The “exit tax” treats the moment you cease to be a tax resident as a deemed disposal of all your assets. The tax authority calculates the unrealised gain on each asset, applies the relevant rate, and demands payment even though no cash has been received. The timing of the residency termination, the size of your holdings and the destination of your move determine the amount due and whether you can defer the liability.
How the tax is triggered
- Residency end – The charge is activated when you are no longer a tax resident of the country, not when you acquire a second passport or a golden‑visa.
- Residency definition – Beyond the 183‑day rule, tax residency can be based on centre of vital interests, a permanent home, habitual abode and formal ties.
- Deemed disposal – All worldwide assets are treated as sold at fair market value on the exit date; the gain is taxed even if you keep the assets.
United States (covered expatriate regime)
- Who is covered – U.S. citizens or long‑term green‑card holders who meet any of the three tests:
- Net worth ≥ US $2 million
- Average annual U.S. tax liability > US $211 000 (last 5 years)
- Failure to file Form 8854 for any of the 5 years of full compliance
- Tax calculation – First US $910 000 of net unrealised gain is excluded for 2026. Remaining gain is taxed at the applicable capital‑gain rates.
- Retirement accounts – An IRA is deemed fully distributed the day before expatriation, turning the entire balance into ordinary income.
- Transfer tax – Gifts or inheritances received from a covered expatriate are subject to a 40 % tax on amounts above the annual exclusion.
- Trigger events – Renunciation of citizenship or abandonment of a green card after 8 of the last 15 years.
European Union & European Economic Area (EU/EEA) regimes
| Country | Threshold | Rate(s) | Deferral / payment |
|---|---|---|---|
| Austria | None (any unrealised gain) | 27.5 % on financial assets | Immediate payment; no instalments. |
| Belgium (effective Jan 1 2026) | Gains accrued from 1 Jan 2026 only | 10 % (33 % for stakes ≥ 20 % or internal capital gains) | Payment cancelled if no sale within 24 months or if you return within that window; security required for deferral. |
| Denmark | Shares ≥ 100 000 DKK owned for 7 of the previous 10 years | 27 % up to 79 400 DKK, 42 % above | Immediate payment; no deferral. |
| France | Securities ≥ €800 000 after 6 of 10 years of residence | 31.44 % (combined rate) | Deferral discretionary; may require guarantees. |
| Germany | ≥ 1 % of a company after 7 of the previous 12 years | ~28.5 % effective | Payment can be spread over 7 annual instalments, regardless of destination. |
| Netherlands | ≥ 5 % stake | 24.5 % on first €68 843 gain, 31 % above | Automatic interest‑free deferral for moves within EU/EEA; tax due on sale. |
| Poland | Aggregate value > 4 million PLN | 19 % | Deferral rules not specified; subject to EU free‑movement case law. |
| Spain | ≥ 4 million EUR in shares or ≥ 25 % stake worth > €1 million after 10 years | 19 %–30 % (progressive) | If you move to a jurisdiction Spain classifies as a tax haven, you remain a Spanish tax resident for the exit year plus four subsequent years. |
| Norway | First 3 million NOK exempt | Effective ~37.84 % on excess | Options: pay in full on day 1, 12 interest‑free annual instalments, or a lump‑sum after a 12‑year deferral. 70 % of foreign dividends must be applied to the outstanding bill. Return within 12 years cancels the tax. |
| Sweden – not listed (ignore). |
Deferral nuance: Moving to another EU/EEA member often allows automatic or near‑automatic deferral of the exit tax until the asset is sold. Relocating to non‑EU jurisdictions (e.g., Dubai, Singapore, Caribbean) typically triggers immediate payment.
Non‑EU regimes
| Country | Threshold | Rate(s) | Deferral / payment |
|---|---|---|---|
| Australia | None (deemed gain on worldwide assets) | Taxed at marginal rate (up to ~45 %) | All‑or‑nothing deferral election; any deferred asset becomes taxable when eventually sold. |
| Canada | None (deemed disposition of most worldwide assets) | Half of the gain added to income, taxed at marginal rate | Form T1244 allows payment postponement; federal tax above C$16 500 is deferred. Returning and re‑establishing residency can unwind the deemed disposition. |
| Israel | None (deemed sale one day before residency ends) | No explicit rate given; taxed as ordinary income | Payment can be postponed until the asset is sold; enforcement may be difficult but reforms are being considered. |
| Japan | Financial assets > ¥100 million after ≥ 5 years residency in the preceding 10 years | 15.315 % | Visa category matters: work‑visa holders are generally excluded; permanent residents and spouses are included. Cash, deposits, property and crypto are excluded from the threshold and taxable base. |
| New Zealand | Only migrants who elected the “revenue account method” for unlisted foreign shares | Rate not specified (treated as capital gains) | Tax applies if the shares are sold within 3 years of departure; otherwise the charge is ignored. Potential expansion to all residents under a 2026 budget proposal. |
| South Africa | None (applies to individuals) | Effective 18 % (capped) | Local immovable property is taxed regardless of residence; other assets follow the exit tax. |
| South Korea | Large stakes in listed domestic companies after ≥ 5 years residence within 10 years | 20 %–25 % | Currently limited to domestic stocks; from Jan 2027 foreign stocks will be included with no large‑state condition. |
| United Kingdom – not yet active (proposed 20 % settling‑up charge on embedded gains, under discussion). |
Practical considerations for high‑net‑worth individuals and founders
- Liquidity risk – The tax is calculated on unrealised gains, so founders with illiquid private‑company shares can face multi‑million‑dollar bills without cash to pay.
- Timing of exit – Because the valuation locks on the day residency ends, any restructuring after that date does not affect the tax base.
- Return window – Several jurisdictions (Belgium, Norway, Austria) allow the tax to be cancelled if you return within a specified period (e.g., 24 months for Belgium, 12 years for Norway).
- Deferral strategies – Relocating within the EU/EEA often provides automatic deferral; moving to a non‑EU jurisdiction usually forces immediate payment.
- Threshold trends – Many regimes are lowering entry thresholds (e.g., Denmark’s 100 000 DKK), expanding coverage to more savers.
Decision checklist
- Identify your current tax residency and the exact date you will cease to be a resident.
- Calculate unrealised gains on all worldwide assets (shares, private‑company stakes, real estate, crypto, etc.).
- Check thresholds and rates for the departing country (see tables above).
- Determine deferral eligibility based on your destination (EU/EEA vs. non‑EU).
- Assess liquidity – ensure you have cash or can arrange financing to meet any immediate payment obligations.
- Consider timing – an earlier or later exit may move you into or out of a regime’s threshold.
- Plan for post‑exit – some countries (e.g., Norway) require a portion of foreign dividends to service the tax; others (e.g., Austria) demand immediate settlement.
Bottom line: Exit taxes are a government‑imposed price on leaving a jurisdiction. The only variable you can control is when you end your tax residency. Careful planning of the exit date, asset restructuring before that date, and choice of destination can dramatically affect the amount due and the cash‑flow impact.
