Wealth tax and ‘exit tax’: useful considerations

Useful considerations

• If you are eligible to complete an income declaration to France, you make your wealth declaration at the same time. 

Most French tax residents declare for both income and wealth tax online at impots.gouv.fr to the same deadlines, set annually from mid-May to early June, depending on where you live. 

If you moved to France in 2025 you can make a first income declaration by paper form and can also make a wealth tax declaration in the same way. You download the forms at impots.gouv.fr. These should be sent to your local tax office by the set paper form deadline, usually in the second half of May each year.

New residents who have activated a personal space on the site may, however, make first income and wealth declarations online. Your tax office can provide log-in data to set this up.

• After a first IFI declaration all future declarations must be online unless there is a good reason you cannot do this. To do this for the first time you can use log-in details from forms sent to you in the year after a first declaration and from your last income tax statement/bill (avis d'impôt). 

• You do not have to send accompanying documents justifying amounts you are declaring but should still retain all documents for at least four years in case the tax office asks for further information.

• People who declare for IFI receive a specific IFI tax bill in around late summer, payable in September

What deductions are allowed?

Immobilière means relating to real estate but IFI can also relate to the value of property ‘rights’, such as a lifetime right to live in a home. Apart from actual land and buildings it can also apply to shares related to investment in real estate, or, if of a mixed nature, in proportion to the investment in real estate.

From this assessable estate, you can deduct various financial obligations that exist on January 1 prior to the year’s declaration. 

These must be obligations on the main taxpayer or someone in their household for this tax and should relate to relevant taxable assets. Deductible debts include such matters as outstanding:

• Liabilities related to acquiring property or property rights; eg. the remaining value of a mortgage and the related interest

• Costs of improving, building, rebuilding or enlarging

• Costs of acquiring shares, pro rata to the amount of these shares that represent investment in property/property rights

• Maintenance costs incurred with regard to property that you rent out

• Taxe foncière and other taxes related to property ownership. 

• The year’s IFI bill can itself be deducted from the final total (this means it needs to be calculated twice).

You cannot deduct debts related to types of property that are exempt from the wealth tax. For types that are partially exempt you may only deduct debts in the same proportion as the part of the property’s value that is taxable.

Ways of reducing wealth tax include….

A calculation called the décote is available to reduce the tax bill of people who declare wealth of €1,300,000 to €1,400,000. IFI is also subject to a ceiling: your income tax on 2025 income plus

2026’s IFI must not be more than 75% of 2025’s income – if it is then the difference

is deducted from your IFI.

Other ways in which IFI can be reduced include, for example: 

• Certain investments in vineyards and forests allow for income that is partially exempt

• You can deduct from the final tax due a sum equal to 75% of the amount of donations given to recognized charities within certain limits 

Which areas pay most wealth tax?

Some 186,000 households received a bill for IFI property wealth tax in 2024, the last year for which a full report was available. Compared to 41 million households assessable for French income tax, that represented about half of one percent. 

Compared to the average tax household in France, those paying IFI draw much more of their income from investments and capital gains: in fact, more so than from work. 

Households paying IFI are found firstly in Paris and the Hauts-de-Seine and Yvelines departments to the west of Paris, followed by Val-de-Marne and Essonne to its south, the Alps – reflecting high prices of ski properties – the Côte d’Azur and the Atlantic coast.

If you move away from France: the exit tax 

Note that if you move back to the US (or elsewhere) in the future, you may still as a non-resident, be liable for French wealth tax declarations and payments if you retain valuable property holdings in France. 

Some Americans may also be affected by France’s ‘exit tax’.

While this will not apply to most Americans moving to France, it is worth being aware of if your plans include building up a company or significant shareholdings while resident in France.

It is designed to prevent people from building up large, unrealized gains while resident in France and then leaving the country to avoid tax when those gains are eventually realized. In effect, it allows France to lock in the right to tax gains that accrued during French residence, even if the assets are not sold at the time of departure.

The exit tax may apply if:

• you have been tax resident in France for at least six years out of the previous 10, and

• you then transfer your tax residence abroad, and

• you hold substantial shareholdings, typically in companies.

It is aimed at wealthier taxpayers, not ordinary salaried workers.

The tax applies to company shares and similar holdings, not to ordinary income.

It is triggered if, on the day before departure the net value of your shareholdings (or those of your tax household) exceeds €800,000, or you hold more than 50% of the shares of a company, regardless of value.

The tax is based on unrealized capital gains - in other words, gains that exist on paper but have not yet been realized by selling the shares. The gain is calculated as at the day before you leave France.

By default, it is taxed at the 30% flat tax on investment income (12.8% income tax plus 17.2% social charges).

Alternatively, taxpayers may opt for taxation under the ordinary income tax bands, which can be beneficial in some cases, as normal capital-gains allowances (including for length of ownership) then apply.

Crucially, the tax can arise even if the shares are not sold and no cash is received, however in many cases, the tax is not payable immediately.

If you move to another EU or EEA country, or a country that has signed agreements with France to combat tax evasion and allow mutual tax recovery (including the United States) the exit tax is automatically set aside and only becomes payable if the shares are actually sold.

If the shares are not sold within two years of departure (or five years if the relevant shareholdings exceed €2.57 million), the tax is cancelled entirely.

Where tax was paid on departure (for example, when moving to a non-cooperative country), it may be refunded if the shares remain unsold after the same periods.

The tax also does not apply if you move back to France.

The exit tax is generally not payable if shares are given away, although where the recipient lives in a country considered non-cooperative, the authorities may ask for evidence that the gift was not made solely to avoid tax.

A specific exit-tax declaration must be filed in the year following departure, by the usual income-tax deadline.

The declaration sets out the value of the latent gains at the time of departure.

Ongoing reporting may be required until the tax is cancelled or becomes payable.