«"Alexis, I'm selling my company for 5 million euros in two years, but I'm moving to Mauritius in three months. Will I have to pay taxes right away?"»
Numerical example
Typical case: founding director of a non-listed company. Acquisition price of shares: €10,000. Market value on the day of departure: €5,000,000. Unrealized capital gain: €4,990,000.
Element | Amount |
Taxable unrealized capital gain | 4 990 000 € |
Income tax (12.8 %) | 638 720 € |
Social security contributions (17.2 %) | 858 280 € |
Total theoretical exit tax: €1,497,000 (30 % of the unrealized capital gain). This amount is not collected by the Treasury on the day of departure if the taxpayer benefits from the deferral. It becomes due if the securities are sold before the deferral expires, or on the date of the actual sale, within the fifteen-year limit.
What is the exit tax? Definition, mechanism and a numerical example
The exit tax is a French tax codified in Article 167 bis of the General Tax Code. It applies to unrealized capital gains on company shares held by a taxpayer at the time they transfer their tax residence outside of France. It is triggered if the taxpayer's securities holdings exceed €800,000 or if their shareholding reaches at least 50% of a company's capital.
The applicable rate is the flat tax of 30% (12.8% income tax and 17.2% social security contributions), unless the taxpayer opts for the progressive tax scale. An automatic deferral of payment applies to transfers to the European Union or the European Economic Area; a deferral by option, subject to the provision of guarantees, is possible for other destinations. The exit tax becomes final after fifteen years for securities held in trust.
The five-point mechanism
Triggering event: the transfer of tax residence. The exit tax is triggered on the day the taxpayer ceases to be a French tax resident as defined in Article 4 B of the French General Tax Code (CGI). The effective date is generally the date of actual establishment in the host country.
Basis: unrealized capital gains on the day of departure. The tax authorities calculate the difference between the market value of the securities on the date of departure and their acquisition price. This latent difference becomes taxable even in the absence of an actual sale.
Triggering thresholds: alternative. The scheme applies if one of the two conditions is met at the time of departure: securities assets exceeding €800,000 OR direct or indirect participation equal to or greater than 50 % in a French company.
Rate: single flat-rate levy of 30 %. Taxation is calculated at a flat rate of 30% (12.8% income tax and 17.2% social security contributions). Taxpayers may opt for the progressive tax scale if this is more advantageous.
Payment deferral: automatic to the EU/EEA, optional elsewhere. For transfers to an EU or EEA member state that has signed an administrative assistance agreement with France, deferral is automatic. For other countries, the taxpayer must apply for deferral and provide guarantees (bank guarantee, pledge of securities), except in specific cases.
Balmont Reading
The exit tax is not a tax, but a deferral. It only becomes payable in three cases: sale of the securities before the end of the deferral period, return to France with repurchase of the securities, or failure to meet annual reporting obligations. Mastering the system involves never triggering the actual taxation: this is the purpose of exit strategy.
Understanding the Exit Tax:
The tax "toll" for entrepreneurs
The Exit Tax (article 167 bis of the French General Tax Code) aims to tax the unrealized capital gains on shares, securities, or equity interests held by taxpayers transferring their tax residence outside of France. The legislator's idea is simple: to prevent you from realizing your capital gains in a low-tax country after having benefited from the French ecosystem.
Who is affected? (Thresholds and conditions of application)
You enter the taxpayer category targeted by the French tax law if you meet two cumulative criteria:
- The duration criterion: You have been a French tax resident for at least 6 years during the 10 years preceding your departure.
- The wealth criterion: You hold direct or indirect interests whose total value exceeds one value ceiling of 800 000 € OR if you hold at least 50 % of social benefits of a company.
The companies concerned and the excluded assets
The tax primarily targets securities of holding, of SAS or SARL companies, as well as units in UCITS funds. On the other hand, real estate (subject to the taxation of rental income for non-residents) and liquid assets are Excluded assets of this device. However, be careful with the’Wealth tax for non-residents which will continue to apply if your French real estate assets exceed €1.3 million.
Strategy development: Payment deferral, your best ally
The key to a exit tax strategy Success lies in obtaining and maintaining the payment deferral. Without this deferral, the tax is due from the year following your departure, which can create a major cash flow impasse (taxing "virtual" wealth not yet received).
Automatic Suspension vs. Suspension Under Guarantee
- Partner countries (EU, EEA): The deferment is automatic. You pay nothing upon departure; the tax remains a deferred tax. This also applies to certain countries that have signed a mutual assistance agreement with France.
- Outside the EU (e.g., Dubai, USA, Mauritius, Singapore) : A suspended sentence requires a administrative procedure complex. You must designate a tax representative in France and provide guarantees (bank guarantee, pledge of securities) to the tax authorities to cover 30 % of the unrealized capital gain (12.8 % of income tax + 17.2 % of social security contributions).
The impact of the 2026 Finance Bill and the legislative timetable
There new regulations The tax system is constantly evolving. Discussions surrounding the’impact of the 2026 Finance Bill suggest a tightening of the conditions. Currently, after a period of 2 or 5 years (depending on the initial value of the securities), the tax is theoretically cancelled if you have not sold your securities. The legislature could extend these periods to combat purely tax-driven "expatriation for convenience.".
