“Alexis, I’m selling my company for 5 million euros in two years’ time, but I’m moving to Mauritius in three months. Will I have to pay the tax straight away?”
Worked example
Typical case: founder-director of an unlisted company. Acquisition price of the securities: €10,000. Market value on the day of departure: €5,000,000. Unrealised capital gain: €4,990,000.
|
Item |
Amount |
|
Taxable unrealised capital gain |
€4,990,000 |
|
Income tax (12.8%) |
€638,720 |
|
Social levies (17.2%) |
€858,280 |
Theoretical total exit tax: €1,497,000 (30% of the unrealised capital gain). This amount is not collected by the Treasury on the day of departure if the taxpayer benefits from the deferral of payment. It effectively becomes due if the securities are sold before the deferral lapse periods, or on the actual date of disposal within the fifteen-year limit.
What is the exit tax? Definition, mechanism and worked example
The exit tax is a French levy codified in article 167 bis of the General Tax Code. It applies to unrealised capital gains on company securities held by a taxpayer at the point when they transfer their tax residence outside France. It is triggered if the securities portfolio exceeds €800,000 or if the holding reaches at least 50% of a company’s capital.
The applicable rate is the flat-rate levy (PFU) of 30% (12.8% income tax and 17.2% social levies), unless the taxpayer opts for the progressive scale. An automatic deferral of payment applies for a move to the European Union or the European Economic Area; a deferral upon request, subject to the provision of guarantees, is available for other destinations. The exit tax becomes discharged after fifteen years for securities that are retained.
The mechanism in five points
Chargeable event: the transfer of tax residence. The exit tax is triggered on the day the taxpayer ceases to be a French tax resident within the meaning of article 4 B of the CGI. The effective date used is generally the date of actual settlement in the host country.
Tax base: unrealised capital gains on the day of departure. The tax authorities calculate the difference between the market value of the securities on the day of departure and their acquisition price. This unrealised difference becomes taxable even in the absence of an actual disposal.
Trigger thresholds: alternative. The scheme applies if either of the two conditions is met at the time of departure: a securities portfolio worth more than €800,000 OR a direct or indirect holding equal to or greater than 50% in a French company.
Rate: single flat-rate levy of 30%. The tax is set at the flat-rate levy (PFU) of 30% (12.8% for income tax and 17.2% for social levies). The taxpayer may opt for the progressive scale if this proves more favourable.
Deferral of payment: automatic to the EU/EEA, upon request elsewhere. For a move to a member State of the EU or the EEA that has concluded an administrative assistance agreement with France, the deferral applies as of right. For other countries, the taxpayer must apply for it and provide guarantees (bank guarantee, pledge of securities) save in particular cases.
The Balmont perspective
The exit tax is not a tax, it is a deferral. It only actually becomes payable in three cases: disposal of the securities before the end of the deferral, return to France with a buy-back of the securities, or failure to meet the annual reporting obligations. Mastering the scheme consists in never triggering the effective tax charge: this is the purpose of disposal engineering.
Understanding the Exit Tax:
The entrepreneurs’ fiscal “toll”
The Exit Tax (article 167 bis of the CGI) is designed to tax unrealised capital gains on company rights, securities or holdings owned by taxpayers transferring their tax domicile outside France. The legislator’s idea is simple: to prevent you from realising your capital gain in a low-tax country after having benefited from the French ecosystem.
Who is concerned? (Thresholds and conditions of application)
You fall within the category of taxpayers targeted by French tax law if you meet two cumulative criteria:
- The duration test: You have been a French tax resident for at least 6 of the 10 years preceding your departure.
- The wealth test: You hold direct or indirect participations whose overall value exceeds a value ceiling of €800,000 OR you hold at least 50% of the corporate profits of a company.
The companies concerned and the excluded assets
The tax mainly targets holding, SAS or SARL securities, as well as units in UCITS (OPCVM). By contrast, real estate (subject to the rental income tax regime for non-residents) and cash are assets excluded from this scheme. Be mindful, however, of the IFI for non-residents which will continue to apply if your French property assets exceed €1.3m.
Building the strategy: deferral of payment, your greatest ally
The key to a successful exit tax strategy lies in obtaining and maintaining the deferral of payment. Without this deferral, the tax is due as early as the year following your departure, which can create a major cash-flow deadlock (taxing “virtual” wealth that has not yet been realised).
Automatic deferral vs deferral subject to guarantee
- Partner countries (EU, EEA): The deferral is automatic. You pay nothing at the time of 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): The deferral requires a complex administrative procedure. You must appoint a tax representative in France and provide guarantees (bank guarantee, pledge of securities) to the tax authorities to cover 30% of the unrealised capital gain (12.8% income tax + 17.2% social levies).
The impact of the 2026 Finance Bill (PLF 2026) and the legislative timetable
The new regulations on tax are shifting. Discussions around the impact of the PLF 2026 suggest a tightening of the conditions. Today, after a period of 2 or 5 years (depending on the value of the securities at departure), the tax is theoretically wiped out if you have not sold your securities. The legislator could lengthen these periods to counter purely fiscal “convenience expatriations”.
