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Transcript

The Final Shakedown: 8 Countries That Tax You for Leaving · IMI Podcasts

• 0:00
  SPEAKER_00: Most people spend months researching where to move.
• 0:03
  SPEAKER_00: They compare tax regimes, residency programs, and quality of life.
• 0:07
  SPEAKER_00: They rarely ask the question that should come first.
• 0:10
  SPEAKER_00: What will my current country charge me for leaving?
• 0:14
  SPEAKER_00: Exit taxes apply to unrealized capital gains when you change tax residency or give up citizenship.
• 0:21
  SPEAKER_00: The government treats your worldwide assets as if you sold them the day before you left, then taxes the paper profit.
• 0:29
  SPEAKER_00: You have not sold anything.
• 0:30
  SPEAKER_00: You may not have any cash to pay the bill, the tax comes due anyway.
• 0:35
  SPEAKER_00: For anyone building a global mobility portfolio or considering a move to a territorial tax jurisdiction, exit taxes represent the hidden cost of the departure itself.
• 0:46
  SPEAKER_00: They can erode years of careful tax planning in a single filing.
• 0:51
  SPEAKER_00: The mechanics are consistent across jurisdictions, even where the details vary.
• 0:56
  SPEAKER_00: On the day you cease to be a tax resident, or in the case of the United States renounced citizenship, the government performs a deemed disposition of your assets, your stocks, business interests, real estate holdings, and in some countries retirement accounts are valued at fair market value.
• 1:13
  SPEAKER_00: The difference between that value and your original cost basis becomes a taxable capital gain.
• 1:20
  SPEAKER_00: You are taxed on wealth you have not yet realized, at rates that range from 15% up to 42% depending on the country.
• 1:29
  SPEAKER_00: Some governments allow deferral, others demand immediate payment or collateral, a few will pursue you for years after you leave.
• 1:37
  SPEAKER_00: The countries that impose exit taxes fall into two broad categories.
• 1:41
  SPEAKER_00: The first group ties the tax to a change in tax residency.
• 1:45
  SPEAKER_00: If you move and are no longer a resident for domestic tax purposes, the exit tax applies.
• 1:51
  SPEAKER_00: Canada, Australia, Norway, and most of Europe operate on this model.
• 1:55
  SPEAKER_00: The second group, limited in practice to the United States, ties the tax to citizenship itself.
• 2:02
  SPEAKER_00: Americans cannot escape their worldwide tax obligations by moving abroad.
• 2:06
  SPEAKER_00: The only way out is to renounce, and that triggers an exit tax of its own.
• 2:12
  SPEAKER_00: The United States is one of only two countries in the world, alongside Eritrea, that taxes based on citizenship rather than residency.
• 2:21
  SPEAKER_00: An American living in the UAE, where no personal income tax exists, still owes the IRS.
• 2:28
  SPEAKER_00: Moving to a low-tax country does not solve the problem, only renunciation does.
• 2:34
  SPEAKER_00: When a U.S.
• 2:35
  SPEAKER_00: citizen renounces or a long-term green card holder, eight of the last 15 years, abandons their status, the IRS applies a mark-to-market exit tax to worldwide assets.
• 2:47
  SPEAKER_00: All property is treated as sold at fair market value the day before expatriation.
• 2:53
  SPEAKER_00: The tax only applies to covered expatriates, a classification triggered by meeting any one of three tests, a net worth of$2 million or more, an average annual federal income tax liability exceeding$211,000 over the prior five years, for 2026, or a failure to certify five years of full tax compliance on Form 8854.
• 3:19
  SPEAKER_00: A one-time exclusion shields the first$910,000 of net unrealized gains in 2026.
• 3:27
  SPEAKER_00: Gains above that threshold are taxed at standard capital gains rates.
• 3:32
  SPEAKER_00: Retirement accounts receive separate, arguably harsher treatment.
• 3:37
  SPEAKER_00: IRAs are treated as fully distributed the day before expatriation, triggering immediate ordinary income tax on the entire balance.
• 3:46
  SPEAKER_00: The consequences extend beyond the departing individual.
• 3:49
  SPEAKER_00: U.S.
• 3:50
  SPEAKER_00: citizens or residents who receive gifts or inheritances from a covered expatriate face a 40% inheritance tax on amounts above the annual exclusion.
• 3:59
  SPEAKER_00: If a parent renounces and their child remains American, the child could lose nearly half of any future inheritance.
