Exit Taxation: Tax Charges When Leaving Your Home Country

One of the most overlooked costs of international mobility is exit taxation — the charge that many countries impose on assets when a resident leaves, treating departure as if assets had been sold on the day of departure. Exit taxes vary enormously in scope and severity, and failing to account for them can result in substantial unexpected tax liabilities at a moment when you are already managing the complex logistics of relocation.

This guide covers the key exit tax regimes in the countries most relevant to internationally mobile HNW individuals — the UK, Australia, Germany, Canada, South Africa, and the US — explains how they work, and sets out strategies for managing the liability.

Tax rules change. This guide reflects the position as of 2026. Professional advice is essential before any departure from a country where you have significant assets.

What Is an Exit Tax?

An exit tax (also called a departure tax, emigration tax, or deemed disposal charge) treats a taxpayer as if they had sold all — or specific categories of — their assets on the day they leave the country. The deemed proceeds are typically market value, and any gain over the historical cost is taxed as if it were an actual sale.

The rationale is to prevent residents from accumulating unrealised gains during their residence in a country, then emigrating to a low-tax jurisdiction before selling — thereby escaping capital gains tax entirely.

Exit taxes range from mild (the UK's rules are relatively narrowly targeted) to severe (Australia's deemed disposal can generate large bills for departing residents with appreciated assets).

The United Kingdom

The Basic Position

The UK does not impose a broad exit tax on all assets when a resident departs. Capital gains in the UK are taxed on actual disposals, not departures. A UK resident who leaves the UK on 5 April 2026 does not pay CGT on the unrealised gains in their portfolio on that date.

However, there are important targeted rules that achieve similar effects in specific situations:

Temporary Non-Residence Rules

The temporary non-residence (TNR) rules (TCGA 1992, ss.10A, 10AA) are the most significant exit-related provision. If a UK resident leaves the UK, becomes non-resident, and then returns within 5 years (specifically, fewer than 5 complete UK tax years of non-residence), certain gains realised during the non-resident period are "caught" and taxed in the year of return.

The categories of income and gains caught by the TNR rules include:

• Capital gains on assets held before departure (not assets acquired and disposed of entirely during the period of non-residence)
• Income from certain investment-type sources
• Benefits from offshore trusts received during the non-resident period

The practical implication: if you are planning to leave the UK temporarily (say, for 3 years in Dubai), you cannot realise gains on pre-departure assets and expect to escape UK CGT. If you sell UK shares while non-resident and return within 5 years, the gains will be charged in the year of return.

For clients contemplating a short-term move, the TNR rules mean that:

• Pre-departure disposals of appreciated assets may be better than post-departure disposals (if likely to return within 5 years)
• Alternatively, a longer period of non-residence (5+ years) is required to benefit from gains realised abroad

UK Residential Property

UK non-residents are subject to Non-Resident Capital Gains Tax (NRCGT) on disposals of UK residential (and commercial, since April 2019) property. Exit from the UK does not prevent this — the UK retains taxing rights on UK real estate regardless of where the owner resides.

UK Company Shares

Capital gains on shares in UK companies are not subject to UK CGT for non-residents (provided the shares do not relate to UK land). Non-residents can sell UK equities without UK CGT exposure (subject to treaty positions and any TNR rules).

Australia

Australia's exit tax regime is one of the most comprehensive and potentially painful in the English-speaking world. For HNW individuals with significant appreciated assets leaving Australia permanently, this can represent a very large tax bill.

Deemed Capital Gains Tax on Departure

Under Division 104-I of the Income Tax Assessment Act 1997, when an individual ceases to be an Australian tax resident, they are treated as having disposed of and reacquired most of their assets at market value on the day of departure. Any resulting capital gains are taxable in Australia.

Assets excluded from the deemed disposal include:

• Taxable Australian property (direct interests in Australian real estate, and shares in companies where more than 50% of assets are Australian real estate)
• Certain superannuation interests
• Australian assets of a business carried on at a permanent establishment in Australia

Everything else — global share portfolios, offshore bonds, foreign real estate, private company shares — is subject to deemed disposal.

Example: A UK national has lived in Australia for 10 years and holds a diversified global investment portfolio worth A$5 million, with a cost base of A$2 million. On departure, Australia deems a disposal of the portfolio at A$5 million, generating a A$3 million gain. After the 50% CGT discount (available for assets held more than 12 months), A$1.5 million is taxable — at a marginal rate of 45%, this generates A$675,000 of Australian tax.

Planning Around Australian Exit Tax

Key strategies:

• Defer departure to manage the timing of the deemed disposal relative to other income
• Crystallise losses before departure to offset gains
• Consider the 50% discount — ensure assets have been held for at least 12 months to access the discount
• Elect to defer — for certain assets, an election can be made to defer the deemed disposal until the asset is actually sold (at which point Australian tax may or may not apply, depending on whether the asset is "taxable Australian property")
• Treaty relief — the Australia-US DTA has specific departure tax provisions; other treaties may also provide relief or deferral

Germany

Germany imposes an exit tax on departure for individuals who have been German tax residents for at least 7 of the last 12 years and hold shares of at least 1% in any company (German or foreign).

