The decision to move is rarely about a single reason. However, there is often a trigger and, increasingly, for many high-net-worth individuals (HNWIs), it’s taxation. Whether or not your relocation plans are shaped by taxation, you should understand one key concept: exit taxes.
In simple terms, exit taxes allow a country to tax gains that were built up while you were in its tax system, even if you haven’t sold your assets. For HNWIs with significant shareholdings, investment portfolios, or privately held businesses, a change of residence can become a major tax event that must be carefully navigated.
This article explores exit taxes from a practical, high-level perspective. We’ll cover:
Throughout, we focus on what you can control: understanding the landscape, asking informed questions of your financial and tax advisors, and building the documentation that stands up to scrutiny. While we’re not giving you legal or tax advice, the information below should help you have more explicit, earlier conversations with your professional team.
Exit taxes are levied when a person or business leaves a country’s tax system. This typically happens by changing residency, emigrating, or moving assets abroad. Their purpose is simple: to tax unrealised gains that accrued while the taxpayer was resident. However, implementation can get tricky and depends on the specific tax jurisdiction in question.
And so, because thresholds, exemptions, and scope vary widely, anyone considering emigration or giving up residency or citizenship should obtain tailored professional advice.
Historically, exit taxes applied mainly to companies that migrated their tax residence or transferred business assets (property, equipment, intellectual property) abroad.
In recent years, however, jurisdictions have increasingly introduced individual exit taxes, typically taxing:
These rules often apply only above certain wealth levels or lengths of residence. Some countries still have no individual exit tax at all.
Exit taxes are not new, but their modern structure has evolved over the past century.
Mid-20th century – Corporate focus
Governments first developed corporate “toll charges” to stop companies from shifting appreciated assets offshore without paying tax. These early rules laid the foundation for later exit tax frameworks.
1960s onward – The emergence of individual expatriation rules
The United States introduced its first expatriation regime in 1966 under the Foreign Investors Tax Act, targeting individuals who left the US for tax-motivated reasons. Congress refined and strengthened these rules over the following decades.
Around the same time, countries such as Canada and Germany established their own departure or exit tax regimes for individuals in the early 1970s, taxing unrealised gains when residents emigrated.
2000s onward – Global spread and tightening
In the 2000s and 2010s, individual exit taxes became more common as global mobility increased and governments focused on taxing wealth where it is created. Many high-tax jurisdictions introduced or expanded exit tax rules for substantial shareholdings and private businesses.
At the same time, the EU Anti-Tax Avoidance Directive (ATAD), adopted in 2016, required all EU Member States to implement corporate exit tax rules, further embedding the principle that latent gains should not migrate untaxed.
| Did you know? The US HEART Act covered expatriation and imposed a mark-to-market tax on unrealised gains above a threshold, and it has strongly influenced individual exit tax designs. |
As mentioned, from the 2000s onwards, individual exit taxes became far more common, driven by:
Many countries strengthened individual exit tax regimes during the 2000s–2020s. The global trend has clearly shifted from purely corporate exit taxes to including rules that covered individuals.
Individual exit taxes now exist in many countries, particularly those concerned about losing wealthy taxpayers with large unrealised gains.
Most systems fall into two broad models:
In reality, many use a mixture of the two.
Countries without individual exit taxes include the UK, Italy, Monaco, and the UAE. But even in these countries, discussions around introducing exit taxes have been ongoing. Furthermore, they may have hidden or very specific rules where extra taxes may be imposed upon leaving.
The end of your tax residency in a specific tax jurisdiction is typically the trigger point for exit taxes. The rules apply from when an individual ceases to be a tax resident or transfers certain assets abroad.
Most regimes require:
If you continue to be considered a tax resident, you’ll probably need to keep paying taxes. And if your tax residency ends, well, the exit taxes may trigger depending on the jurisdiction.
As global mobility increases, exit taxes are becoming a key factor in relocation planning. Speaking with a tax advisor — ideally one familiar with cross-border mobility — is essential. Below are the core points to consider.
Three core trigger points matter:
Understanding triggers early gives you more control over timing and structure.
A comprehensive review typically includes:
Some jurisdictions may allow:
Even a well-designed plan can fail if you cannot prove when you left.
Authorities now increasingly rely on:
Tribunals have criticised reconstructed spreadsheets and partial receipts as inadequate when determining tax residency. For HNWIs, especially those leaving high-tax or sensitive jurisdictions, it’s fundamental to maintain:
Platforms like Daysium help create a defensible audit trail by automatically capturing day counts, applying rule-sets designed with your advisor, and storing contemporaneous evidence.
Yes. Exit taxes are widely recognised in international tax law. They are used by many countries to prevent untaxed gains from leaving their tax base. Their application varies significantly by jurisdiction.
The UK does not currently impose an individual exit tax on unrealised gains when someone leaves the country. However, certain UK tax liabilities can still arise after departure, and HMRC remains focused on residency evidence.
Exit taxes generally apply to individuals who cease to be tax resident in a country and hold assets with significant unrealised gains. Countries also often impose exit taxes on corporations that move assets, functions, or tax residence abroad. The precise triggers and thresholds vary by jurisdiction.
Specialist cross-border tax advisors typically handle expatriation and exit tax planning. Look for professionals with experience in international mobility, treaty interpretation, and high-net-worth tax structuring. Daysium Partners include advisors who regularly support clients navigating residency changes and exit-related risks.
Exit taxes are only becoming more prominent. The direction is clear: increasing scrutiny, more focus on unrealised gains, and higher expectations for detailed residency evidence.
Two things matter:
A good starting point is a tax residency risk assessment. This helps you and your advisors understand how different authorities may view your position today, where risks may arise, and whether your tax residency evidence is strong enough.
From there, using an automated tool like Daysium ensures your day counts and supporting evidence are captured accurately and consistently long before any questions arise.
This won’t replace tailored tax advice, but with clear insight into exit taxes, a solid understanding of your residency risk, and strong data behind you, you can make relocation decisions with confidence and control.
Curious about your tax residency risk score? Take our 5-minute assessment today.
Created in partnership with industry experts, tackle the complex challenges of day counting and tax record-keeping.
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