Updated
GL-E-04
Glossary · Taxes and residency
Exit Tax - Exit tax on ending residency
Some countries (Germany, France, Norway, the Netherlands) charge a tax when you leave and stop being a resident — on the unrealized gain of assets. It must be accounted for BEFORE relocating.
01 / In 30 seconds
The short answer
- What it is
- A tax some countries levy when you leave their tax residence
- What it is levied on
- Unrealised gains on assets — as if you had sold them on departure
- Where it exists
- Germany, France, Norway, the Netherlands and others
- When to take it into account
- Before the move: it is calculated at the moment of the change of status
- Can be planned
- Yes: calculate it in advance together with the change of residence
02 / In plain words
What Exit Tax means
Exit tax is a tax some countries levy on a person when they cease to be a tax resident. The logic is this: the state “fixes” the increase in the value of your assets at the moment of departure and taxes it as if you had sold everything, even if you have actually sold nothing (an unrealised gain).
Such a tax exists, for example, in Germany, France, Norway and the Netherlands — and the list of countries is growing. It concerns above all valuable assets: stakes in companies, shares, sometimes real estate. For the state the point is to stop gains accumulated over years of living in the country escaping tax simply through a change of residence before a large sale.
The conclusion for the client is straightforward: exit tax is taken into account BEFORE the move, not after. A change of tax residence can save on future sales, but if there is an exit tax on leaving, that saving is partly or fully eaten up. That is why the move and large transactions are planned together, with all taxes calculated at every step.
A case from practice
The owner of a stake in a business wants to change tax residence before a sale in order to save on the gain. But their country has an exit tax: on leaving, the gain is taxed as if they had sold the stake at the moment of departure. Having worked this out in advance, they choose the scenario in which the overall tax is lowest.
Where it matters
- Changing tax residence
- Leaving a country with an exit tax
- Selling a business or a stake
- Holding valuable assets
- International tax planning
- A second passport and relocation
03 / What it covers
What matters about exit tax
Where to start
- Unrealised gain
- Stakes and shares
- Sometimes real estate
Where
- Germany, France
- Norway, the Netherlands
- The list is growing
When
- On leaving residence
- At the moment of departure
- Calculated before the move
Purpose
- To stop gains escaping
- Eats up the saving
- Planned in advance
04 / How it works
How to account for exit tax
Assess the assets and the gain
Check the country’s exit tax
Compare relocation scenarios
Plan the transactions and timing
The optimal exit
05 / Key facts
What you need to know
01
Exit tax is levied on leaving tax residence
02
It taxes unrealised gains on assets
03
It exists in Germany, France, Norway and the Netherlands
04
It concerns above all stakes, shares and valuable assets
05
It is taken into account BEFORE the move, not after
Common mistakes
- Changing residence without calculating exit tax
- Planning the move after deciding to sell
- Assuming a second passport removes exit tax
- Forgetting about large stakes and shares
- Not taking CFC rules into account together with the exit
06 / Expert advice
How to prepare in advance
The move and large transactions are planned together, before the change of residence: the assets and the accumulated gain are assessed, it is checked whether the country has an exit tax, and it is calculated whether the change of status pays off once this tax is included. Sometimes the order and timing of the steps are changed to minimise the overall tax. Then the saving is not eaten up by the exit tax.
What we do for you. We calculate exit tax before your move: how much the state will take on your departure, whether the change of residence pays off once this tax is included, and how to order the steps so that the overall tax is minimal. You make the decision with the full picture.
Dmitry NagyTax consultant, international taxation and compliance (ex-Big4)
07 / Questions
Frequently asked questions
A tax some countries levy when you leave their tax residence — on unrealised gains on assets, as if you had sold them at the moment of departure.
Germany, France, Norway and the Netherlands, for example. The list of countries with such a tax is gradually growing, so it is checked for the particular jurisdiction.
Above all on the increase in value of stakes in companies, shares and sometimes real estate — assets that have accumulated gains during your years of residence.
No. Exit tax is tied to tax residence, not citizenship. A passport does not cancel it by itself.
Before the move. Exit tax arises at the moment the status changes, so it must be planned in advance, together with large transactions.
Sometimes — through a sensible order of steps and timing, and deferrals or reliefs where they exist. But only when planned before leaving, not after.
Related terms
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