EXIT TAX: THE GUIDE
EXIT TAX
An exit tax is a tax that is imposed on individuals or businesses when they leave a country or jurisdiction. This type of tax is typically imposed on individuals who have lived or worked in a country for a certain number of years and are now leaving permanently or on businesses that are relocating to a different jurisdiction.
Exit taxes can take various forms, including a one-time payment or a tax on any capital gains realized upon leaving the country. In some cases, the exit tax may be imposed on the individual's entire net worth or on specific assets, such as real estate or financial assets.
Exit taxes are not common in all countries, and the rules and regulations surrounding them can vary significantly from one jurisdiction to another. Some countries, such as the United States, have an exit tax for individuals who have lived in the country for a certain number of years and have a net worth above a certain threshold. In these cases, the individual may be required to pay a tax on any capital gains realized upon leaving the country, as well as a tax on any assets that were not subject to capital gains tax at the time of their sale or transfer.
Other countries may have different rules for determining when and how an exit tax is imposed. For example, some countries may only impose an exit tax on individuals or businesses that have been resident in the country for a certain number of years, while others may impose an exit tax on anyone who leaves the country, regardless of how long they have lived or worked there.
In addition to the various rules and regulations surrounding exit taxes, there may also be exclusions or exemptions available to certain individuals or businesses. For example, some countries may exempt certain types of assets, such as primary residences, from exit taxes, or they may offer reduced rates to individuals who are leaving the country due to retirement or other circumstances.
In general, it is important for individuals and businesses to carefully consider the potential impact of an exit tax when planning to relocate to a different country or jurisdiction. It may be necessary to seek the advice of a tax professional or financial advisor to understand the specific rules and regulations that apply to your situation.
EXAMPLES
(but remember that laws can change rapidly)
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United States: The United States has an exit tax for individuals who are deemed to be "covered expatriates" under the Internal Revenue Code. A covered expatriate is an individual who has a net worth of over $2 million, has an average annual net income tax liability of over $165,000 for the past five years, or has failed to certify under penalty of perjury that they have met all of their U.S. tax obligations for the past five years. Covered expatriates are subject to an exit tax on their worldwide assets when they leave the United States.
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France: France has an exit tax for individuals who have lived in the country for at least six of the past 10 years and are leaving the country permanently. The exit tax is imposed on the individual's worldwide assets, including real estate, financial assets, and business interests. There are exclusions and exemptions available, including for primary residences and certain types of financial assets.
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Germany: Germany has an exit tax for individuals who have lived in the country for at least eight of the past 10 years and are leaving the country permanently. The exit tax is imposed on the individual's worldwide assets, including real estate, financial assets, and business interests. There are exclusions and exemptions available, including for primary residences and certain types of financial assets.
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Switzerland: Switzerland has an exit tax for individuals who have lived in the country for at least 10 years and are leaving the country permanently. The exit tax is imposed on the individual's worldwide assets, including real estate, financial assets, and business interests. There are exclusions and exemptions available, including for primary residences and certain types of financial assets.
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Canada: Canada does not have an exit tax for individuals who are leaving the country permanently. However, it does have a deemed disposition rule that requires individuals to pay tax on any capital gains realized on their worldwide assets when they become non-residents of Canada. This includes real estate, financial assets, and business interests. There are exclusions and exemptions available, including for primary residences and certain types of financial assets.
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