French Exit Tax and Moving to Georgia: What You Need to Know

The French impôt de sortie — commonly called the "exit tax" — is a topic that generates significant anxiety among French freelancers considering a move to Georgia. For most, it will not apply. But understanding the rules is essential before you leave, because getting them wrong can result in a very large and unexpected tax bill.

This article covers everything you need to know: who the exit tax applies to, how it works, when it can be deferred, and how to properly exit the French tax system whether or not you're subject to exit tax. We also address the critical issue of the France-Georgia tax treaty — or rather, the current absence of one.

What Is the French Exit Tax?

France introduced its exit tax in 2011 (Article 167 bis CGI). The rule imposes an immediate tax charge on certain unrealized capital gains and value increases held by French residents who move their domicile fiscal abroad.

The logic is straightforward from the state's perspective: if you built up significant wealth in France while benefiting from French infrastructure and services, and then move abroad just before realizing those gains, France wants a share before you go.

The exit tax covers:

• Unrealized capital gains on shares, stock options, and certain other financial instruments
• Creances (receivables) where payment is contingent on future events — typically earn-outs from business sales
• Indirect holdings in certain structures

It does not cover:

• Real estate (covered separately by the rules on CGT on French real estate for non-residents)
• Future income from your freelance activity (which is simply taxed in your new country of residence)
• Cash savings or bank deposits
• Standard pension entitlements

Who Does It Affect?

The French exit tax only applies if you meet both of the following conditions:

1. Residency requirement: You must have been tax-resident in France for at least 6 of the 10 years immediately preceding your departure.
2. Threshold requirement: The total value of the relevant assets (shares, options, receivables) subject to exit tax must exceed €800,000, OR the unrealized gains on those assets must exceed €800,000.

For the vast majority of French freelancers — those who do not hold substantial share portfolios or own stakes in growing companies — the exit tax simply does not apply. If your wealth consists of savings accounts, an auto-entrepreneur with no equity value, perhaps an investment account with €50,000–€100,000 in listed stocks, you are almost certainly below the €800,000 threshold and exit tax is not relevant to your situation.

Where exit tax does become relevant is for founders who own equity in a startup, employees who hold significant stock options (BSPCEs, AGA, SO), or anyone who built up a significant share portfolio while resident in France.

How the Exit Tax Works in Practice

If you are subject to exit tax, here's what happens:

1. At the moment you transfer your tax domicile abroad, you are deemed to have sold all qualifying assets at their current market value
2. The unrealized gain (market value minus acquisition cost) is calculated
3. This gain is subject to the standard French flat tax (PFU — prélèvement forfaitaire unique) of 30% (12.8% income tax + 17.2% social contributions), or the progressive income tax scale at your option
4. The resulting tax amount is declared on a specific form (2074-ETD, "état de suivi") attached to your departure-year income tax return

Example:

You own €2,000,000 in BSPCEs (startup stock options) with an acquisition cost of €50,000. Unrealized gain = €1,950,000. Exit tax at 30% PFU = €585,000.

This is a significant amount. But critically — see the next section — you may not have to pay it immediately.

Automatic Deferral (Sursis de Paiement)

One of the most important and least-discussed aspects of French exit tax is the automatic payment deferral that applies when you move to certain countries — including Georgia.

Under French law (Article 167 bis VI CGI), when you move to a country that is not a member of the EU/EEA and does not have an administrative assistance treaty with France covering exchange of tax information, you must provide a security (caution) or a représentant fiscal accrédité (accredited tax representative in France) to obtain a payment deferral.

However, when you move within the EU/EEA, the deferral is automatic with no security required. Georgia is not in the EU or EEA. This means if you move to Georgia:

• You must declare the exit tax on your departure return
• To defer payment, you need to appoint a French tax representative and may need to provide a financial guarantee
• The tax becomes due when you actually sell the underlying assets, or if you move to a third country, or after 5 years (if the assets haven't been sold)

In practice, for freelancers subject to exit tax, the cost of managing exit tax on a move to Georgia is usually manageable — especially if the underlying assets are startup options that you can't sell anyway until a liquidity event. A French avocat fiscaliste can handle the deferral paperwork for a few thousand euros.

The France-Georgia Tax Treaty (or Lack Thereof)

This is perhaps the most legally important section for French freelancers moving to Georgia.

As of April 2026, France and Georgia have not concluded a comprehensive income tax convention (double taxation agreement, or DTA). This means the standard network of treaty protections — reduced withholding tax rates on dividends, defined tie-breaker residency rules, guaranteed exemption from double taxation — does not apply between these two countries.

