France to abolish ‘Exit Tax’

PARIS: France will abolish a tax imposed on the capital gains of top earners and entrepreneurs who leave France and sell their assets with a more-targeted levy designed to deter tax optimisation, said a finance ministry spokesman on Saturday.

France imposed the so-called “Exit Tax” in 2011 during the presidency of Nicolas Sarkozy.

It required individuals who held assets in stocks and bonds of more than €800,000 (RM3.8 million), or at least 50 per cent of the capital of a company, to pay capital gains on assets sold up to 15 years after they left France.

Its aim was to stop individuals temporarily changing their tax domicile to skirt French taxes but pro-business President Emmanuel Macron says it damages France’s attractiveness as an investment destination.

A finance ministry spokesman said the new “anti-abuse mechanism” would concern asset sales made up to two years after an individual leaves France.

“The Exit Tax as it is today will be scrapped,” said the ministry spokesman.

“The new scheme will target asset sales made shortly after leaving France — two years — to stop people moving back and forth over a short period to optimise tax efficiencies on capital gains.”

The new rules will come into effect on January 1 next year.