Exit taxes can become one of the largest hidden costs in an international relocation plan. They apply when a person leaves a country’s tax system, or in the United States when a citizen or long-term green card holder renounces, and can trigger tax on unrealized gains before any asset has actually been sold.
How exit taxes work
Most exit tax systems use a deemed disposition mechanism.
When a person gives up tax residency, the government treats certain assets as if they were sold at fair market value immediately before departure. The difference between fair market value and original cost basis becomes a taxable capital gain.
Assets that may be caught include:
- Stocks
- Business interests
- Partnership interests
- Private company shares
- Foreign real estate
- Cryptocurrency
- Financial instruments
- In some countries, retirement accounts
Tax rates vary by country, but the transcript describes a range from about 15% to 42%.
Some countries allow deferral, while others require immediate payment, collateral, or continued reporting after departure.
There are two broad models:
- Residence-based exit tax: triggered when tax residency ends.
- Citizenship-based exit tax: mainly the United States model, triggered when citizenship or long-term green card status is abandoned.
For global mobility planning, the key issue is not only where to move, but what the current country charges for leaving.
Canada
Canada’s departure tax applies when an individual stops being a Canadian tax resident, regardless of citizenship.
Canada deems the person to have sold most worldwide assets at fair market value immediately before departure.
Assets included may cover:
- Stocks
- Mutual funds
- Cryptocurrency
- Foreign real estate
- Partnership interests
- Private company shares
Excluded assets include:
- Canadian real estate
- Registered retirement accounts such as RRSPs
- Tax-Free Savings Accounts
- Principal residence
Capital gains are taxed at a 50% inclusion rate, meaning half of the gain is added to taxable income and taxed at the person’s marginal rate.
A 2024 proposal under Justin Trudeau would have raised the inclusion rate to 66.67% for gains above $250,000, but the transcript says this was later deferred and canceled under Prime Minister Mark Carney.
The lifetime capital gains exemption was kept and increased to $1,250,000 for qualifying small business shares and farming or fishing property.
For business owners with appreciated private company shares, the departure tax can reach seven figures.
Canada allows deferral. A taxpayer can file Form T1244 to postpone payment until the asset is actually sold. If the deferred federal tax exceeds $16,500, security must be provided to the Canada Revenue Agency, often through a letter of credit or a charge on Canadian assets.
If the person later returns to Canada and reestablishes residency, they can elect to unwind the departure tax on assets still owned, effectively canceling the deemed disposition.
Japan
Japan introduced its exit tax in 2015 for Japanese nationals and extended it to foreign nationals from 2020.
It applies to residents who:
- Hold financial assets with a combined market value of 100 million yen, roughly $630,000
- Have lived in Japan for more than five of the previous 10 years
The threshold is low compared with other major systems. It can catch expatriates with moderately sized portfolios, including restricted stock units or stock options accumulated while working in Japan.
The tax rate is 15.3%, consisting of 15% national income tax plus a 0.3% reconstruction surtax. A 5% local inhabitants tax may also apply, raising the combined rate to about 20.3%.
The deemed sale covers:
- Securities
- ETFs
- Mutual funds
- Bonds
- Options
- Derivatives
Excluded assets include:
- Cash
- Bank deposits
- Real estate
- Cryptocurrency
Visa category matters. People on Table 1 work visas, such as engineer, specialist in humanities, intra-company transferee, and business manager categories, are generally excluded from the residency count.
People on Table 2 visas, including permanent residents and spouses of Japanese nationals, are counted.
This can affect long-term foreign residents who upgrade to permanent residency without considering exit tax exposure.
Japan allows deferral for up to 10 years, but it requires appointing a tax agent in Japan and posting collateral equal to the tax liability.
If the person returns to Japan during the deferral period, the tax is canceled on assets still held.
Norway
Norway has repeatedly tightened its exit tax rules since 2022.