• 4:07
  SPEAKER_00: For those who do renounce, the intersection of exit tax with foreign tax rules can produce double taxation.
• 4:14
  SPEAKER_00: An American who owns property in Portugal, for example, will pay U.S.
• 4:18
  SPEAKER_00: exit tax on the deemed sale.
• 4:21
  SPEAKER_00: When they eventually sell the property, Portugal taxes the full gain from the original purchase price.
• 4:27
  SPEAKER_00: The U.S.
• 4:28
  SPEAKER_00: provides a basis step up for American tax purposes, but Portugal does not recognize the hypothetical sale.
• 4:35
  SPEAKER_00: This combination of citizenship-based taxation and a punitive exit regime is why few American millionaires actually leave, even when domestic tax rates rise.
• 4:46
  SPEAKER_00: The cost of exit is simply too high for most.
• 4:49
  SPEAKER_00: Canada's departure tax applies to any individual who ceases to be a Canadian tax resident, regardless of citizenship.
• 4:57
  SPEAKER_00: The government deems you to have disposed of most worldwide assets at fair market value immediately before departure.
• 5:04
  SPEAKER_00: The scope is wide.
• 5:06
  SPEAKER_00: Stocks, mutual funds, cryptocurrency, foreign real estate, partnership interests, and private company shares are all subject to the deemed disposition.
• 5:16
  SPEAKER_00: Canadian Real Property, registered retirement accounts, RRSPs, RRIFS, TFSAs, and your principal residents are excluded.
• 5:28
  SPEAKER_00: Capital gains are taxed at a 50% inclusion rate, meaning half of any gain is added to taxable income and taxed at your marginal rate.
• 5:38
  SPEAKER_00: A 2024 federal budget proposal to raise the inclusion rate to 66.67% for gains above$250,000 was deferred in January 2025, then canceled entirely by Prime Minister Mark Carney on March 21, 2025.
• 5:58
  SPEAKER_00: The inclusion rate remains a flat 50% for all capital gains.
• 6:02
  SPEAKER_00: The lifetime capital gains exemption, increased to$1,250,000 for qualifying small business shares and farming or fishing property was retained.
• 6:14
  SPEAKER_00: For a business owner holding private company shares that have appreciated by several million dollars, the departure tax bill can still run into seven figures.
• 6:23
  SPEAKER_00: Deferral is available.
• 6:25
  SPEAKER_00: You can elect to postpone payment until you actually sell the assets by filing Form T1244.
• 6:32
  SPEAKER_00: If the deferred federal tax exceeds$16,500, you must provide adequate security to the Canada Revenue Agency, typically a letter of credit or a charge on Canadian assets.
• 6:45
  SPEAKER_00: If you own property valued above$25,000 at the time of departure, you must also file Form T1161 disclosing all properties.
• 6:54
  SPEAKER_00: One advantage of the Canadian system: if you return and re-establish Canadian residency, you can elect to unwind the departure tax on assets you still own, effectively canceling the deemed disposition.
• 7:07
  SPEAKER_00: Japan's exit tax, introduced in July 2015 for Japanese nationals and effective for foreign nationals from July 2020, applies to residents who hold financial assets with a combined market value of 100 million yen, approximately$660,000 or more, and who have lived in Japan for more than five of the preceding 10 years.
• 7:32
  SPEAKER_00: The threshold is low by global standards.
• 7:35
  SPEAKER_00: While the US triggers its exit tax at a net worth of$2 million, and most European countries focus on business owners, Japan's 100 million yen covers anyone with a moderately sized equity portfolio, including expats who accumulated RSUs and stock options during their time in the country.
• 7:55
  SPEAKER_00: The tax rate is 15.315%, combining 15% national income tax with a 0.315% reconstruction surtax.
• 8:07
  SPEAKER_00: A 5% local inhabitants tax may also apply, bringing the combined effective rate to approximately 20.315%.
• 8:16
  SPEAKER_00: The deemed sale covers securities, ETFs, mutual funds, bonds, options, and derivatives.
• 8:23
  SPEAKER_00: Cash, bank deposits, real estate, and cryptocurrency are excluded from both the asset threshold and the taxable base.
• 8:31
  SPEAKER_00: Foreign nationals on Table I work visas, including engineer slash specialist in humanities, intracompany transferee and business manager categories, are generally excluded from the residency count.
• 8:43
  SPEAKER_00: Those on Table II visas, including permanent residents and spouses of Japanese nationals, are not.
• 8:50
  SPEAKER_00: The distinction catches many long-term expats who upgraded to permanent residency without considering the exit tax implications.