What this means in practice:

• No treaty tie-breaker: If both France and Georgia could claim you as a tax resident, there is no treaty mechanism to resolve the conflict. France's domestic rules determine whether you have broken French tax residency; Georgia's domestic rules determine whether you have established Georgian tax residency. The two analyses are independent.
• No reduced withholding: Dividend income from French companies paid to a Georgian resident is subject to the French domestic withholding rate (generally 12.8% or 30% depending on the shareholder), not a reduced treaty rate.
• No guaranteed non-double-taxation: In theory, both France and Georgia could tax the same income. In practice, this is very unlikely for earned freelance income — France taxes based on domicile fiscal, and if you have properly exited French tax residency, France has no claim on your Georgian-source earnings.

Why this matters less than you might think:

For the typical French freelancer moving to Georgia to operate a service business, the absence of a DTA is largely irrelevant. You earn income from your Georgian IE. France taxes income from French-source activities and French residents — once you are no longer French resident, France cannot tax your Georgian IE income under domestic French law, regardless of treaty status.

The DTA gap matters primarily for:

• People receiving French-source passive income (dividends, royalties) from France while living in Georgia
• People in situations where the residency question is ambiguous
• People with exit tax issues (covered above)

The 183-Day Rule: Breaking French Tax Residency

French tax residency is determined by Article 4B of the Code Général des Impôts. You are a French tax resident if any of the following apply:

1. Your foyer (family home / household) is in France, even if you work abroad
2. Your principal place of professional activity is in France
3. France is the center of your economic interests (investments, income sources primarily in France)
4. You spend more than 183 days per year in France

These are alternative conditions, not cumulative. This means that spending fewer than 183 days in France is not sufficient alone to break French tax residency. You must also ensure that:

• Your foyer is not in France — don't maintain a permanent home that family members use continuously
• Your principal professional activity is not in France — don't continue operating from a French office or primarily serving French clients in a way that could be argued as French-based
• France is not the center of your economic interests

The 183-day rule specifically:

The 183-day rule is a bright-line test. If you spend more than 183 days in Georgia in a calendar year, Georgia considers you a Georgian tax resident. If you spend fewer than 183 days in France, that's one factor (but not the only factor) supporting non-residency in France.

What "Domicile Fiscal" Means and How to Change It

Your domicile fiscal is your official tax address in France — the address registered with the French tax administration (Direction Générale des Finances Publiques) and your local Service des Impôts des Particuliers (SIP).

To change your domicile fiscal:

1. Notify your local SIP in writing (letter or online via impots.gouv.fr) that you are departing France
2. Provide your new address in Georgia
3. Update your online tax account to reflect the new address
4. Update your bank accounts to use your Georgian address (or a trusted third-party address in France for transition period)

The French tax administration will transfer your file to the Centre des Finances Publiques des Non-Résidents in Paris — the special department that handles the tax affairs of French nationals living abroad.

Filing Your Fiscal Departure Declaration

In the spring following your year of departure, you file a final French income tax return:

1. The declaration: Standard form 2042 for the year of departure, covering income from January 1 to your date of departure
2. Marking non-residency: Tick the box indicating your departure date and new country of residence
3. Exit tax (if applicable): Attach form 2074-ETD and the asset schedule
4. Request deferral (if applicable): File form 2074-ETD-DISP to request payment deferral and provide the required representative/guarantee

Income earned after your departure date from your Georgian IE is not included in this final French declaration. It is taxable only in Georgia.

What about income earned in France before departure?

French-source income earned before your departure date (while still French-resident) remains fully taxable in France. This includes freelance invoices you issued to French clients while living in France, even if they were paid after your departure date. The key is the date the income was earned (when the service was rendered), not when it was received.

Common Traps That Keep You French-Tax-Resident

Many French expats mistakenly believe they have exited the French tax system when they haven't. Common traps:

• Keeping the family home in France: If your spouse and children remain in France in a home you own or rent in your name, the foyer rule keeps you French-resident regardless of where you personally sleep.
• Not updating the domicile fiscal formally: Simply moving without notifying the tax administration means you are still officially registered as French-resident.
• Maintaining primary French client relationships: If 90%+ of your revenue comes from French clients and you're only briefly in Georgia, French tax authorities may argue your principal activity is in France.
• French bank account as primary account: While not determinative, having your main financial account in France is a factor used in residence disputes.
• French drivers' license and car registration: Minor factors but cumulatively relevant in a residence audit.
• Continuing to use French health insurance: Using the French health system implies continued connection to France's social security, which can complicate the residency analysis.

Avoiding Double Taxation Without a Treaty

Without a DTA, you rely on France's domestic rules for avoiding double taxation on income:

• For freelance income earned through your Georgian IE: Once you are not French-resident, France does not tax this income under domestic rules. Georgia taxes it at 1%. There is no double taxation.
• For French-source passive income (dividends from French companies): France will apply a 12.8% withholding tax (or higher depending on structure). Georgia may also tax this as foreign income at a low rate. Without a treaty, you would theoretically owe in both countries — though Georgia's low rate means the combined burden is still far below French domestic rates.
• For French real estate: France retains taxing rights on French real estate capital gains for non-residents under domestic French law. This is unaffected by your Georgian residency.