FlagSageExit tax
Glossary term
An exit tax is a tax charged when a person or company leaves a country's tax system, often by treating assets as sold at market value at the time of departure.
In the United States, the expatriation tax rules apply to some citizens who give up citizenship and some long-term residents who end their status. The IRS says a covered expatriate is treated as having sold all property at fair market value on the day before the expatriation date, with an exclusion amount that is adjusted for inflation. Whether a person is covered depends on tests for net worth, average income tax liability and certification on Form 8854 that past tax obligations were met.
In the European Union, the Anti-Tax Avoidance Directive requires member states to tax certain transfers of assets or of tax residence by corporate taxpayers. The tax is set at the market value of the transferred assets less their value for tax purposes.
Other countries may have their own departure rules with different triggers, thresholds and payment options. Check the current official guidance of the country being left.
Not to be confused with
- Citizenship-based taxation. Citizenship-based taxation applies while a person is a US citizen, and the expatriation tax concerns the act of giving that status up.
- Split-year treatment. Split-year treatment divides a UK tax year on arrival or departure and is not a charge on leaving.
Sources
- Expatriation taxOfficial guidance
- Anti-Tax Avoidance DirectiveOfficial guidance
- Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal marketPrimary law
Related
- Countries covered
- General
- Sources
- 3 sources
- Tax year
- Current rules as checked
- Review
- Not professionally reviewed
Sources checked November 8, 2026