Optimization Pre-departure asset management: Concrete scenarios
L'’strategy development It must be implemented at least 6 to 12 months before departure to be effective. Here are the strategies we use at Balmont Conseil:
The gift before expatriation :
«"Purge" the capital gain
This is one of the most powerful strategies. By gifting the bare ownership of your securities to your children (donees) before your departure, you transfer the tax burden. If the children remain French residents, the Exit Tax on these securities is waived. It's an excellent way to combine wealth optimization And inheritance.
Contribution to a Holding Company (150-0 B ter)
If you plan to sell your business after you leave, contributing the shares to a holding Subject to corporate income tax, this can allow you to solidify the tax deferral. However, be careful to comply with the 60% reinvestment quota. We analyze your investment strategies to verify that the reinvestment is eligible and does not break the deferral.
Managing earn-out and guarantee clauses
For managers whose businesses are currently being sold, the earn-out clauses (Price supplements) are a trap. If the price supplement is paid while you are already abroad, it may be taxed twice depending on the tax treaties. We are reworking the asset valuation and the protocols to minimize this risk.
Reporting obligations: An obstacle course
Your tax return non-resident property becomes a key component of your assets.
1
Year N+1: You must file the form 2074-ETD with your tax return. That's when the...’securities valuation. An undervaluation can lead to an adjustment; an overvaluation makes you provide excessively burdensome guarantees.
2
Annual monitoring (Form 2074-ETS): Each year you must declare that you still hold the securities. Failure to do so tax monitoring is the number one cause for forfeiture of the deferment. The tax authorities then consider that the tax is due immediately, with late payment penalties.
Exit tax threshold: €800,000 or 50% participation (%), details of the two conditions
The exit tax (article 167 bis of the General Tax Code) applies when one of the following two conditions is met at the time of the transfer of tax residence outside of France: either the total value of the securities held in the taxpayer's assets exceeds €800,000, or the taxpayer's direct or indirect participation in a company reaches at least 50% of its profits or capital.
The two conditions are alternative: only one needs to be met. The value used is the market value on the date of departure. The valuation is carried out per tax household and includes securities held in full ownership, bare ownership, and usufruct.
Summary table of thresholds
Condition | Threshold | Legal reference |
Securities assets | ≥ €800,000 | Article 167 bis I-1° CGI |
Capital participation | ≥ 50 % of social rights | Article 167 bis I-2° CGI |
Perimeter | Full tax household | Article 167 bis II CGI |
Balmont Reading
The €800,000 threshold seems high, but it is exceeded by almost all managers who have founded a profitable SME within the last ten years. The unrealized value of unlisted securities is frequently underestimated by the founders themselves. Our firm systematically conducts a joint revaluation at the beginning of the audit to measure the actual exposure. The rule of thumb: if revenue exceeds €1.5 million with a net margin greater than 15%, the threshold is almost always reached.
Which securities are included in the calculation?
Included in the base are all securities representing social rights or securities held by members of the tax household on the day of departure: shares, partnership interests, units of mutual funds, units of investment companies, convertible bonds, warrants, exercised stock options and securities held within the framework of PEE, PERCO or PEA already allocated.
Assurance-vie contracts in units of account (subject to a separate regime), real estate held directly (subject where applicable to IFI and capital gains tax on real estate), and shares of companies with a predominance of real estate (specific regime) are not included.
1
Is the €800,000 threshold calculated based on market value or purchase price?
At market value on the day of the transfer of residence. For unlisted securities, the valuation is carried out using the methods accepted by tax doctrine (sector multiples, discounting of cash flows, mathematical value), and it is recommended to document it jointly by an auditor or an approved expert to anticipate any subsequent dispute.
2
Does the 50 % participation threshold apply per company or per household?
By company, but by combining the shares of members of the tax household and those held indirectly through intermediary structures (holding company, trust). An individual shareholding of 30 % combined with 25 % held by the spouse reaches the threshold.
3
Can a partial transfer just before departure bring the amount below the threshold?
Theoretically, yes, but the transaction must be genuine (actual transfer of rights, actual price) and precede the change of residence. A sham or intra-family transfer would be rejected by the tax authorities as tax avoidance (Article L. 64 of the French Tax Procedures Code). In practice, however, the contribution-sale via a holding company (Article 150-0 B ter) is used to defer taxation rather than circumvent it.
FAQ Detailed: Everything an executive needs to know about the Exit Tax
Balmont Conseil's support: Expertise and Precision
Risk analysis
We simulate the actual cost of a sale at 3, 5 and 10 years depending on your country of destination.
Coordination with experts
We work with your tax lawyers to validate the earn-out clauses and warranty.
Technical support
Our platform uses AI to monitor changes in tax treaties and to alert you in the event of any changes to the law applicable to your expatriate situation.
Conclusion: Anticipation, the key to your international peace of mind
A exit tax strategy is not an attempt to’tax avoidance, This is a measure of asset protection and sound management. In a world where the legislative calendar is accelerating and where tax transparency is becoming the norm (automatic exchange of information), relying on investment strategies Robustness is essential.
