Exit Tax When Moving Abroad: Why Portfolios Now Count Too

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A packed suitcase and a laptop showing a portfolio chart in an apartment above the city

Exit tax when moving abroad can tax gains you've never realised. How the rules work worldwide, and why fund and ETF portfolios are now caught.

Key takeaways

  • Several countries treat your assets as sold on the day you leave and tax gains you have never cashed.
  • Since January 2025, Germany's exit tax also reaches private ETF and fund holdings with acquisition costs of €500,000 or more per fund, for anyone who has been tax resident in Germany for seven of the last twelve years.
  • Thresholds, deferral options and return rules differ sharply between countries, and a move within the EU is not automatically tax-free.
  • Deferral often depends on annual reporting, and a missed deadline can make the full tax due at once.
  • Preparation has to start well before the move, because most options disappear once residence has changed.

For years, the received wisdom among internationally mobile Germans was that exit tax is a problem for people who own a GmbH, and that anyone whose wealth sat in ETFs could relocate whenever they liked. Since 1 January 2025, that's no longer true. Germany now applies its exit tax to investment fund units as well, so an investor who has fed a savings plan for fifteen or twenty years can receive a tax assessment on leaving without having sold a single unit.

Germany is the latest example rather than an exception. An exit tax when moving abroad exists in some form in Austria, France, Spain, the Netherlands, Norway, Canada and Australia, and the United States has its own version for people who give up citizenship or a long-held green card. This article explains the principle, compares how these nine countries apply it as of October 2026, and looks at why the rules keep getting stricter and where people most often go wrong.

Does exit tax only affect business owners?

No. Owners of significant company stakes remain the core group, but several countries reach well beyond them, and Germany's extension to investment funds shows where things are heading.

The German rule now has two layers. Under section 6 of the Foreign Tax Act (Außensteuergesetz), anyone who has been fully tax resident in Germany for at least seven of the last twelve years and has held at least 1% of a company at any time in the last five years is treated as having sold those shares at market value when they give up German residence. The Annual Tax Act 2024 added a parallel rule to the Investment Tax Act for privately held fund units, including ordinary ETFs, equity funds and bond funds. It applies to departures from 1 January 2025 and uses the same seven-of-twelve-years residence test as section 6, so someone who moved to Germany recently falls outside it however large the holding. Beyond that condition, it takes either at least 1% of a fund's units held in the five years before you leave, or units in a single fund that cost at least €500,000. Practitioners generally read the €500,000 test as applying fund by fund rather than across your whole portfolio. Units in special investment funds (Spezial-Investmentfonds) are caught regardless of size.

What people tend to miss is that the threshold looks at what you paid, not at what the units are worth today. A savings plan of €2,500 a month, kept up for 17 years, adds up to €510,000 of acquisition costs in a single fund. Plenty of high-earning professionals reach that figure without ever thinking of themselves as large investors.

What is an exit tax, and how does it work when you move abroad?

An exit tax treats certain assets as if you had sold them on the day you stop being tax resident and taxes the gain built up until then, even though nothing has been sold and no money has come in. Tax lawyers call this a deemed disposal.

The state's reasoning is simple enough. The gain grew while you lived there, but once you're resident elsewhere, a double tax treaty will usually hand the right to tax a future sale to your new country. If that country is the UAE, which doesn't levy personal income tax on investment gains, your former home would never collect anything on growth that happened on its watch, so it takes its share before you go.

For you, the result is a tax bill without the cash that would normally pay it. A simple illustration based on Germany's fund rules shows the scale (figures rounded, church tax and some technical adjustments left out). Say you hold a global equity ETF that cost €510,000 and is worth €1.2 million when you give up German residence. The unrealised gain is €690,000, of which 70% is taxable after the partial exemption for equity funds, leaving €483,000. At the 25% flat rate plus solidarity surcharge, 26.375% in total, the assessment comes to roughly €127,000. Small lump sums taxed in earlier years (the Vorabpauschale) bring it down a little, while the portfolio itself stays fully invested.