• 8:59
  SPEAKER_00: Deferral is available for up to ten years, an initial five-year period plus a five-year extension, but requires appointing a tax agent in Japan and posting collateral equal to the tax liability.
• 9:11
  SPEAKER_00: If you return to Japan within the deferral period, the tax is cancelled on assets you still hold.
• 9:18
  SPEAKER_00: Norway has overhauled its exit tax rules repeatedly since 2022, each time making them stricter.
• 9:25
  SPEAKER_00: The current framework, shaped by the 2025 national budget, is among the most aggressive in Europe.
• 9:32
  SPEAKER_00: When a Norwegian tax resident relocates abroad, exit tax applies to latent capital gains on shares, share savings accounts, and endowment insurance.
• 9:44
  SPEAKER_00: A basic allowance of 3 million Norwegian kroner, approximately$280,000, shields smaller portfolios.
• 9:53
  SPEAKER_00: Gains above this threshold are taxed at an effective rate of roughly 37.84%, calculated by applying Norway's 22% income tax rate to a gain, multiplied by a 1.72 adjustment factor.
• 10:09
  SPEAKER_00: The 2025 changes eliminated what the Norwegian government described as a fundamental loophole.
• 10:16
  SPEAKER_00: Previously, a departing taxpayer could defer the tax indefinitely and avoid it entirely if they held their shares for long enough.
• 10:25
  SPEAKER_00: Under the revised rules, taxpayers have three options immediate payment in full on the date of departure, twelve interest-free annual installments, or a single lump sum payment at the end of the 12-year deferral period with interest.
• 10:40
  SPEAKER_00: If the taxpayer returns to Norway within 12 years, the tax is cancelled on assets still owned at the time of return.
• 10:48
  SPEAKER_00: If they die during the deferral period, heirs who are Norwegian residents are not liable, heirs living abroad inherit the tax obligation.
• 10:57
  SPEAKER_00: Another critical change dividends received while living outside Norway now accelerate exit tax repayment.
• 11:04
  SPEAKER_00: 70% of any distribution must go toward paying down the outstanding exit tax bill.
• 11:10
  SPEAKER_00: This measure closed a strategy where departing Norwegians would strip value from their companies through dividends while abroad, then return and sell the depleted shares at a lower value.
• 11:22
  SPEAKER_00: Norway also eliminated the ability to credit foreign taxes paid on the actual sale against the Norwegian exit tax.
• 11:30
  SPEAKER_00: Any relief from double taxation must now be claimed in the new country of residence.
• 11:35
  SPEAKER_00: The EFTA Surveillance Authority sent a formal request for information to Norway's Ministry of Finance in june 2025, opening an examination into whether the exit tax rules comply with EEA free movement provisions.
• 11:51
  SPEAKER_00: This is a preliminary step, not a formal proceeding, but the outcome could force changes to the regime.
• 11:58
  SPEAKER_00: France imposes an exit tax on individuals who have been tax residents for at least six of the preceding ten years, and who hold shares or financial instruments worth more than 800,000 euros, or who own more than 50% of a company.
• 12:13
  SPEAKER_00: The tax rate is 30%, combining a 12.8% flat income tax with 17.2% in social charges.
• 12:23
  SPEAKER_00: Automatic deferral applies for relocations within the EU or EEA and to countries with qualifying tax treaties.
• 12:32
  SPEAKER_00: For moves to non-cooperative states or countries without tax fraud prevention agreements with France, deferral is available upon request, but may require guarantees.
• 12:43
  SPEAKER_00: For departures since january first, 2019, the forgiveness rules were shortened considerably under reforms initiated during the Macron presidency.
• 12:54
  SPEAKER_00: If you retain your securities without selling for two years after departure, the exit tax is cancelled, provided the total value of taxable securities was below€2.57 million.
• 13:07
  SPEAKER_00: If the value exceeded€2.57 million, the holding period extends to five years.
• 13:14
  SPEAKER_00: The previous 15-year forgiveness period still applies to those who left France between 2014 and 2018.
• 13:22
  SPEAKER_00: Separately, France's National Assembly Finance Committee adopted an amendment in October 2025 that would have required wealthy French nationals to continue paying domestic taxes for up to 10 years after relocating to lower tax jurisdictions.
• 13:38
  SPEAKER_00: The full National Assembly voted the measure down in November 2025, falling short by a single vote.
