France exit tax 2026: What US expats must know about capital gains on emigration
A US citizen leaving France can face French tax on investment gains that have not yet been realized. Under Article 167 bis of the French General Tax Code, the rule can apply when a person has been a French tax resident for at least 6 of the previous 10 years and meets either the 50% ownership test or the €800,000 portfolio-value test at departure.
For departures in 2026, the official French Form 2074-ETD instructions indicate social levies of 18.6%, up from 17.2% for 2025 departures. Combined with the standard 12.8% income-tax rate, that produces a default combined rate of 31.4% on covered gains before any applicable deferral, relief, progressive-rate election, or special rule.
For Americans, the French rule operates alongside US taxation because the United States generally continues taxing US citizens on worldwide income after they move abroad. TFX’s guide to US citizenship-based taxation for Americans abroad explains the continuing US filing obligation.
What is the France exit tax? A quick-answer overview
France imposes an exit tax on unrealized capital gains when a tax resident transfers their domicile abroad, provided they meet specific shareholding thresholds.
Article 167 bis can apply to a person who was a French tax resident for at least 6 of the 10 years before departure and who either holds, directly or indirectly, at least 50% of the profit rights in a company or owns covered securities with a combined value exceeding €800,000. The law can tax gains that exist on the date French tax residence ends even though the shares have not been sold.
The regime also covers certain earn-out receivables and can apply to deferred capital gains carried under earlier French tax rules.
For a US expat, France’s exit tax is separate from US capital-gains tax and separate again from the US expatriation tax under IRC §877A.
Historical background: How France's exit tax was created
France has used several versions of exit taxation. The modern Article 167 bis regime was introduced in 2011 and later amended, including major changes in 2014 and 2019.
The 2011 regime targeted certain unrealized gains when a French tax resident moved abroad. Subsequent reforms adjusted the covered assets, residence tests, deferral mechanics, and length of time a taxpayer had to continue monitoring the deferred tax.
The modern system is not a one-time rule from 2011; it has been repeatedly amended, so the departure year determines which version applies.
For taxpayers leaving in 2026, the current 2-year and 5-year relief periods derive from the 2019 reform rather than from the original 2011 framework.
Who is subject to the French exit tax?
The French exit tax can apply when an individual leaves French tax residence after meeting both a residence-history test and an asset threshold test.
The following 2 conditions are central:
- French residence test: The taxpayer was French tax resident for at least 6 of the previous 10 years.
- Asset threshold test: At departure, the taxpayer either holds at least 50% of the profit rights in a company, directly or indirectly, or the aggregate value of covered securities exceeds €800,000.
A person leaving France with a modest portfolio below €800,000 can still fall within Article 167 bis if that person owns at least 50% of the profit rights in a company.
The 6-of-10-year rule generally applies to latent gains on shares and similar company interests. Earn-out receivables and certain previously deferred gains can have separate treatment.
Which assets are covered? Scope of the French exit tax
The French exit tax mainly targets latent gains on substantial shareholdings and securities portfolios, together with certain earn-out rights and deferred gains.
The following 2 broad categories are central:
- Shares, securities, and company rights with latent gains. The regime can cover these assets when the taxpayer holds at least 50% of the company’s profit rights or the total value of relevant holdings exceeds €800,000.
- Earn-out receivables. Certain rights to additional sale proceeds, where the amount depends on a future event or performance measure, can remain within the exit-tax regime after residence changes.
Ordinary directly owned real estate is generally outside the latent-gain scope of Article 167 bis. A company interest can still fall within the regime even where the company itself owns real property.
The regime focuses on specified financial and company interests, not every asset owned by a person leaving France.
How the taxable gain is calculated
The taxable amount is generally based on the unrealized gain existing when French tax residence ends. For covered shares, the calculation compares the market value at departure with the taxpayer’s relevant tax basis.
At a high level:
Unrealized gain = fair market value at departure − tax basis
Where a security has increased from €200,000 to €500,000 by the departure date, the latent gain is generally €300,000 before applying the tax rate and any available deferral or relief.
Special basis rules can apply where the taxpayer acquired the securities by gift, inheritance, merger, contribution, exchange, or another transaction with tax-deferred treatment.
A French exit-tax calculation should not simply use brokerage cost if French tax law assigns a different tax basis to the shares.