Under the framework shaped by the 2025 national budget, exit tax applies when a Norwegian tax resident relocates abroad and has unrealized gains on:
- Shares
- Share savings accounts
- Endowment insurance
A basic allowance of 3 million Norwegian kroner, roughly $310,000, shields smaller portfolios.
Gains above that threshold are taxed at an effective rate of about 37.8%.
The revised rules removed what the government viewed as a loophole. Previously, some departing taxpayers could defer the tax indefinitely and potentially avoid it by holding shares long enough.
Current options include:
- Immediate payment in full at departure
- 12 interest-free annual installments
- One lump-sum payment at the end of a 12-year deferral period, with interest
Dividends received while abroad now accelerate repayment. 70% of any distribution must go toward the outstanding exit tax bill.
Norway also eliminated the ability to credit foreign taxes paid on the eventual sale against Norwegian exit tax. Any double-taxation relief must be claimed in the new country of residence.
If the taxpayer returns to Norway within 12 years, the tax is canceled on assets still owned.
The EFTA Surveillance Authority sent a formal request for information to Norway’s Ministry of Finance in June 2025, examining whether the rules comply with EEA free movement provisions. The outcome could force changes, but the rules remain in place for now.
France
France imposes an exit tax on individuals who:
- Have been French tax residents for at least six of the previous 10 years
- Hold shares or financial instruments worth more than €800,000
- Or own more than 50% of a company
The tax rate is 30%, combining:
- 12.8% flat income tax
- 17.2% social charges
For departures since 2019, forgiveness rules have been shortened.
If the taxpayer holds the securities without selling after departure, the exit tax can be canceled after:
- Two years, if taxable securities were below €2.57 million
- Five years, if taxable securities exceeded €2.57 million
The French National Assembly voted in 2025 on a proposal requiring wealthy nationals to continue paying domestic taxes for up to 10 years after relocating. It failed by one vote, but similar proposals have appeared repeatedly since 2019.
Denmark
Denmark has the lowest exit tax threshold discussed.
The threshold is only 100,000 Danish kroner, about $15,500.
This means Denmark can catch a much wider range of departing residents than most other exit tax regimes.
Unrealized gains are taxed at:
- 27% on gains up to about 79,400 Danish kroner for 2026
- 42% above that
Germany
Germany’s exit tax targets individuals who hold at least 1% of a company’s shares.
Since 2022, departing shareholders can spread payment over seven interest-free annual installments, regardless of destination.
From 2025, Germany’s rules also cover investment fund holdings above €500,000.
The effective tax rate can reach up to about 28.5%.
Spain
Spain’s exit tax applies to individuals who have been tax residents for at least 10 of the previous 15 years and who hold:
- Company shares exceeding €4 million
- Or a 25% stake worth more than €1 million
For 2025 onward, rates range from 19% to 30%.
People who move to one of the 24 jurisdictions Spain classifies as tax havens may continue to owe Spanish global income tax for up to five years after departure.
Netherlands
The Netherlands taxes gains on substantial interests.
A substantial interest means holding 5% or more of a company’s shares.
Since 2024, a two-bracket system applies:
- 24.5% on the first €67,804 of gains
- 31% above that
People moving within the EU or EEA receive automatic interest-free deferral and pay only when they sell.
Austria
Austria has no minimum threshold.
If a person holds even one appreciated share, the gain can be taxable on departure at 27.5%.
However, for moves within the EU or EEA, Austria offers indefinite interest-free deferral. The tax is paid only when the asset is actually sold.
This makes Austria broad in scope, but less punitive for people relocating within Europe.
Australia
Australia’s exit tax applies when a person stops being an Australian tax resident.
The taxpayer is treated as having sold all non-Australian property at market value.
Domestic property and business assets are excluded.
A taxpayer can elect to defer the capital gain, but the election is all-or-nothing. It applies to every eligible asset or none.
The 50% capital gains tax discount is prorated for periods of Australian residency after 2012.
From 2025, the foreign resident capital gains withholding rate increased to 15%, with no minimum threshold.
United Kingdom
The United Kingdom does not currently impose an exit tax.
