU) and choose to be taxed according to the progressive income tax scale, which is sometimes more advantageous when the holding period allowances applicable to securities acquired before January 1, 2018, are significant. This option is comprehensive and applies to all investment income and capital gains of the tax household for the year.
Exceptional contribution on high incomes (CEHR). An additional contribution of 3 to 4 % applies to the portion of the reference tax income exceeding €250,000 (single person) or €500,000 (couple), respectively, above higher thresholds. Unrealized capital gains are included in the tax base for this contribution.
3. Payment deferral: automatic, optional, duration, expiry
THE payment deferral allows for the deferral of the actual payment of the calculated tax. The deferral is automatic for a transfer to a Member State of the European Union or the European Economic Area that has concluded an administrative assistance agreement for tax recovery with France (Norway, Iceland). For other destinations (Swiss, United Kingdom, UNITED STATES, United Arab Emirates, Singapore, etc.), the stay of execution is granted on an optional basis and subject to the provision of guarantees.
The deferral becomes final after fifteen years for securities held for that period. Early return to France before these fifteen years results in the cancellation of the deferred capital gain (Article 167 bis VI of the French General Tax Code), as does a gift to a member of the tax household who remains a resident, or the death of the expatriate taxpayer. Conversely, the sale, repurchase, or cancellation of securities during the deferral period makes the tax immediately payable on the corresponding portion of the capital gain.
4. Reporting obligations
| Form | Object | Due date |
| 2074-ETD | Initial declaration at the time of transfer | With the 2042 declaration of the year of departure |
| 2074-ETSL | Annual monitoring statement during the deferment | Each year as long as the suspended sentence is active |
| Warranty slip | Justification of guarantees for optional deferment | Concurrent with the request for a stay of execution |
Failure to file the annual 2074-ETSL form results in the immediate payment of the exit tax plus 10 %. This is the most frequent error in unaccompanied expatriation cases: the taxpayer, believing they no longer have French income, neglects to file their annual follow-up and loses their deferment.
5. Levers for optimization
Contribution-transfer to a holding company (article 150-0 B ter)
Freeze the capital gain through a tax deferral obtained by contributing operating shares to a controlled holding company. If the contribution occurs at least three years before the sale, the deferral is maintained without any reinvestment requirement. The deferred capital gain is not subject to exit tax at the time of departure.
Gift prior to transfer
Donating the shares before departure eliminates the unrealized capital gain on the donated share. The recipient receives the shares with a reassessed acquisition value as of the date of the gift. Combined with a division of ownership, The operation reduces the base of the exit tax while organizing the transfer.
Choosing a designated destination
Automatic deferment without collateral is reserved for EU/EEA countries. The opportunity cost of a bank guarantee for a non-EU destination can reach €200,000 to €500,000 over fifteen years for a theoretical exit tax of €3 million. The choice between Italy and the UAE is not based solely on the local tax rate.
Optimized transfer schedule
A transfer during the first half of the calendar year maximizes the chances of benefiting from the local tax regime for the entire year in the host country and secures non-resident status in France. Combining this with the end of a deferral of capital contribution and sale exceeding 36 months allows for an optimal sale in the receiving jurisdiction.
6. Case study with figures: a manager selling their SME after expatriation in 2026
Profile. Founder and CEO of an industrial SME established in 2009. 100% ownership of % through a French holding company. Holding company value as of January 1, 2026: €12 million. Cumulative acquisition price of the holding company shares: €50,000. Planned sale to an industrial fund in 2029.
Intended expatriation destination: Portugal (IFICI regime applicable to eligible beneficiaries).
Scenario A — Sale to France in 2026 followed by expatriation.
- Taxable capital gain: €11,950,000.
- PFU: 30 %.
- French tax burden: €3,585,000.
- Plus CEHR (4 % beyond 1 million RFR for a couple): approximately €470,000.
- Total France: ~€4,055,000.
The executive takes €7,945,000 abroad.
Scenario B — Expatriation to Portugal in 2026, exit tax with automatic deferral, sale from Portugal in 2029
- Theoretical exit tax calculated on the day of departure: 30 % of €11,950,000 = €3,585,000, placed in automatic deferral (EU).
- Transfer of securities to Portugal in 2029: IFICI regime applicable.
- Capital gains are taxed according to the France-Portugal tax treaty and Portuguese rules.
- Portuguese taxation on capital gains from the sale of shares in foreign companies is generally 28 % for non-IFICI eligibles, but may be exempt under IFICI if the sale relates to shares in a non-Portuguese company.
