Leaving France for the United Kingdom: exit tax, six-year clause and British residency test

The United Kingdom is included in the list of automatically granted deferrals in form 2074-ETD (transfers from 2025). This deferral also assumes that the state is not non-cooperative within the meaning of Article 238-0 A of the French General Tax Code (CGI), a point we were unable to verify. The Franco-British tax treaty also contains a six-year tax clause (Article 14 § 6) which should be read before leaving. On the British side, your residency is determined on a daily basis by the Statutory Residence Test.

Exit tax: the United Kingdom is on the list for case no. 1

The conditions are those outlined in the information sheet: tax residence in France for at least six of the ten years preceding the transfer, and either at least 50% of the profits from a company or a portfolio with a total value exceeding €800,000 on the transfer date. The tax authority's information sheet states "at least €800,000": the two texts differ on the threshold, and we will not settle the matter. Income tax is 12.8%, with the option to choose the progressive tax scale. Social security contributions are 17.2% for a transfer in 2025 and 18.6% for a departure in 2026.

Case No. 1 covers the European Union and states bound to France by an administrative assistance agreement and a mutual assistance agreement on debt recovery. The notice lists 70 states and territories outside the Union, including the United Kingdom. In these cases, the stay of execution is automatic, as opposed to a stay upon request. The list of non-cooperative states is checked on the date of your departure.

Relief. The tax is waived, or refunded if it has already been paid, after a period of two years if the total value of the securities is less than €2.57 million, and after five years if it exceeds this amount, provided the securities are still held. Returning to France also qualifies as an event for tax relief.

Statements. Form 2074-ETD, in paper format only, must be filed with the tax office (SIP) you were previously registered with, the year following the transfer, along with forms 2042 and 2042 C. Annual monitoring is done using form 2074-ETS3 (or 2074-ETSL in certain cases). If you do not rectify your situation within thirty days of receiving a formal notice, the deferred tax becomes immediately due. A previous contribution-sale is treated separately: the transfer of residence terminates the deferral under Article 150-0 B ter.

The six-year tax year clause: Article 14 § 6

Article 14, paragraph 5 of the Convention of June 19, 2008, stipulates that gains from property other than that listed in paragraphs 1 to 4 are taxable only in the State of which the transferor is a resident. Paragraph 6 then reserves the right of a State to levy, according to its legislation, a tax on gains from the alienation of "any property" by persons defined in the text as being resident in that State, with regard to the six preceding tax years and the tax year of the alienation. The exact wording of the residency requirements is found in the text of the Convention. The text is reciprocal and refers to "a person," a concept that includes companies.

We have not found any source that links this clause to the exit tax. Therefore, do not assume that it protects or exposes you, and have it reviewed before any transfer of securities. The elimination of double taxation is the responsibility of the state that taxes on this basis (Article 24 § 4 a).

Residence: the British test and the convention

According to GOV.UK, the UK tax year runs from April 6 to April 5. According to HMRC's RDR3 guide, you are considered a resident if you spend 183 days or more in the UK during the tax year. You are considered a non-resident if you spend fewer than 16 days (resident in one of the three previous years), fewer than 46 days (non-resident in the three previous years), or if you work full-time abroad. In the latter case, three additional conditions apply: fewer than 91 days in the UK, fewer than 31 days of work exceeding 3 hours in the UK, and no significant break in work abroad. Conversely, another automatic residency test relates to housing: there is at least one period of 91 consecutive days with a home in the UK, including at least 30 days in the tax year, you were present in that home for at least 30 days in the year, and you did not have a home abroad or spent less than 30 days there in the tax year.

The year of change can be split: cases 1 to 3 describe a departure from the UK, cases 4 to 8 an arrival, for example case 5 (starting full-time work in the UK) or case 8 (starting accommodation in the UK). HMRC does not explain, on the page I read, how the split year affects foreign income and earnings. See the Statutory Residence Test.