French exit tax rates and applicable thresholds
For departures in 2026, the standard French income-tax component on covered gains is generally 12.8%. The official 2026 Form 2074-ETD materials indicate social levies of 18.6%, producing a standard combined headline rate of 31.4% where both components apply.
The 31.4% figure is a headline rate, not a guarantee that every taxpayer pays exactly 31.4%, because elections, special income rules, social-security status, deferral, or later relief can change the final result.
| Asset category | Applicable income-tax rate | Social charges rate | Combined headline rate |
|---|---|---|---|
| Covered unrealized gains on shares or company rights | 12.8% standard rate | 18.6% | 31.4% |
| Covered earn-out receivables | 12.8% standard rate | 18.6% where applicable | 31.4% where both apply |
France also allows the progressive income-tax scale in certain circumstances when the taxpayer elects for that treatment. That decision should be modeled rather than assumed to be better than the flat rate.
Deferral of payment: How to postpone the exit tax
French exit tax can often be deferred rather than paid immediately when residence changes. The availability and mechanics of deferral depend on the country of destination and whether the conditions for automatic deferral are met.
The main deferral routes are:
- Automatic deferral: It applies when residence is transferred to an EU member state or to another qualifying state or territory that has the required administrative-assistance and tax-recovery arrangements with France and is not excluded under the statutory rules.
- Deferral on request: For destinations outside the automatic-deferral rules, a taxpayer may need to apply for deferral and provide a French tax representative or security where the statute requires it.
- Ongoing monitoring: Obtaining deferral does not automatically erase the tax. Later sales, redemptions, cancellations, gifts, returns to France, or expiry of the statutory holding period can affect whether the deferred amount becomes payable or is relieved.
Moving to a qualifying jurisdiction can defer payment automatically, but the filing and reporting requirements remain important.
When does the exit tax expire? Conditions for relief
A deferred exit-tax liability can be relieved after the statutory period or after other qualifying events. For departures under the post-2019 rules, the most familiar holding periods are 2 years and 5 years.
The principal relief events include:
- End of the statutory holding period: Generally 2 years for holdings within the lower value band and 5 years where the statutory €2.57 million threshold for the longer period is exceeded.
- Return to French tax residence: Relief can arise when the taxpayer becomes resident in France again while still holding the relevant assets or rights.
- Death: The deferred liability may receive relief under the statutory death provisions.
- Certain gifts: A transfer by gift can qualify for relief where the Article 167 bis conditions are satisfied.
The deferral period does not mean the tax automatically becomes payable at the end of 2 or 5 years; in many cases the liability is relieved if the required conditions are still met.
A sale, redemption, cancellation, or other taxable event during the deferral period can cause some or all of the deferred tax to become payable.
The role of tax treaties: Does the US-France tax treaty apply?
The US-France income tax treaty does not contain a simple rule that cancels France’s Article 167 bis exit tax whenever a US citizen moves from France to another country.
Treaty analysis can still matter because the treaty contains residence, capital-gains, and double-tax-relief provisions.
The treaty should be treated as part of the coordination analysis, not as an automatic exemption from the French exit tax.
Article 24 contains relief-from-double-taxation rules. Whether a French tax amount qualifies for a US foreign tax credit and when that credit can be claimed are separate questions under US tax law.
TFX’s US-France tax treaty guide explains the broader treaty framework for Americans living in France.
US expatriation tax vs. French exit tax: Key differences
French exit tax and US expatriation tax are separate regimes with different triggers. Moving out of France can trigger Article 167 bis, while IRC §877A generally applies only when a covered expatriate gives up US citizenship or terminates qualifying long-term US residency.
A US citizen who simply leaves France but keeps US citizenship does not trigger the US expatriation tax solely because of the French move.
| Feature | French exit tax – Article 167 bis | US expatriation tax – IRC §877A |
|---|---|---|
| Trigger | Transfer of French tax residence abroad plus statutory residence and asset conditions | Expatriation from the United States by relinquishing US citizenship or ending qualifying long-term residency |
| Main tax base | Covered latent gains and specified receivables | Deemed sale of worldwide property, subject to statutory exceptions |
| Who can be subject | Former French tax residents meeting Article 167 bis conditions | Covered expatriates under IRC §877A |
| Relief or deferral | Automatic or requested French deferral and later statutory relief | Separate US deferral election can apply under statutory conditions |
| Typical US citizen leaving France | Potentially relevant | Not triggered merely by leaving France |
TFX’s guide to US exit tax for citizens and long-term residents explains the covered-expatriate rules and IRC §877A calculation.