Most countries let you spread or defer payment, and some cancel the tax if you come back, but each of these reliefs comes with its own conditions.

Which countries have an exit tax, and what do they tax?

Germany, Austria, France, Spain, the Netherlands, Norway, Canada and Australia all tax some form of unrealised gain when you leave, while the United States does so only when citizenship or long-term green card status ends. The table summarises the main features as of October 2026. It is a simplification, and each regime has exceptions that can change the result in an individual case.

Country What is taxed Main thresholds Residence condition Payment If you return
Germany Company shares and, since 2025, privately held fund units Shares: 1% stake. Funds: 1% of a fund or €500,000 acquisition cost per fund; both 1% tests look back five years 7 of the last 12 years On application, 7 annual instalments, usually against security Tax lapses on return within 7 years (extendable to 12) if conditions are met
Austria Most private capital assets, including shares, funds and crypto acquired after the relevant cut-off dates No size threshold No minimum period EU/EEA moves: assessment deferred on application until sale. Other countries: due immediately No return rule as such; the deferred tax is only assessed if you sell
Netherlands Substantial company interests (generally 5% or more), pension and annuity claims 5% stake No minimum period Protective assessment, collected on sale or dividends; security may be required outside the EU For shares, no time limit on the claim for departures since September 2015
France Shares and securities, earn-out receivables Holdings above €800,000, or at least 50% of a company's profits 6 of the last 10 years Automatic deferral for the EU and states with assistance agreements; elsewhere on request with guarantees Relief if still held after 2 years (5 above €2.57m), or on return
Spain Shares and units in companies and investment funds Above €4m, or above €1m with a stake over 25% 10 of the last 15 years Deferral for EU/EEA moves; on request for certain work moves or treaty countries Cancelled on return within the deferral period, still holding
Norway Shares, fund units, share savings accounts, options, endowment insurance Gains above NOK 3m On ending Norwegian tax residence Upfront, 12 interest-free instalments, or 12-year deferral with interest; 70% of dividends go towards the tax Waived and refunded on return within 12 years, still holding
Canada Most worldwide property, except e.g. Canadian real estate and registered plans No size threshold; reporting above C$25,000 Short-term residents partly exempt Interest-free deferral until sale; security above C$16,500 of federal tax Can be unwound on return, still owning the assets
Australia Assets that aren't "taxable Australian property", such as foreign and most listed shares No size threshold Short-term residents partly exempt Option to defer until a later sale or return If deferred, gain worked out on sale or return
United States Worldwide assets, marked to market Net worth of $2m+, average tax above $211,000, or a compliance failure; $910,000 of gain excluded (2026) Citizens; green card holders in 8 of the last 15 years Election to defer, with security and interest Not applicable

Rates vary just as much. German fund gains face 26.375% before church tax, Austria taxes capital gains at a special rate of 27.5%, France charges 31.4% in 2026 including social charges, Spain's savings rates go up to 30%, and Norway's rate on share gains is 37.84%.

Exit tax on shares versus exit tax on ETFs and funds

The older exit taxes were built around company owners. Germany's section 6, the Dutch substantial-interest rule and the French regime all assume that someone with a meaningful stake in a business might sell it soon after moving, and in the Netherlands that is still the only target.

Other countries never drew that line. Austria taxes practically all capital assets acquired since its 2011 and 2012 reforms, whatever their size, and Norway explicitly lists fund units, share savings accounts and endowment insurance. Spain has included collective investment funds since 2015, though its high thresholds mean it mostly reaches larger fortunes. Germany's 2025 extension moves it towards this second group, with the stated aim of closing a route in which founders placed company stakes inside funds to sidestep section 6.

Departure tax in Canada and Australia: when almost everything counts

Canada's departure tax is the broadest regime in this comparison. When you stop being resident, you're treated as having sold most of your property at fair market value, wherever it's held. Canadian real estate, certain business property and registered plans such as RRSPs and TFSAs are excluded, but a portfolio of foreign shares or crypto assets is not, and neither is privately held physical gold. Germany's exit tax, by contrast, doesn't touch gold at all, which shows how much depends on the country you leave rather than on the asset. Canada also expects a list of your property if it's worth more than C$25,000 in total, and late filing costs C$25 a day up to C$2,500, even if no tax ends up being due.