The exit tax (Wegzugsbesteuerung under s.6 AStG) treats the shares as sold at market value on departure. Any gain over the original cost is subject to German income tax.

Deferral is available for departures to EU/EEA countries (on application, subject to conditions). For departures to non-EU/EEA countries (including, post-Brexit, the UK and UAE), deferral is typically not available — the full tax is payable, though Germany has introduced some instalment options.

The German exit tax can be particularly significant for founders or early investors in businesses that have grown substantially in value. Proper pre-departure planning — potentially involving corporate restructuring, gift transfers, or timing of the move — is important.

Canada

Canada's departure tax (section 128.1 of the Income Tax Act) deems an individual to have disposed of most assets at fair market value when ceasing Canadian residence.

Assets excluded from the deemed disposal include:

• Canadian real property
• Canadian pension entitlements
• RRSPs and RRIFs (registered retirement savings plans)

Everything else — global securities portfolios, foreign real estate, private company shares, life insurance policies with surrender value — is deemed sold.

Any resulting gains are taxable in Canada in the year of departure. Losses can offset gains. The 50% inclusion rate for capital gains (as of 2026, though this is subject to pending legislative changes in Canada) means only half the gain is included in income.

Tax deferral is available for certain amounts, and instalment payment options exist. Treaty positions with the destination country should be considered.

South Africa

South Africa imposes a deemed disposal of worldwide assets (excluding South African real property and permanent establishment assets) when an individual ceases to be ordinarily resident in South Africa.

Any capital gain arising on the deemed disposal is subject to South African capital gains tax at the applicable inclusion rate (and marginal income tax rate). South Africa has an extensive treaty network that may modify the position in some circumstances.

South African residents considering emigration should also be aware of the formal emigration process previously administered through the South African Reserve Bank (SARB), which involved financial emigration via the banking system. While the formal financial emigration status was abolished, exchange control regulations still apply to the transfer of funds abroad and should be carefully managed.

United States: Special Considerations

The US approach to exit taxation is unique because the US taxes its citizens and long-term residents on worldwide income regardless of where they live. "Leaving the US" does not automatically reduce US tax obligations for citizens.

Expatriation tax (Section 877A): For US citizens who renounce their citizenship, and for long-term permanent residents (green card holders) who relinquish their green cards, an exit tax applies if the individual is a "covered expatriate." This applies if:

• Average annual US income tax for the 5 years before expatriation exceeds $211,000 (indexed; 2026 figure)
• Net worth exceeds $2 million at the date of expatriation
• The individual has not certified compliance with US tax obligations for the 5 preceding years

The exit tax treats all worldwide assets as sold at fair market value on the day before expatriation. Gains exceeding $910,000 (2026 exclusion, indexed) are taxable. Deferral is available for certain deferred compensation and specified tax-deferred accounts.

For non-citizens who hold green cards and plan to relinquish them, the same rules apply. The significance for internationally mobile clients is substantial — green card holders who have been US permanent residents for 8 of the last 15 years are subject to the exit tax on departure.

Planning Strategies Across Jurisdictions

Pre-Departure Checklist

• Know your CGT base costs — accurate cost histories for all assets are essential for exit tax calculations
• Consider pre-departure disposals — in some jurisdictions, selling an asset before departure (at a favourable rate) may be preferable to the deemed disposal
• Understand deferral options — Australia, Germany, and Canada all have deferral mechanisms; understand when they apply
• Review the treaty position — the treaty between your departure and destination countries may modify exit tax rules
• Consider the timing of departure — the tax year in which you depart can significantly affect the amount taxable
• Restructure before departure where appropriate — sometimes corporate restructuring, gifting, or other pre-departure steps can reduce exit tax exposure significantly
• Review pension and retirement accounts — these are often excluded from exit tax but have their own cross-border complexities

The General Principle

The single most important principle: plan exit tax well in advance. Restructuring, timing decisions, and elections that are available before departure are almost never available after. Engaging qualified tax advisers 12-18 months before an anticipated move is not excessive — it is prudent.

How Global Investments Can Help

Global Investments helps internationally mobile individuals navigate exit taxation as part of a comprehensive pre-departure financial plan. We work with specialist tax advisers in each relevant jurisdiction to identify exit tax exposure, assess planning options, and implement strategies to minimise unnecessary tax charges.

Whether you are leaving the UK, returning from Australia, or considering the implications of a US green card relinquishment, we can help you understand your obligations and plan accordingly. Contact us for an initial consultation.

Capital is at risk. Exit tax rules vary significantly by jurisdiction and may change. This article is for information only. Always take specialist legal and tax advice tailored to your specific circumstances before any departure.