Moves to strengthen France’s ‘exit tax’: who would this affect?

A group of cross-party French MPs have voted to strengthen France’s so-called ‘exit tax’ and return it to its original and stricter 2011 status.

The change has been added to France's proposed 2025 budget bill as an amendment.

If implemented it would see a ‘15-year’ rule reinstated. This generally means that people who move their tax domicile outside of France would be taxed on certain company shares and profits they own at the time of leaving (subject to conditions outlined in more detail below) unless they retain them for 15 years after leaving. 

President Emmanuel Macron reduced the time-limit to two years (or five in certain cases) in 2018 in a bid to make investing in France more appealing.

The amendment does not include a change to the current rate of the tax – 30% – nor the thresholds for when it is activated (either a shareholding with a value of €800,000 or a majority shareholding in a company).

The change was added as an amendment to the 2025 budget by the Finance Commission. The government can now choose to include it - or not - when it submits its budget bill to MPs in the Assemblée nationale for wider debate next week.

MPs may subsequently seek to remove the amendment although this is unlikely considering the cross-party support it received.

Read more: Tax increases and spending cuts: France's 2025 budget revealed

Who is affected by exit tax? 

The current exit tax is levied on people who satisfy both of the following conditions:

1 - They have been resident in France for six or more of the last 10 years (regardless of nationality) and they then move their tax domicile outside of the country

2 - They have shares in a company (whether French or foreign) exceeding a value of €800,000 or they own more than 50% of shares in a company

They are eligible to be taxed at a flat 30% rate (12.8% income tax, 17.8% social charges) on the theoretical gains made from these shares whilst resident in France, even if the shares remain in their possession when they leave.

If the person moves to an EU/EEA country or one that has signed agreements with France to combat tax avoidance and evasion and for mutual tax recovery, the tax is only levied when the shares are sold. 

If the shares are not sold within two years (or five if the value is €2.57 million or more), then the tax is not levied (or can be refunded to those who have already paid it). 

Under the new proposal, this will increase to 15 years.

You can read more about the current version of the tax on page 27 of our guide to French Income Tax on sale here. 

Read more: EXPLAINED: France’s property wealth tax 2024

Widespread support for amendment

The reinstatement of the original 2011 rules was approved by the Finance Commission of the Assemblée nationale, and saw a rare agreement between MPs in the left-wing alliance Nouveau Front Populaire, right-wing Les Républicains, and far-right Rassemblement National, who all voted in favour.

The amendments “combat people who transfer their residence outside France simply and solely to avoid taxation,” said Les Républicains MP Véronique Louwagie who introduced the amendment. 

She said Mr Macron’s changes in 2018 amounted “quite simply to abolishing the tax.” 

‘It would be truly incomprehensible if the government, at a time when we are looking for new tax revenue and (when) we need tax justice, did not maintain this amendment’ said Green MP Eva Sas.

Other changes proposed by the left wing Nouveau Front Populaire earlier in the year, such as a return to a generalised tax on wealth, have not been added as amendments to the budget.

Read more: What is ‘exit tax’ that France's PM candidate wants to bring back?