You decide to leave France and relocate to Singapore, Dubai, or Lisbon. You have spent years building a shareholding in a startup or a holding company. You file your departure paperwork, close your bank accounts, and consider the matter done. Then, months later, you receive a tax notice for gains you have never received. That is the French exit tax in action, and it catches more founders off guard than almost any other departure obligation I flag with clients who are restructuring out of France.
The French exit tax (Article 167 bis of the Code général des impôts, introduced by the amended finance law of 29 July 2011) operates as a deemed-disposal regime: France taxes unrealized gains on the day you stop being a French tax resident, not on the day you sell. If you hold a large enough stake, the bill is real, immediate in legal terms, and potentially large.
Who is subject to the French exit tax
Two conditions must both be met for the French exit tax to apply.
The first is a residence-history test. You must have been a French tax resident for at least 6 of the 10 tax years immediately preceding your departure. This catches long-term residents and serial founders who built their businesses in France, but excludes shorter-term residents or those who interrupted French residency during that window.
The second is a securities test. Your qualifying holdings must either have an aggregate market value of at least €800,000 (as of the 2026 guidance from the French Tax Administration), or represent at least 50% of a company’s profits. The €800,000 threshold is assessed across all qualifying securities, not per company.
The French exit tax thresholds
| Condition | Threshold | Source |
|---|---|---|
| Residence history | At least 6 of the preceding 10 years as French tax resident | French Tax Administration (2026) |
| Portfolio value | Aggregate value ≥ €800,000 | French Tax Administration (2026) |
| Ownership concentration | At least 50% of a company’s profits | French Tax Administration (2026) |
Both conditions must be satisfied simultaneously. A founder who has been resident for 8 years but holds only €200,000 in securities is not in scope. A founder who holds €3 million in shares but has been resident for only 4 years is also outside the charge.
For mobile founders building tax residency around multiple jurisdictions, the residence-history window is worth tracking precisely. Periods of non-French residence within the 10-year lookback reduce the count.
How French exit tax on unrealized gains works
The charge covers three categories of asset at the date of departure: unrealized capital gains on qualifying securities, earn-out receivables (créances de complément de prix), and gains on securities that were already subject to a French tax deferral regime. All three are treated as if realized on your last day of French tax residence.
The valuation is locked at the departure date. If your holding subsequently falls in value during a deferral or relief period, you receive no automatic reduction in the taxable base until the relief period ends. This is one of the provisions that practitioners outside France often miss.
Assets triggering French exit tax on unrealized gains
Startup equity, holding company shares, and interest-bearing convertible instruments can all be in scope if they satisfy the €800,000 or 50%-of-profits test. Private company holdings are not exempt on the ground that they are illiquid.
Declaration and reporting obligations
The departure declaration is filed on form 2074-ETD, submitted with the income-tax return you file in the year following your departure. You declare the unrealized gains, earn-out receivables, and deferred-tax gains held on the date you transferred your residence.
The annual reporting burden is lighter for post-2019 movers, and this is not a new rule: the official notices already carried it for the 2023 follow-up year. For taxpayers who transferred residence on or after 1 January 2019 and who declared only unrealized gains subject to deferral, the annual form 2074-ETSL (Etat de suivi des plus-values latentes) is no longer required, provided no event occurred during the year that would end the deferral or trigger relief. This administrative simplification reduces ongoing compliance cost for post-2019 movers who have not yet sold their holdings.
Payment deferral and relief periods
The French exit tax does not require immediate payment in most circumstances. Two forms of deferral are available.
Automatic deferral, with no separate application and no guarantee requirement, depends on where you move: it covers transfers to an EU or EEA state bound to France by administrative and recovery assistance conventions, and for any other destination (Singapore and the UAE included) it turns on the assistance conventions France has concluded with that country. The deferral suspends collection until a triggering event occurs: sale of the securities, redemption, cancellation, or company liquidation.
Application-based deferral requires submitting form 2074-ETD together with a proposed guarantee acceptable to the tax administration. This route is used where the automatic conditions are not met.
Two-year vs. five-year relief paths
For departures from 1 January 2019, relief (full cancellation of the exit charge on unrealized gains) follows one of two timelines depending on the value of the relevant portfolio, subject to the statutory conditions being maintained throughout.
| Transfer date | Portfolio value | Relief period | Condition |
|---|---|---|---|
| From 1 January 2019 | Up to €2,570,000 | 2 years | Securities maintained, no triggering event |
| From 1 January 2019 | Above €2,570,000 | 5 years | Securities maintained, no triggering event |
| 2014 to 2018 | Any value | 15 years | Legacy rules apply |
The 15-year rule for 2014-2018 departures was the prior regime and remains in force for those who left under those rules. If you departed in that window, you are still under a monitoring obligation until the 15-year period expires.
Deferral requirements and triggering events
The relief is automatic on meeting the conditions: no disposal, no redemption, no cancellation, and no company liquidation during the deferral period. A partial sale ends the deferral on the portion sold.
For founders who relocate to Singapore or Dubai and intend to restructure their shareholding shortly after departure, the interaction between the French exit tax relief period and a planned share sale deserves careful sequencing. Selling within the two- or five-year window ends the deferral, and the tax on the gains that were deferred becomes payable. This is one of the areas where the holding company structure chosen before departure can affect the outcome materially.
Founders who move to Singapore and later consider their tax residency planning should note that France’s exit charge clock runs independently of the new jurisdiction’s residency rules. You can be a full Singapore tax resident and still have an active French exit tax deferral running in parallel.
The jurisdictional comparison between Singapore, Hong Kong, and Dubai is relevant here because each destination handles the interaction with French tax obligations differently at the double taxation agreement (DTA) level. France has DTAs with all three, though the treaty provisions do not eliminate the exit charge.
FAQ
Who is subject to the French exit tax when leaving France?
Two conditions must both be met: you must have been a French tax resident for at least 6 of the 10 years immediately preceding your departure, and you must hold qualifying securities with an aggregate value of at least €800,000 or representing at least 50% of a company’s profits. Both tests are assessed on your departure date. A person who has been resident for only 3 or 4 years in the lookback window is not in scope, regardless of their portfolio size.
Does the French exit tax apply to shares in a privately held startup or holding company?
Yes, private company shares are in scope if the two threshold conditions are met, even when they are illiquid or unquoted. Valuation at the departure date is required on form 2074-ETD, and the taxable base is fixed at that point.
When is payment of the French exit tax deferred or cancelled after departure?
Collection is suspended automatically only if your destination qualifies (an EU or EEA state bound to France by administrative and recovery assistance conventions, or another country with the required assistance conventions); otherwise you must apply. For departures from 1 January 2019, relief (cancellation of the charge) follows after 2 years for portfolios of up to €2,570,000 or after 5 years for portfolios above that threshold, provided no triggering event such as a sale, redemption, or company liquidation occurs during the period. Departures between 2014 and 2018 remain under the legacy 15-year relief period. An application-based deferral requires form 2074-ETD and a proposed guarantee.
Sources
- French Tax Administration: Je quitte la France, suis-je concerné par l’exit tax ? (Updated October 2, 2026)
- French Tax Administration: I am leaving France. Do I have to pay exit tax? (Updated October 3, 2026)
