Countries With an Exit Tax: Assets, Rules, and Penalties

Roughly a dozen countries impose some form of exit tax on people who leave, and the list of countries with an exit tax includes the United States, Canada, Australia, France, Germany, Spain, the Netherlands, Norway, Denmark, and South Africa. The idea is the same everywhere: on the day you go, the government treats certain assets as if you had sold them, and taxes the paper gain. Who gets caught, which assets are covered, and whether you can defer payment differ enough that two people leaving two different countries on the same day can face wildly different bills.

What an Exit Tax Actually Does

The mechanism is called deemed disposition. On your departure date (in some countries, the day before), the tax authority pretends you sold your covered assets at fair market value. You owe capital gains tax on the difference between what you paid and that departure-day value, even though you still hold the asset and haven’t seen a dollar of cash. The logic is that the country wants to tax growth that happened while you lived there, before you carry those gains to a lower-tax jurisdiction and sell.

Beyond that shared idea, the systems diverge. The United States ties its exit tax to citizenship and long-term green card status, not residency. Everyone else ties it to tax residency. Some countries sweep in almost every asset; others only reach large shareholders. Deferral is generous in some places and expensive in others.

United States

The U.S. system is unusual. It applies to citizens who renounce citizenship and to long-term permanent residents (green card holders for eight or more of the last fifteen years) who surrender their status. Simply moving abroad while keeping your passport doesn’t trigger it.¹

Even then, the tax only bites if you’re a “covered expatriate.” You become one if any of these is true: your net worth is $2 million or more at expatriation; your average annual net income tax for the previous five years exceeds an inflation-adjusted threshold ($206,000 for 2025, $211,000 for 2026); or you fail to certify on Form 8854 that you’re current on federal tax for the last five years.¹

If you’re covered, most of your worldwide assets are treated as sold the day before expatriation. A statutory exclusion, set at $600,000 and adjusted for inflation since 2008, now sits above $800,000, and only gains above the exclusion are taxed.²

Retirement and deferred compensation follow separate rules. IRAs and 401(k)s are treated as fully distributed the day before you go, with income tax due on the whole balance but the early-withdrawal penalty waived. Eligible deferred compensation (certain pensions) faces 30% withholding when paid. Interests in nongrantor trusts are also taxed at 30% as distributions occur.²

One consequence of covered expatriate status is permanent. Under IRC 2801, any gift or bequest you later make to a U.S. person is subject to a transfer tax at the highest estate and gift tax rate, currently 40%. The U.S. recipient owes the tax and files Form 708. A credit is available for foreign gift or estate tax already paid on the same transfer, but the practical effect is that gifts back to family in the U.S. are no longer tax-free.

Deferral is possible on an asset-by-asset basis, but interest runs on the deferred tax from the original due date, and you must post adequate security such as bonds, letters of credit, escrow, or a mortgage.³ If the IRS later decides the security is inadequate, the full balance plus interest becomes immediately due unless you cure the shortfall within 30 days.²

Canada

Canada’s departure tax is simpler in concept but broad in reach. When you cease to be a Canadian tax resident, you’re deemed to have sold most of your property at fair market value immediately before departure, and the gain or loss goes on your final Canadian return.⁴

Several categories are exempt:

Canadian real estate and resource properties, since Canada can still tax you on those as a non-resident.
Registered accounts such as RRSPs, TFSAs, RRIFs, and pension plans.
Inventory and business assets you continue to operate through a Canadian permanent establishment.
Property you owned before arriving (or later inherited) if you lived in Canada for 60 months or less during the ten years before emigrating.⁴

That last exemption matters: Canada doesn’t penalize a short-term resident who leaves within five years. Deferral is available if you post acceptable security with the Canada Revenue Agency.

Australia

Australia triggers a capital gains tax event when you stop being a resident for tax purposes. You’re taken to have sold all your CGT assets at market value, except “taxable Australian property,” which mainly means Australian real estate and indirect interests in Australian land. Those stay within Australia’s reach whenever you actually sell, so they don’t need to be taxed at the door.⁵

Temporary residents are fully exempt. Everyone else can elect to disregard the deemed disposal, but the trade-off is real: the assets keep being treated as taxable Australian property until you sell or become resident again, so post-departure growth stays inside Australia’s tax net. The choice is pay now on pre-departure gains, or pay later on the full gain including everything that accrues after you leave.⁵

France

France’s exit tax under Article 167 bis of the General Tax Code catches you if you were a French tax resident for at least six of the previous ten years and hold securities or shares worth €800,000 or more, or representing at least 50% of a company’s profits.⁶

How long you stay abroad matters. For transfers of residence since January 2019, portfolios below €2,570,000 receive automatic relief after two years abroad; above that value, the wait is five years. Annual monitoring returns are required during the period. Sell the shares before relief kicks in and the tax becomes due.⁶

Germany

Germany’s exit tax under Section 6 of the Foreign Tax Act (AStG) is narrowly targeted. It applies only if you held at least 1% of a corporation at any point during the last five years and were subject to unlimited German tax liability for at least seven of the last twelve years. When both conditions are met, the shares are treated as sold at fair market value on departure. Payment can be deferred for moves within the EU or EEA.