Australia applies a similar deemed disposal but lets you elect to keep the assets inside its tax net instead. The gain is then calculated when you sell or become resident again, so any rise or fall after departure counts too.

The US: tax on giving up citizenship or a green card

Moving abroad as a US citizen triggers nothing, because the US taxes its citizens wherever they live. The expatriation tax applies when you renounce citizenship, or give up a green card held in at least eight of the last fifteen years, and count as a "covered expatriate". For 2026 that means a net worth of $2 million or more, average annual US income tax above $211,000 over the previous five years, or failing to certify five years of tax compliance. Your worldwide assets are then treated as sold the day before expatriation, with the first $910,000 of gain excluded. The IRS adjusts both figures for inflation every year.

Why are more countries tightening exit taxes?

Governments are tightening them mainly because wealthy people have become more mobile, and because destinations with no capital gains tax make losing future taxing rights more costly for the country left behind.

Recent changes all point the same way. Since 2020, EU rules have required member states to apply exit taxes to companies moving assets or their tax residence abroad, with payment spread over five years. Germany abolished its unlimited, interest-free deferral for moves within the EU and EEA from January 2022 and added fund units in 2025. Norway stopped letting exit tax lapse after five years abroad for departures from late November 2022, and from March 2024 it capped deferral at twelve years and began diverting 70% of dividends towards the outstanding amount. The Netherlands stopped forgiving its claims on company shares for anyone leaving after September 2015, and Austria's Budget Measures Act 2026 has added an annual reporting duty for larger deferred cases.

The legislative material keeps returning to two motives: protecting the domestic tax base and closing gaps that advisers had been using. It's reasonable to expect these rules to become stricter over time, not looser.

What are the most expensive exit tax mistakes?

The costliest mistakes concern timing and information rather than tax rates, and by the time most people notice them, the decisive date has passed.

Moving first and checking later

Exit tax is triggered by leaving, which in most countries means giving up your home there or moving your habitual residence and centre of life elsewhere. From that moment the deemed sale has happened. Anything that depends on preparation, from adjusting the timing to arranging security for a deferral, needs to be in place beforehand, and much of it takes months.

Underestimating what a company or portfolio is worth

Listed ETFs have a price on every trading day. A private company doesn't, and the tax office's figure can be far higher than the founder's own sense of its value. Germany's simplified valuation method for unlisted shares, for example, multiplies average adjusted annual profit by a factor of 13.75, so a consultancy with €400,000 of adjusted profit can be valued at around €5.5 million on paper, with the gain taxed against that figure and no buyer in sight. Challenging a valuation is possible, but expensive once the assessment is out.

Assuming a move within the EU is always tax-free

European law limits how harshly member states can treat moves within the EU, and many people conclude that relocating from Germany to Cyprus or from Austria to Portugal triggers nothing. That's only partly right. Austria still defers on request for EU and EEA moves, and France and Spain offer deferral too. Germany, however, has treated EU and non-EU moves alike since 2022: the tax is due, and you can apply to pay it in seven annual instalments, usually against security. Some commentators doubt this is fully compatible with EU law, but it is the rule tax offices currently apply.

Losing deferral by missing reporting duties

Deferral is rarely unconditional. Germany expects you to confirm your address and continued ownership every year by 31 July, and if you don't, the outstanding instalments fall due within a month. In Austria, deferrals decided after 30 June 2026 where the untaxed gain is above €100,000 need annual proof that nothing has been sold, and in those newer cases a missed report counts as a triggering event in itself. Older Austrian deferrals above that amount need one-off proof by 31 December 2026. France can make deferred tax payable at once after a missed filing. These deadlines arrive years after the move, often when the original adviser is no longer involved, which is why they slip.

How should you prepare for exit tax before moving abroad?

Preparation starts with a valuation and a timeline, then checks the rules of both countries and settles the order of steps, ideally a year or more before departure and always with qualified tax advice in each country involved.