• 13:45
  SPEAKER_00: The proposal is dead for now, but its sponsors have introduced similar measures repeatedly since 2019, and the political appetite for extended post-departure taxation in France is growing.
• 13:57
  SPEAKER_00: Denmark's exit tax, or Fra Flitterbiskotting, applies to individuals who have been taxable in Denmark for at least seven of the preceding ten years, and who hold shares with a market value of 100,000 Danish kroner, approximately$14,000 or more.
• 14:16
  SPEAKER_00: That threshold is the lowest of any jurisdiction with an exit tax, catching a far wider range of departing residents than systems designed for high net worth individuals.
• 14:27
  SPEAKER_00: Unrealised gains are taxed at Denmark's standard share income rates, 27% on gains up to$79,400 Danish kroner for 2026 and 42% above that.
• 14:41
  SPEAKER_00: For married couples, the lower bracket doubles to 158,800 Danish kroner.
• 14:47
  SPEAKER_00: Since March 2015, a general exit tax also applies to foreign real estate, speculative assets, and company interests held by departing residents.
• 14:58
  SPEAKER_00: Deferral is available.
• 15:00
  SPEAKER_00: Taxpayers can elect to be taxed on an ongoing basis as if they still resided in Denmark, reporting gains and losses annually.
• 15:08
  SPEAKER_00: Within the EU and Nordic area, no collateral is required.
• 15:12
  SPEAKER_00: Germany's exit tax targets individuals who hold at least 1% of a company's shares.
• 15:19
  SPEAKER_00: The tax authority calculates unrealized gains at market value on the day before departure.
• 15:25
  SPEAKER_00: Since 2022, Germany no longer distinguishes between EU or EEA and third country relocations for deferral purposes.
• 15:34
  SPEAKER_00: Departing shareholders can spread payment over seven interest-free annual installments, regardless of the destination country.
• 15:41
  SPEAKER_00: From 2025, the rules also cover investment fund holdings above€500,000.
• 15:48
  SPEAKER_00: The effective rate reaches up to 28.5%, including Solidarity surcharge.
• 15:55
  SPEAKER_00: Spain's exit tax, in effect from 2015, applies to individuals who have been tax residents for at least 10 of the preceding 15 years, and who hold company shares or ownership stakes exceeding 4 million euros, or a 25% stake worth more than 1 million euros.
• 16:14
  SPEAKER_00: Rates for 2025 onward range from 19% to 30%, following the addition of a new top bracket above€300,000 in gains.
• 16:25
  SPEAKER_00: EU slash EEA movers can defer for 10 years, and Spain waives the tax entirely if you return within that period.
• 16:33
  SPEAKER_00: Those who move to jurisdictions Spain classifies as tax havens, owe Spanish global income tax for up to five years after departure.
• 16:44
  SPEAKER_00: The Netherlands taxes gains on substantial interests, defined as holding 5% or more of a company's shares.
• 16:52
  SPEAKER_00: Since 2024, a two bracket system applies, 24.5% on the first 67,804 euros of gains, and 31% above that threshold.
• 17:06
  SPEAKER_00: EU slash EEA movers receive automatic interest-free deferral and pay only when they actually sell the shares.
• 17:15
  SPEAKER_00: In October 2024, the Dutch Parliament instructed the government to explore additional exit tax measures amid concerns over high net worth individuals leaving for lower tax jurisdictions.
• 17:27
  SPEAKER_00: Austria applies exit tax at 27.5% on unrealized gains across all financial assets, with no minimum threshold.
• 17:37
  SPEAKER_00: If you hold a single share that has appreciated, the gain is taxable upon departure.
• 17:42
  SPEAKER_00: For EU and EEA moves, individuals can request that the exit tax be assessed, but not payable until the assets are actually sold, an indefinite interest-free deferral for as long as you hold the securities.
• 17:56
  SPEAKER_00: For moves outside the EU slash EEA, the tax must be paid immediately.
• 18:02
  SPEAKER_00: There is no installment option for non-EU departures.
• 18:06
  SPEAKER_00: The absence of a threshold, combined with the indefinite deferral for intra-EU moves, makes Austria's regime simultaneously one of the broadest in scope and one of the least punitive for those relocating within Europe.
• 18:20
  SPEAKER_00: Australia's exit tax operates through what the Australian Taxation Office calls CGT Event Y1.
• 18:28
  SPEAKER_00: When you cease to be an Australian tax resident, you are treated as having disposed of all non-taxable Australian property at market value.