Wealth optimisation before departure: concrete scenarios
Building the strategy must take place at least 6 to 12 months before departure to be effective. Here are the levers we activate at Balmont Conseil:
Gifting before expatriation:
“Purging” 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 those securities falls away. It is an excellent way to combine wealth optimisation and wealth transmission.
Contributing to a Holding company (150-0 B ter)
If you plan to sell your business after your departure, contributing the securities to a holding company subject to corporation tax can allow the tax deferral to be crystallised. However, be mindful of complying with the 60% reinvestment quota. We analyse your investment strategies to check that the reinvestment is eligible and does not break the deferral.
Managing earn-out and warranty clauses
For directors in the midst of a disposal, earn-out clauses (price supplements) are a trap. If the price supplement is paid while you are already abroad, it can be taxed twice depending on the tax treaties. We rework the valuation of the assets and the protocols to minimise this risk.
Reporting obligations: the obstacle course
Your non-resident tax return becomes a cornerstone of your wealth.
1
Year N+1: You must file form 2074-ETD with your income tax return. This is when the valuation of the securities is set. An undervaluation can lead to a reassessment; an overvaluation makes you provide guarantees that are too heavy.
2
Annual monitoring (Form 2074-ETS): Each year, you must declare that you still hold the securities. Omitting this monitoring of the tax charges is the number one cause of forfeiture of the deferral. The tax authorities then consider that the tax is immediately due, with late-payment penalties.
Exit tax threshold: €800,000 or a 50% holding — the detail of the two conditions
The exit tax (article 167 bis of the General Tax Code) applies where one of the following two conditions is met at the time of the transfer of tax residence outside France: either the overall value of the securities held in the taxpayer’s estate exceeds €800,000, or the taxpayer’s direct or indirect holding in a company reaches at least 50% of its profits or capital.
The two conditions are alternative: it is enough for just one to be satisfied. The value used is the market value on the day of departure. The assessment is made per tax household and includes securities held in full ownership, in bare ownership and in usufruct.
Summary table of the thresholds
|
Condition |
Threshold |
Legal reference |
|
Securities portfolio |
≥ €800,000 |
Article 167 bis I-1° CGI |
|
Holding in the capital |
≥ 50% of the corporate rights |
Article 167 bis I-2° CGI |
|
Scope |
Full tax household |
Article 167 bis II CGI |
The Balmont perspective
The €800,000 threshold appears high, but it is crossed by the vast majority of directors who have founded a profitable SME over the past ten years. The unrealised valuation of unlisted securities is frequently underestimated by the founders themselves. Our firm systematically carries out a contradictory revaluation at the start of the audit to gauge the real exposure. The rule of thumb: if turnover exceeds €1.5m with a net margin above 15%, the threshold is almost always reached.
Which securities are included in the calculation?
Included in the tax base are all securities representing corporate rights or transferable securities held by the members of the tax household on the day of departure: shares, corporate units, FCP units, SICAV units, convertible bonds, subscription warrants, exercised stock options and securities held within a PEE, PERCO or PEA and already allocated.
Not counted are unit-linked life-insurance contracts (which fall under a separate regime), real estate held directly (subject, where applicable, to the IFI and to the property capital-gains tax regime), and securities of companies with a predominantly real-estate character (specific regime).
1
Is the €800,000 threshold calculated on market value or on acquisition price?
On 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, cash-flow discounting, mathematical value), and it is advisable to document it contradictorily through a statutory auditor or an approved expert in order to anticipate any subsequent challenge.
2
Does the 50% holding threshold apply per company or per household?
Per company, but by aggregating the holdings of the members of the tax household and those held indirectly through interposed structures (holding company, trust). An individual holding of 30% coupled with 25% held by the spouse reaches the threshold.
3
Can a partial disposal just before departure bring you back below the threshold?
In theory yes, but the transaction must be genuine (effective transfer of rights, real price) and prior to the transfer of residence. A sham or intra-family disposal would be disregarded by the tax authorities on the grounds of abuse of law (article L. 64 of the LPF). The practice instead consists in using the contribution-disposal via a holding company (article 150-0 B ter) to defer taxation rather than to circumvent it.
Detailed FAQ: everything a director needs to know about the Exit Tax
The Balmont Conseil support: expertise and precision
Risk analysis
We simulate the real cost of a disposal at 3, 5 and 10 years depending on your destination country.
Coordination with the experts
We work with your tax lawyers to validate the earn-out clauses and warranty clauses.
Technology support
Our platform uses AI to monitor changes in tax treaties and to alert you in the event of a change in the law applicable to your expatriate situation.
Conclusion: anticipation, the key to your international peace of mind
An exit tax strategy is not an attempt at tax avoidance, it is a measure of asset protection and sound management. In a world where the legislative timetable is accelerating and where fiscal transparency is becoming the norm (automatic exchange of information), relying on robust investment strategies is essential.