Spain

Spain’s exit tax under Article 95 bis of the Personal Income Tax Law requires two conditions: at least ten years of tax residency in the last fifteen, and shareholdings worth €4,000,000 or more, or a stake of at least 25% in a company worth over €1,000,000. Those thresholds keep the tax focused on wealthy business owners and major shareholders rather than ordinary movers.

Netherlands

The Dutch system targets “substantial interest” holders, meaning anyone owning at least 5% of a company. Emigration is treated as a notional sale, and the tax office issues a “preserving assessment” to lock in the claim. For intra-EU moves, deferral is automatic, interest-free, and requires no collateral. The tax becomes payable only when you actually sell or take dividends. The preserving assessment has no expiration date.

Norway

Norway’s exit tax covers shares, fund units, share savings accounts, certain financial instruments, and foreign pension accounts treated as investment accounts (including U.S. IRAs and 401(k)s). Only gains above NOK 3,000,000 (roughly $280,000) are taxable, so smaller portfolios escape entirely.⁷

Payment can be made immediately, spread in installments over twelve years, or deferred entirely for twelve years. Moves within the EEA let losses offset gains; moves outside the EEA count only gains.⁷

Denmark

Denmark triggers exit tax if you leave holding shares worth DKK 100,000 or more (about $14,000), provided you’ve been liable for Danish tax on share gains for at least seven years. All shares count toward the threshold, including those that would otherwise be tax-free.⁸

You can defer by reporting gains and losses each year as if you still lived in Denmark. Moves within the EU or Nordic region require no collateral; other destinations require adequate security. Miss the annual filing deadline and the entire deferred balance becomes immediately payable.⁸

South Africa

South Africa applies a deemed disposal at market value to all worldwide assets when you cease to be a tax resident, excluding only immovable property located in South Africa. Domestic real estate stays taxable when eventually sold, so it’s carved out of the departure event.⁹

Countries With Narrow Rules

Some countries have no blanket exit tax but apply departure-triggered taxation in specific situations. Portugal has no general exit tax on unrealized capital gains, but treats loss of Portuguese tax residency as a disposal event for crypto assets, startup equity acquired under favorable tax regimes, and gains deferred from earlier business restructurings. Someone leaving Portugal with only a traditional stock portfolio pays nothing at the door; someone with significant crypto or startup shares faces a bill.

What Assets Are Usually Covered

Across jurisdictions, the assets most commonly captured are publicly traded stocks and bonds, interests in private companies, partnership interests, and foreign real estate. What’s typically excluded is domestic real estate (the departing country can still tax it later) and tax-sheltered retirement accounts that have their own future-taxation mechanisms. Personal property like household goods and cars is generally exempt or below de minimis thresholds. Cash carries no unrealized gain, so it’s out.

Publicly traded securities value themselves. Privately held business interests, foreign real estate, and trust assets almost always need a professional appraisal, and those take time. Starting the valuation work months before departure is the single most useful thing you can do.

The Double Taxation Problem

The most frustrating part of exit taxes is being taxed twice on the same gain: once by the country you leave (via deemed disposition) and again by the country you arrive in when you actually sell. Treaty relief is inconsistent.

For U.S. covered expatriates, treaties generally don’t help with the mark-to-market exit tax. The timing is the obstacle: expatriation typically coincides with establishing new residency, so the deemed gain is computed while you’re still inside the U.S. tax system, before treaty protections apply. Foreign tax credits handle ongoing income but aren’t built for a one-time deemed sale.

Some countries fix this on the receiving end by stepping up your cost basis to the fair market value used by the departing country, so only post-arrival growth is taxed on eventual sale. Canada does this explicitly, and some European bilateral treaties include similar mechanisms. Not every pair of countries coordinates well, and this is where cross-border tax advice pays for itself.

Penalties for Ignoring Exit Tax

Consequences range from daily fines to full acceleration of deferred balances. In the United States, failing to file Form 8854 when required carries a $10,000 penalty, and failure to certify tax compliance on that form automatically makes you a covered expatriate regardless of your net worth or income.¹

Canada’s Form T1161 penalty runs $25 per day late, with a $100 minimum and $2,500 cap.⁴ In Denmark, missing the annual reporting deadline while on a deferral converts your entire deferred balance into immediately payable debt.⁸ Norway can assess exit tax up to fifteen years after the relocation if you didn’t include the information in your return.⁷

Within the EU, Directive 2010/24/EU lets member states pursue tax debts across borders. Your departure country’s tax authority can ask your new country of residence to collect on its behalf, so simply relocating and going quiet is not a strategy.¹⁰

1
Internal Revenue Service. Expatriation Tax
2
Office of the Law Revision Counsel. 26 USC 877A – Tax Responsibilities of Expatriation
3
Internal Revenue Service. Collateral Agreements and Security Type Collateral
4
Canada Revenue Agency. Dispositions of Property for Emigrants of Canada
5
Australian Taxation Office. How Changing Residency Affects CGT
6
Direction Générale des Finances Publiques. Do I Have to Pay an Exit Tax
7
Skatteetaten. Exit Tax
8
Skattestyrelsen. Tax on Shares if You Leave Denmark
9
South African Revenue Service. Cease to Be an SA Tax Resident and Reinstatement of SA Tax Resident
10
European Commission. EU and International Tax Collection News