Exit Tax

An exit tax is a tax levied by a government on individuals who relinquish their citizenship or long-term residency, typically applied to unrealised capital gains as if all assets were sold on the date of expatriation. In the United States, the exit tax applies to 'covered expatriates' who meet certain net worth or tax liability thresholds. Similar provisions exist in Germany, Canada, Australia, and the Netherlands, though the mechanics vary significantly. Exit taxes are intended to prevent high-net-worth individuals from avoiding tax on accrued gains by moving to lower-tax jurisdictions.