Navigating the Complexities of Exit Taxes

Navigating the Complexities of Exit Taxes

Exit Taxes: Not as Daunting as They Seem

What is an Exit Tax?

  • Exit taxes, also known as expatriation or emigration taxes, are levied when a person ceases to be a tax resident of their country.
  • They often take the form of capital gains taxes based on the "deemed disposition" of all assets, taxing unrealized capital gains.
  • This allows the country to claim its "fair share" of the wealth accumulated while the person was a tax resident.

Countries with Exit Taxes

  • The countries known to impose exit taxes include the United States, Canada, Australia, France, Germany, Spain, South Africa, United Kingdom, Norway, Finland, Sweden, Netherlands, Portugal, and Eritrea.
  • The specifics of these exit taxes vary significantly between countries.

Exit Taxes for Canadians and Americans


  • When becoming a tax non-resident, Canada deems that certain properties have been disposed of at their fair market value, resulting in a tax on unrealized capital gains.
  • This can be an issue for those looking to hold onto Canadian property after leaving, especially in a market with significant appreciation.

United States

  • The U.S. exit tax applies to citizens with a net worth over $2 million, as well as permanent residents and green-card holders in certain situations.
  • The U.S. looks at worldwide assets for the exit tax calculation, unlike Canada's focus on domestic assets.
  • However, there is a $767,000 capital gains exemption.

Are Exit Taxes as Formidable as They Seem?

  • While the prospect of exit taxes can be daunting, with proper planning, the impact can be substantially mitigated.
  • Unless you're leaving the country immediately, you have time to research and implement strategies to minimize your exit tax obligations.
  • The exit tax should not hold you back from pursuing your reasons for leaving, as it is a manageable obstacle compared to the potential benefits of an international lifestyle.

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