- The deferral of exit tax in France expires and the exit tax becomes payable: €3,585,000.
Cumulative total: ~€3,585,000 + applicable Portuguese taxation.
Scenario C — Contribution-sale in 2026 + expatriation 2027 + Sale of holding company by the manager in 2030
The contribution in 2026 defers the unrealized capital gain. At the time of departure in 2027, the deferred capital gain is not included in the exit tax base (the contributed securities no longer exist in the personal assets; it is the holding company's securities that count).
The 2027 exit tax only applies to the unrealized capital gain on the holding company's shares between the contribution date and the departure date—which is small if little time has elapsed. The sale of the holding company's shares by the non-resident executive is treated according to the tax treaty and the tax regime of the country of arrival.
Under certain tax treaties (Portugal, Italy, UAE), the right to tax capital gains on holding company shares may revert to the seller's country of residence. Total potentially reduced.
Comparative reading:
Scenario A is the simplest but the most expensive.
Scenario B neutralizes French taxation through deferral, but the exit tax becomes effective at the time of the sale.
Scenario C, the most structured, can halve the total burden in the best-case scenario, but requires 4 to 5 years of planning and a favorable tax treaty.
The best scenario is never theoretical: it is calculated on a case-by-case basis, taking into account the cost of structures, applicable conventions and the time window.
FAQ about the 2026 Exit Tax
Does the exit tax apply to capital gains already taxed in France?
No. The tax base is limited to unrealized capital gains, that is, those that have never been taxed. Capital gains already declared and taxed (previous sales, contributions and sales released from deferral) are not included.
What happens if you return to France before the age of 15?
The deferred tax liability is waived. The securities revert to their French status and their initial acquisition price for the calculation of the next capital gain. This reversion results in the complete cancellation of the exit tax (Article 167 bis VI of the French General Tax Code).
Can one be exempt from exit tax if one resells the securities in the country of arrival?
No, the deferral ends upon the transfer of ownership, and the exit tax becomes payable on the portion of the unrealized capital gain corresponding to the transferred securities. Taxation in the country of arrival is then added according to local rules and the applicable tax treaty.
Does the exit tax apply to assurance-vie contracts?
No, assurance-vie contracts are not included in the tax base. They fall under a separate tax regime for non-residents upon redemption. Luxembourg assurance-vie remains completely portable.
What is the difference between exit tax and IFI when leaving the country?
The exit tax applies to unrealized capital gains on securities at the time of departure. The IFI (real estate wealth tax) ceases to be due on foreign assets upon expatriation, but remains due on real estate located in France and retained by the taxpayer.
Alexis's reading on the 2026 Exit Tax
«"The only real driver of exit tax costs is not the rate: it's the timing. In the 47 expatriation cases handled by our firm over the last three years, the difference between the theoretical cost and the cost actually borne by the client has varied from 1 to 25 depending on the quality of the prior structuring.
The rule of thumb: an executive relocation project that doesn't involve a prior contribution-sale leaves an average of €2 million in avoidable taxes on a net worth of €10 million. This difference is what Balmont's AI modeling makes visible in less than three minutes.»
Sources & References
1. Legal Basis (General Tax Code)
- Article 167 bis of the French General Tax Code The founding text of the Exit Tax. It defines the tax base (unrealized capital gains), the thresholds (€800,000 or 50% of social profits), the rates and the conditions of transfer.
- Article 4 B of the French General Tax Code (CGI) Defines the criteria for tax residence in France (home, main place of residence, professional activity, center of economic interests).
- Article 150-0 B ter of the French General Tax Code (CGI) Governs the contribution-sale mechanism (tax deferral), a major optimization lever cited in the practical case.
2. Administrative Doctrine (BOFiP)
- BOI-RPPM-PVBMI-30-20 This is the administrative "bible" of the Exit Tax. This official bulletin details the tax authorities' interpretation of the scope, calculation methods, and operation of the payment deferral.
- BOI-RPPM-PVBMI-30-10-60 : Details on the deferral of taxation in the event of a contribution of securities to a controlled company (150-0 B ter).
3. Case Law and Constitutionality
- Decision No. 2011-638 DC of July 28, 2011 The Constitutional Council validates the Exit Tax mechanism, emphasizing the objective of combating tax evasion.
4. International Tax Treaties
- France-Portugal Tax Convention : For the practical case (in particular the rules for sharing the right to tax between the State of source and the State of residence).
- IFICI regime (Portugal) Portuguese decrees governing the new status of non-habitual residents (applicable depending on installation dates).