Compliance obligations: Forms and deadlines when leaving France
French exit-tax compliance begins in the departure year and can continue while a deferred liability remains outstanding.
The principal filing steps are:
- Calculate and report the departure position. Form 2074-ETD is used for the departure-year exit-tax calculation under the circumstances described in its instructions. The form is filed according to the applicable French income-tax filing timetable.
- Monitor deferred liabilities. Depending on the taxpayer’s assets and events after departure, Forms 2074-ETS3 or 2074-ETSL can apply. A taxpayer with only latent gains is not necessarily required to file the same monitoring form every year if no reportable event occurs.
- Report later taxable or relief events. A sale, redemption, gift, return to France, expiry of the relief period, or other relevant event can require updated reporting.
Deferral does not eliminate the recordkeeping obligation: taxpayers should keep the departure valuation, tax basis, ownership records, and later transaction documents until the French liability is resolved.
US reporting obligations for Americans leaving France
Leaving France does not end US reporting for a US citizen. A taxpayer can still need Form 1040, FBAR, Form 8938, and entity-specific international information returns after moving.
The following US filings commonly matter:
- FBAR – FinCEN Form 114: Required when the aggregate maximum value of foreign financial accounts exceeds $10,000 at any time during the calendar year. The threshold is not indexed for inflation. The normal due date is April 15, with an automatic extension to October 15. French and other foreign accounts over $10,000? Get help with your FBAR filing
- Form 8938: For taxpayers living abroad, the threshold is generally more than $200,000 at year-end or $300,000 at any time for an unmarried taxpayer or married taxpayer filing separately, and more than $400,000 at year-end or $600,000 at any time for married taxpayers filing jointly. Domestic-resident thresholds are lower.
- Form 5471, Form 8865, or Form 8858: These can apply to foreign corporations, partnerships, or disregarded entities after the move, depending on ownership and classification.
Moving from France to another country changes where you live; it does not remove US citizenship-based tax filing requirements.
TFX’s FBAR vs. FATCA guide explains the separate account and asset-reporting regimes.
File your US expat tax return while leaving France
A cross-border move can change foreign tax credits, residence, account reporting, and business-form obligations even when US citizenship stays the same.
France exit tax and capital gains on real property: What is excluded?
Directly owned real estate is generally outside the latent-gain scope of Article 167 bis. The French exit tax is aimed mainly at covered securities, company rights, specified receivables, and previously deferred gains rather than at a deemed sale of every asset a person owns.
A house or apartment owned directly is generally not included in the Article 167 bis unrealized-gain calculation merely because the owner leaves France.
Shares in a company that owns real property can require a different analysis because the taxpayer owns company rights rather than the real estate directly.
A later sale of French real estate can still produce French capital-gains tax under France’s nonresident property rules. Being outside the exit-tax scope does not make the property exempt from future French tax.
TFX’s guide to capital gains tax on foreign property explains the US reporting side when Americans sell real estate abroad.
Double taxation risk: Can you be taxed twice on the same gain?
French exit tax and US capital-gains tax can create timing and credit problems because France may calculate tax when residence ends, while the United States may not recognize gain until an actual sale occurs.
The same economic appreciation can enter the French and US tax systems at different times and with different basis rules.
Three areas require coordination:
- Foreign Tax Credit: US law may allow qualifying French income tax to be credited, subject to the Form 1116 rules, sourcing, income categories, limitations, and timing.
- Treaty relief: Article 24 of the US-France treaty provides double-tax-relief mechanisms, but the treaty does not automatically make every French exit-tax amount immediately creditable in the United States.
- Basis and timing: A French deemed gain under Article 167 bis should not be assumed to produce an automatic US basis step-up. US basis remains governed by US tax rules unless a specific provision changes it.
This mismatch can matter when a taxpayer pays French tax before the US sale. A US adviser should review when the French levy becomes a creditable foreign income tax and whether carryback or carryforward rules can help.
TFX’s Form 1116 Foreign Tax Credit guide explains the US limitation and carryover mechanics.