If both France and the United Kingdom consider you a resident, Article 4 of the tax treaty determines your status: permanent home; if you have one in both countries, the country with which your personal and economic ties are closest (center of vital interests); failing that, habitual residence, nationality, and then agreement of the authorities. A person is not considered a resident if they are taxed in a country solely on income from sources located in that country. On the French side, Article 4B establishes three criteria, only one of which is sufficient: home or principal residence, professional activity, and center of economic interests (BOI-IR-CHAMP-10).

After arrival: FIG regime and Inheritance Tax

The FIG scheme applies after at least 10 consecutive tax years of non-residence in the UK. It reduces the tax burden on most foreign income and gains earned during the first four years of residence. The relief must be claimed for 2025-26 and subsequent years.

For inheritance purposes, you are considered a "long-term UK resident" after a total of 10 or more years of tax residency in the UK over the previous 20 years. This status can be maintained for up to 10 tax years after leaving the UK, and assets located outside the UK may then be subject to Inheritance Tax. See the FIG regime and the Inheritance Tax.

Enter, work, take care

France Diplomatie indicates that a valid passport is required, that stays of up to six months are visa-free for tourism, family visits, and most short-term business trips, and that a long-stay visa is necessary for working, studying, or settling. Without a visa or resident status, an Electronic Travel Authority (ETA) is required. For the Skilled Worker visa, GOV.UK requires a UK employer approved by the Home Office, a confirmed job offer before application, a sponsorship certificate, an occupation from the eligible list, a minimum wage, and a certain level of English proficiency. The visa is valid for up to five years before renewal.

With their application, most applicants pay the Immigration Health Surcharge and then use the NHS for free from the start of their visa; some treatments, such as prescriptions and dental care, remain chargeable. The National Insurance number is applied for from within the UK, and it is possible to start working before receiving it by proving eligibility to work. See the entry and stay of a Frenchman.

French statements from the year of departure

Notify your last tax office of your new address. For the year of departure, you must file form 2042 (income up to the departure date) and, if you still have taxable French-source income, form 2042-NR for the year ending December 31st. The Non-Resident Tax Office will then handle your tax return. Online filing is mandatory if your residence has internet access.

France continues to tax only your French-source income, subject to tax treaties. Capital gains on securities are generally exempt from French tax, except for gains exceeding 25% of the rights to profits from a company subject to corporate income tax (IS) and headquartered in France, held jointly with the family group within the five years preceding the sale: the levy is 12.8%. According to the tax authorities' website (updated in 2022), the French wealth tax (IFI) for non-residents applies to their real estate assets and rights located in France, as well as to the portion of their company shares corresponding to these assets. Withholding tax on dividends is capped at 15% of gross income by Article 11 of the tax treaty.

Starting in London with €3,100,000 in securities: a numerical example (fictitious profile)

Situation. A fictional female executive, domiciled in France for over ten years, owns 70 shares of her company. Her shares are worth €3,100,000 and the unrealized capital gain amounts to €1,800,000. She transfers her residence to the United Kingdom on December 1, 2026. Assumptions: income tax at 12.8% without opting for the progressive tax scale, social security contributions at 18.6% (rate for a departure in 2026).

Issue. She meets the conditions for the exit tax. She wants to know if the automatic stay of execution applies.

Strategy. She checks, on the date of her departure, that the United Kingdom remains eligible for the deferral, and prepares the 2074-ETD for 2027 as well as its annual follow-up.

Result. The deferred tax amounts to €565,200: €230,400 in income tax at 12.8% of the % tax bracket and €334,800 in social security contributions at 18.6% of the % tax bracket, representing 31.4% of the capital gain. His securities exceed €2,570,000: the tax relief period is 5 years. Form 2074-ETD is due in 2027. The tax is deferred if the United Kingdom meets the conditions of case no. 1 on the departure date.

What changes depending on your situation

• The value of your securities, which determines the tax relief period.
• Your British status: sponsored employee, manager, retiree.
• Your days of presence and your accommodation in the United Kingdom.
• Your ties to France: home, work, economic interests.

No result is guaranteed in advance: each point must be read in light of the documents in your file.