The valuation tells you whether there's an issue at all. For a portfolio, that means listing acquisition costs per fund as well as current values. For a company, it means a realistic estimate using the method the tax authority is likely to apply.

The timeline matters because most regimes count years of residence. Germany looks at seven of the last twelve, France at six of ten, Spain at ten of fifteen. Someone who arrived fairly recently may still fall outside the rule, and anyone planning to return should know which return window applies before leaving.

The destination country is easy to forget. It decides whether the value you were taxed on becomes your new purchase price, whether it taxes a later sale itself, and how the treaty between the two countries splits the rights.

The order of steps is where company, residency and tax decisions meet. When you give up your home, where your company is managed from, when holdings change and when a new residence permit takes effect can each shift the outcome. Legal and structural options exist in many countries, but whether any of them fits depends entirely on your circumstances, and they generally have to be planned and implemented well before you move. That's why at GWS we treat company structure, residency and tax residency as one connected plan and coordinate with qualified tax partners before a departure date is set.

Who this is for, and who it isn't for

This is most relevant if you hold 1% or more of a company, have large acquisition costs in individual funds, or have sizeable investments in a country with a broad regime such as Austria, Canada or Norway, and you're thinking about moving in the next few years. It also concerns you if you've already left and are deferring an exit tax, because your reporting duties may still be running.

It matters less if your wealth sits mainly in your home, cash or pension plans that your country excludes, or if your investments are clearly below the local thresholds. US citizens moving abroad without renouncing aren't affected by the expatriation tax, although their US filing obligations continue, and recent arrivals may be partly or fully exempt in some countries.

The key decision points

Exit taxes now reach well beyond business owners, and in Germany a long-running ETF savings plan can be enough. The first question is whether the country you're leaving taxes the assets you hold, at their current values, given how long you've lived there. If it does, you need to know how the tax would be paid, what reporting it would require in the years afterwards, and whether returning would cancel it. Almost all of the value of preparation lies in the period before you leave.

FAQ

Is there an exit tax on ETFs?

In some countries, yes. Germany has covered privately held fund units, including ETFs, since 1 January 2025 if you have held at least 1% of a fund within the last five years or your units cost €500,000 or more. Austria, Norway, Canada and Australia include fund holdings under their general rules.

Do I have to pay exit tax if I move to Dubai?

The UAE doesn't levy an exit tax or personal income tax on investment gains. Any exit tax would come from the country you're leaving, depending on its thresholds and your residence history there.

Is a move within the EU free of exit tax?

Not automatically. Austria, France and Spain offer deferral for EU and EEA moves, while Germany has treated them like any other move since 2022 and allows payment in seven annual instalments.

What is a departure tax?

It's another name for an exit tax, used particularly in Canada, where leaving is treated as a sale of most of your property at market value unless you elect to defer the tax.

Does exit tax disappear if I move back?

In some countries, under conditions. Germany cancels it on return within seven years (extendable to twelve), Norway within twelve, and Canada lets you unwind the deemed sale if you still own the assets. Austria has no return rule of that kind, although a deferred Austrian claim is only assessed once you sell.

Want to know more?

If you're considering a move and would like to understand how exit taxes could affect your company or portfolio, you're welcome to book a call with our team.

Sources

About Global Wealth Strategy

Global Wealth Strategy (GWS) is an independent international advisory firm based at the Dubai World Trade Centre. Founded in Germany in 2018 and now headquartered in Dubai, GWS helps entrepreneurs, investors, high-net-worth individuals and families bring structure to their international lives: from company structuring and banking to asset protection, real estate, residency and succession. Every engagement starts with a clear roadmap across the areas that matter for the client, and GWS can implement it end to end. Our advisory is fee-based and independent, and we work alongside specialist legal and tax partners to turn complex cross-border situations into clear, coordinated strategies.

Disclaimer: This article is for general information only and does not constitute legal, tax or financial advice. Rules and requirements change, and outcomes depend on individual circumstances. Please seek qualified professional advice before acting.

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