However, the direction is changing.
After abolishing the non-domicile regime in April 2025, reports emerged that the government was considering a 20% settling-up charge on gains embedded in assets at the point of departure.
The Treasury confirmed the issue was under consideration, but no formal decision has been made.
Anyone with assets in the UK should watch this closely.
South Africa
South Africa applies an exit tax through deemed disposal when a person relinquishes South African tax residency.
The deemed disposal applies to worldwide assets, excluding domestic real estate.
The maximum effective capital gains tax rate for individuals is 18%.
United States
The United States is one of only two countries discussed that taxes based on citizenship rather than residence, the other being Eritrea.
A US citizen living in a zero-tax country can still owe US tax on worldwide income.
Moving abroad does not end the obligation. Only renouncing citizenship can end citizenship-based taxation, and renunciation can trigger the US exit tax.
The US exit tax applies to:
- US citizens who renounce
- Long-term green card holders who abandon status after holding a green card for eight of the last 15 years
The IRS applies a mark-to-market tax to worldwide assets. All property is treated as sold at fair market value the day before expatriation.
The tax applies only to “covered expatriates.”
A person becomes a covered expatriate by meeting any of three tests:
- Net worth of $2 million or more
- Average annual federal income tax liability above $211,000 over the previous five years for 2026
- Failure to certify five years of full tax compliance on Form 8854
A one-time exclusion shields the first $910,000 of net unrealized gains in 2026. Above that, standard capital gains rates apply.
Retirement accounts receive separate treatment. IRAs are treated as fully distributed the day before expatriation, triggering immediate ordinary income tax on the entire balance.
The consequences can affect heirs. US citizens or residents who receive gifts or inheritances from a covered expatriate face a 40% tax on amounts above the annual exclusion.
If a parent renounces and a child remains American, the child may face a major tax hit on future inheritance.
This combination of citizenship-based taxation and exit tax is why many American millionaires do not renounce even when they dislike the system. The cost of exit can be too high.
Countries without exit taxes
Several popular investment migration destinations do not impose exit taxes.
The transcript highlights Italy and Portugal as two major examples. A person can leave either country without a deemed disposition of assets.
This can be useful for investors structuring a multi-step mobility plan because it preserves flexibility for future moves.
Other countries mentioned without exit taxes include:
- Belgium
- Switzerland
Sweden and Finland do not charge tax at the point of departure, but they have clawback rules allowing taxation of gains if shares are sold within a defined period after leaving.
In Sweden’s case, the clawback window is 10 years.
Planning implications
Exit taxes can change the economics of relocation.
A move to a zero-tax or territorial jurisdiction may lose much of its value if the person must pay a large exit tax before leaving the current country.
The issue is especially important for people with large unrealized gains in:
- Private businesses
- Public equities
- Stock options
- Restricted stock units
- Crypto portfolios
- Foreign property
- Investment funds
The longer a person waits and the more assets appreciate, the larger the potential exit tax bill can become.
Pre-departure planning may reduce or eliminate liability through legitimate strategies such as:
- Asset restructuring
- Gifting
- Timing the move
- Managing multi-year tax averages
- Reviewing residency status before upgrading visas or permanent residence
- Evaluating whether deferral is available
- Understanding collateral requirements
- Coordinating the tax rules of both the departure and destination countries
Countries with wealth taxes are especially likely to tighten exit tax rules. Norway is the main example in the transcript. If a country taxes wealth annually and wealthy people leave, it may introduce or strengthen exit taxes to capture gains before departure.
The United Kingdom is presented as a country to watch because it has already abolished the non-dom regime and is considering a departure charge.
Practical takeaway
Exit taxes should be evaluated before choosing a new residence or citizenship strategy.
The key question is not only where to go, but whether the person can afford to leave the current tax system.
For high-net-worth investors, entrepreneurs, and globally mobile families, the departure country can matter as much as the destination. A low-tax relocation plan only works if the exit cost does not erase the benefit.
