France - 2026 Finance Bill: The National Assembly votes for a major reform of the exit tax and French expatriates
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2026 Finance Bill: the National Assembly adopts a key amendment on the Exit Tax
Among the debates surrounding the 2026 Finance Bill, one amendment stands out in particular: amendment No. I-807, which proposes an in-depth reform of the “Exit Tax” regime. Behind this technical term lies a central issue: France’s ability to tax the unrealised capital gains of taxpayers who leave its tax territory.
What is the Exit Tax?
The Exit Tax is a mechanism provided for in Article 167 bis of the French General Tax Code. It allows the tax authorities to tax unrealised capital gains on shares held by a taxpayer when that taxpayer transfers their tax domicile outside France.
The idea is simple: to prevent a taxpayer who holds securities worth more than €800,000 or (alternative criterion) shares in one or more companies representing more than 50% of the share capital from leaving France just before realising a significant capital gain in a country with more favourable taxation.
In practice, the scheme mainly applies to business owners, investors and significant shareholders.
What current law provides
Since the 2019 Finance Act, the Exit Tax has been considerably relaxed.
The reform shortened the period during which the tax can apply: the tax monitoring period was reduced from 15 years to just 2 or 5 years, depending on the value of the taxpayer’s assets (below or above €2,570,000). In practical terms, if a taxpayer leaves France and keeps their shares for two years without selling them, the tax is no longer due.
This change was presented as a measure to boost attractiveness, but it also significantly reduced the effectiveness of the scheme. In most cases, the capital gain only becomes taxable if the sale takes place within two years of departure, which means the tax is rarely collected.
What the amendment would change
Amendment I-807 essentially aims to restore the mechanism to its initial, much stricter version. Several major modifications are proposed:
Re-establishment of the 15-year period: France could once again tax unrealized capital gains over a long period after the taxpayer's departure.
Strengthening the conditions for the deferral of payment: the rules would be tightened, with more requirements depending on the destination country.
Regulation of restructuring operations (contributions, exchanges, mergers) in order to avoid certain schemes allowing tax avoidance.
The stated objective is clear: to fight more effectively against departures motivated by tax optimization and to reduce the "blind spots" of the current system.
What are the concrete impacts?
For the taxpayers concerned, the amendment would mark a return to a significantly more restrictive regime. The 15-year monitoring period means that the tax could become payable again if the shares are sold within this interval, even long after departure. This represents a significant financial risk, particularly for entrepreneurs whose share value can fluctuate significantly over time.
Reporting requirements would also be strengthened: maintaining precise information on the shares for such a long period exposes them to risks of errors or litigation. Finally, restructuring operations could become tax-sensitive, as some could call into question the deferral of payment.
An example to understand
Let us take the case of a French entrepreneur who holds 2 million euros in unrealized capital gains on his company's shares and moves to Canada.
Today, if he does not sell his shares within two years of his departure, the tax is due.
With the amendment, this sword of Damocles would remain suspended for 15 years.
Why this step backward?
For the authors of the amendment, the 2019 reform stripped the Exit tax of its substance. Reducing the timeframe to 15 years would, according to them, allow a return to a truly deterrent mechanism adapted to current economic realities, where the valuation of a company can occur long after the departure of its founder.
Conclusion
Update : amendment no. I-807 was ultimately not kept in the final text. The 2026 Finance Act, published in the Journal officiel on 20 February 2026, does not change the exit tax time limits. The regime resulting from the 2019 reform therefore still applies, with relief after 2 years, or 5 years where the shares exceed €2.57 million. The debate shows, however, that the issue may come back in future finance bills.
The adoption in the first reading of amendment no. I-807 marks a major turning point in international taxation. The proposed measure is clearly stricter and aims to make the exit tax fully operational, after several years during which its effectiveness had been reduced.
If such a measure were adopted in the future, the exit tax would once again become a major instrument in the fight against international tax optimization, but also a decisive factor to be taken into account for any entrepreneur or investor considering expatriation.
Read also: 2027 Finance Bill: exit tax, gifts of shares and contribution-sale · Dividends paid to French expats: withholding tax from 2026