• 18:36
  SPEAKER_00: Australian real property and assets used in an Australian business are excluded.
• 18:42
  SPEAKER_00: Taxpayers can elect to defer the capital gain, but the election is all or nothing.
• 18:47
  SPEAKER_00: It applies to every eligible asset or none.
• 18:51
  SPEAKER_00: Deferred assets are then classified as taxable Australian property, meaning Australia retains the right to tax them upon eventual sale.
• 18:59
  SPEAKER_00: The 50% CGT discount, normally available for assets held longer than 12 months, is prorated for periods of Australian residency after May 8, 2012.
• 19:12
  SPEAKER_00: From January 1, 2025, the foreign resident capital gains withholding rate increased to 15% with no minimum threshold.
• 19:22
  SPEAKER_00: South Africa applies exit tax through its capital gains tax regime.
• 19:26
  SPEAKER_00: When you cease to be a South African tax resident, a deemed disposal occurs on worldwide assets at market value.
• 19:34
  SPEAKER_00: South African immovable property is excluded from the deemed disposal, as it remains within the country's tax net regardless.
• 19:42
  SPEAKER_00: The maximum effective capital gains tax rate for individuals is 18%, based on an inclusion rate of 40% applied to the top marginal income tax rate of 45%.
• 19:55
  SPEAKER_00: The United Kingdom does not currently impose an exit tax.
• 19:59
  SPEAKER_00: It abolished its non-domicile regime in April 2025 and replaced it with a foreign income and gains FIG system that taxes all residents on worldwide income from day one with a four-year exemption for new arrivals.
• 20:14
  SPEAKER_00: In late 2025, reports emerged that the UK government was considering a 20% settling up charge on gains embedded in assets at the point of departure.
• 20:26
  SPEAKER_00: The measure could raise an estimated£2 billion per year.
• 20:30
  SPEAKER_00: The Treasury has confirmed it is modeling options but has made no formal decision.
• 20:35
  SPEAKER_00: Two of the most popular destination countries for investment migration, Italy and Portugal, do not impose exit taxes.
• 20:43
  SPEAKER_00: You can leave either country without a deemed disposition of your assets.
• 20:48
  SPEAKER_00: For investors relocating from a high exit tax jurisdiction, this is a material advantage when structuring a multi-step mobility plan, as it preserves optionality for future moves without an additional tax event on the way out.
• 21:03
  SPEAKER_00: Belgium and Switzerland also do not impose exit taxes.
• 21:07
  SPEAKER_00: Sweden and Finland take a different approach.
• 21:10
  SPEAKER_00: Neither country charges a tax at the point of departure, but both maintain clawback rules that preserve the right to tax gains if you sell shares within a defined period after leaving, ten years in Sweden's case.
• 21:24
  SPEAKER_00: Exit taxes reshape the calculus of international relocation.
• 21:29
  SPEAKER_00: A move to a zero tax territorial jurisdiction or a favorable crypto tax regime only delivers full value if you can actually leave your current country without a steep bill on the way out.
• 21:41
  SPEAKER_00: The critical variable is timing.
• 21:44
  SPEAKER_00: Exit taxes apply to unrealized gains, which means the longer you wait and the more your assets appreciate, the larger the bill.
• 21:52
  SPEAKER_00: Pre-departure planning, conducted 18 to 24 months before relocation at minimum, can reduce or eliminate the liability through legitimate strategies like asset restructuring, gifting, or timing the move to optimize multi-year tax averages.
• 22:08
  SPEAKER_00: The 183-day tax residency threshold is another trap.
• 22:13
  SPEAKER_00: Some investors assume they can avoid both their home country's exit tax and their new country's tax obligations by staying nowhere long enough.
• 22:23
  SPEAKER_00: Most jurisdictions look far beyond day counts when determining tax residency.
• 22:28
  SPEAKER_00: Center of vital interests, permanent home, habitual abode, and formal ties can all override the 183-day rule.
• 22:39
  SPEAKER_00: Countries that impose wealth taxes are also the ones most likely to tighten exit tax rules.
• 22:45
  SPEAKER_00: Norway is the clearest example, the political logic is straightforward.
• 22:50
  SPEAKER_00: If you tax wealth annually and wealthy people leave, you need an exit tax to capture the gains they take with them.
• 22:58
  SPEAKER_00: Expect more governments to follow this playbook.
• 23:01
  SPEAKER_00: For high net worth investors considering a second residence or citizenship, the question is no longer just where to go, it is where you can afford to leave from.com.
• 23:18
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