What is exit tax?

If you want to relocate your business from one country to another, exit tax might be something that you should consider beforehand.

If someone decides that their company pays too much in taxes in particular country and, therefore, establishes a new company where the tax environment is more favorable in order to transfer the business there, such relocation might be subject to exit tax.

Tax authorities of the country in which the business is currently running might request the taxes on the total value of the company to be paid before relocating, as they might consider that the entity is selling the business to another entity, in another country.

Transfer tax might not apply if the business is transferred due to changing environment of regulations, for example, if the jurisdiction in which the business is currently operating decides to strengthen legal requirements for business sectors and particular company can no longer operate there. There are also some exceptions for cases compatible with the OECD transfer pricing rules – contact us and book a consultation if you would like to find out more regarding your individual case.