Recent developments: France exit tax news and 2024–2026 changes
The basic Article 167 bis framework remains in effect in 2026, but recent years include both administrative updates and court decisions affecting older cases.
The following developments should be separated by year:
- 2019 reform: France shortened the relief period for newer departures to the current 2-year or 5-year structure, with the longer period applying where the relevant holdings exceed €2.57 million.
- 2024 Finance Act: Article 11 addressed historic social-levy liabilities associated with certain 2011–2013 departures. It should not be described as creating the modern 2-year/5-year timetable.
- 2025 Conseil d’État decision: On February 5, 2025, France’s highest administrative court addressed the restored 2011 exit tax as applied to certain EU moves made between March 3 and May 11, 2011, holding that the application at issue conflicted with legal certainty and legitimate expectations. The decision is primarily relevant to old departure cases rather than a new exemption for people leaving in 2026.
For 2026 departures, the practical changes include the current-year forms, thresholds, and the social-levy rate shown in the 2026 Form 2074-ETD instructions.
Pro tips: Planning strategies before you leave France
Exit-tax planning works best before French tax residence ends. Once the departure date passes, options can become narrower because the unrealized gain and covered holdings have already been measured.
Before moving, consider the following:
- Model the exit-tax exposure before the move. Determine whether the 50% ownership or €800,000 portfolio-value thresholds are met and calculate the latent gain.
- Review whether automatic deferral will apply. The destination country determines whether French security or a representative may be required.
- Consider whether a genuine pre-departure sale makes sense. A real disposal before departure can change which tax regime applies, but it can also trigger immediate French capital-gains tax and US capital-gains tax.
- Review gifts carefully. A pre-departure gift can produce French gift-tax, US gift-reporting, basis, and succession consequences even where later exit-tax relief may be available.
- Coordinate French and US basis records. Keep original purchase records, French departure valuations, and later sale documents so both countries’ gain calculations can be reconstructed.
Do not create a transaction solely to avoid Article 167 bis without modeling French income tax, US income tax, gift tax, reporting, and the tax rules of the destination country.
Speak with TFX about US tax obligations after leaving France
Your French exit-tax position and your US filing obligations are separate systems. TFX focuses on the US return, foreign-account reporting, foreign tax credits, and related international forms.
Frequently asked questions
Yes. France has an exit tax under Article 167 bis of the French General Tax Code for specified unrealized gains and rights when a qualifying French tax resident transfers tax residence abroad. For latent gains, the individual generally must satisfy the 6-of-10-year residence test and either the 50% ownership or €800,000 portfolio-value threshold.
For covered unrealized share gains, the principal French exit tax threshold is met when the taxpayer directly or indirectly holds at least 50% of a company’s profit rights or when the total value of relevant securities exceeds €800,000. The residence requirement is generally 6 of the preceding 10 years.
Yes. Payment may be deferred automatically for moves to EU countries and qualifying other jurisdictions that meet France’s statutory cooperation and recovery conditions. For other destinations, deferral can require an application, security, or other conditions.
No. The treaty does not contain a blanket rule cancelling Article 167 bis. Its residence, capital-gain, and Article 24 double-tax-relief provisions can affect the overall result, while US foreign tax credit rules determine whether and when qualifying French tax can reduce US tax.
Form 2074-ETD is the principal departure calculation form. Depending on the taxpayer’s deferred liability and later events, Form 2074-ETS3 or Form 2074-ETSL can also be required. Current-year instructions should be checked because the monitoring obligation is not identical for every asset or event.
Directly owned real property is generally outside the Article 167 bis latent-gain regime. Shares in a company that owns real estate can require separate analysis because the relevant asset is a company interest rather than the property itself.
The payment deferral can continue until an event makes the deferred amount payable or qualifies it for relief. For post-2019 latent gains, the statutory holding period for relief is generally 2 years or 5 years, with the longer period applying where the value of relevant securities at departure exceeds €2.57 million.
Yes, but only if two separate sets of facts exist. A US citizen can face Article 167 bis when leaving France and also IRC §877A if that person separately relinquishes US citizenship and is a covered expatriate. Moving from France to the United States, United Kingdom, Spain, or another country without relinquishing US citizenship does not by itself trigger §877A.
A green card holder can face a different §877A analysis if the individual is a qualifying long-term resident who terminates US residency. TFX’s guide to foreign income and US tax obligations for green card holders explains the broader filing rules.
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