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Home / Insights / Article 167 bis CGI — exit tax and a move to the UAE

Optional vs. Automatic Payment Deferral: Why Dubai Falls Under Paragraph V

Article 167 bis of the French Tax Code (CGI) establishes a targeted regime for the taxation of unrealized capital gains on certain securities and corporate rights upon the transfer of one's tax domicile out of France. It provides for two distinct payment deferral regimes: an automatic deferral, operating by force of law, under its paragraph IV, where the conditions set out in that paragraph are met (by reference in particular to the bilateral treaties in force and to the list of non-cooperative states and territories within the meaning of article 238-0 A CGI), and an optional deferral under its paragraph V, governed in particular by Decree No. 2019-868 of 21 August 2019, which as a general rule requires the proposed security to be filed no later than 90 days before the transfer. Determining which regime applies to a move to a given country — notably the United Arab Emirates — calls for a case-by-case analysis.

In brief — Article 167 bis CGI

Article 167 bis CGI applies, under the conditions it sets out, to the transfer of one's tax domicile out of France where the taxpayer holds shareholdings reaching the thresholds set by that statute (in particular a holding of at least 50% of a company's profits, or a portfolio of securities worth more than EUR 800,000), and where the prior-residence conditions in France are met. The tax assessed on unrealized capital gains, on claims arising from an earn-out clause, and, where applicable, on deferred capital gains, is computed under the rules in force on the date of the transfer. The payment deferral is structured under paragraphs IV (automatic) and V (optional) of article 167 bis CGI, the applicability of which to a given destination calls for a case-by-case analysis. Filing obligations — in particular the submission of the 2074-ETD return — apply throughout the entire deferral period.

A structuring distinction within article 167 bis CGI

The payment deferral is what makes the exit tax workable in practice. Without it, the taxpayer would be forced to sell their securities in order to pay the tax immediately — which would defeat the very purpose of the deemed-disposal fiction. The legislature provided for two distinct regimes, and the dividing line runs precisely through the United Arab Emirates.

Automatic deferral under paragraph IV: the as-of-right regime

Paragraph IV of article 167 bis CGI provides for a deferral granted as of right, operating by force of law, where the transfer is made either to an EU member state or to another state or territory that has entered into both a mutual administrative assistance agreement with France for combating tax fraud and evasion and a mutual assistance agreement for the recovery of tax claims, and that is not a non-cooperative state or territory within the meaning of article 238-0 A CGI. For transfers up to 31 December 2018, the automatic deferral was reserved for moves to the EU, Norway or Iceland; Law No. 2018-1317 of 28 December 2018 (art. 112) broadened the scope of paragraph IV as from 1 January 2019.

Under the automatic deferral, no security is required and no fiscal representative is needed. The annual filing obligations have also been streamlined for transfers since 2019: a taxpayer whose deferral covers only unrealized capital gains is exempt from filing the annual 2074-ETS return (BOI-RPPM-PVBMI-50-10-50). It is the simplest and least costly regime for the taxpayer.

Optional deferral under paragraph V: the path for Dubai

Where the transfer does not fall within the scope of paragraph IV, the taxpayer may apply for a deferral under the conditions set out in paragraph V. This election is made with the French tax authorities and requires three cumulative conditions to be met: the filing of Form 2074-ETD containing the express deferral request, together with a proposal of guarantees equal to 12.8% of the gross amount of the gains and claims concerned (CGI, art. 167 bis, V-1), no later than 90 days before the transfer (CGI, Annex III, art. 41 tervicies A, derived from Decree No. 2019-868 of 21 August 2019), and the designation of a fiscal representative established in France. The taxpayer also remains subject to the follow-up filing obligations on the 2074-ETS forms throughout the deferral period.

For a move to Dubai, paragraph V applies. Why? Because the United Arab Emirates does not meet the condition required by paragraph IV: it is not a member of the EU, and the France-UAE tax treaty of 19 July 1989 (supplemented by the protocol of 6 December 1993) contains no mutual assistance clause for the recovery of tax claims within the meaning required by the statute. The automatic deferral is therefore unavailable. On the other hand, the UAE does not appear on the list of non-cooperative states and territories, which makes paragraph V perfectly workable.

Why this difference is far from trivial

Paragraph V imposes three constraints that shape the entire relocation project. The 90-day deadline for the proposed security is strict: failing to meet it renders the deferral void and the tax immediately due. The designation of a fiscal representative carries a recurring cost (between EUR 1,500 and EUR 15,000 per year depending on the complexity of the case). The follow-up 2074-ETS filing obligations call for rigorous monitoring over 2 or 5 years — the exemption from annual filing applicable since 2019 covers only the case where the deferral relates exclusively to unrealized capital gains, and any event affecting the securities must be reported. None of these constraints exist under paragraph IV.

In practice, this means that a business owner hesitating between Lisbon and Dubai discovers, at the planning stage, that the operating cost of the deferral is not the same depending on the destination. This dimension must be factored into the decision early on.

Worked numerical example

Assumption: a business owner holding 100% of an SAS valued at EUR 4,000,000 on the eve of departure, with an unrealized capital gain of EUR 3,800,000. Gross exit tax computed, for a 2026 transfer, at 31.4% (12.8% income tax, article 200 A CGI, plus 18.6% social levies, Law No. 2025-1403 of 30 December 2025, art. 12) = EUR 1,193,200.

If the destination is Lisbon (EU), the automatic deferral under paragraph IV applies: no security, no fiscal representative, streamlined annual returns. Direct operating cost: zero. On expiry of the 5-year period (portfolio > EUR 2.57M), the tax on the unrealized gains is discharged (CGI, art. 167 bis, VII), the discharge being recorded through the 2074-ETS return.

If the destination is Dubai, the optional deferral under paragraph V applies. The initial guarantee is set at 12.8% of the gross amount of the gain (≈ EUR 486,000, CGI, art. 167 bis, V-1), then supplemented after the assessment notice is issued, up to the amount of the tax actually computed (≈ EUR 1.19M). Direct operating cost over 5 years: bank guarantee (≈ 1% per year of the guaranteed amount, i.e. in the order of EUR 5,000 to EUR 12,000/year depending on the period) + fiscal representative (EUR 5,000/year = EUR 25,000). That is an order of magnitude of EUR 70,000 to EUR 90,000 in total operating cost to obtain the deferral. This cost remains far lower than immediate payment of the exit tax (EUR 1,193,200), but it must be factored into the decision.

Operational summary

The choice between paragraphs IV and V is not really a choice: it follows automatically from the destination. For a move to Dubai, only paragraph V applies. The minimum operational sequence comprises an audit at T-12 months (deferral feasibility, valuation of the securities), preparation at T-6 months (selection of the security, prequalification of the fiscal representative), formalization at T-3 months (filing of the proposed security), execution at T-0 (the actual transfer), and then annual monitoring over 2 or 5 years depending on the portfolio value.

Frequently asked questions

Can the automatic deferral under article 167 bis IV CGI apply to a move to the UAE?

No. The United Arab Emirates does not meet the condition required by paragraph IV: it is not a member of the EU, and the France-UAE tax treaty of 19 July 1989 contains no mutual assistance clause for the recovery of tax claims within the meaning required by the statute. The deferral applicable to a move to Dubai is the one provided under paragraph V, granted upon election.

What is the annual cost of an optional deferral under paragraph V for a move to Dubai?

The cost combines two items: the security (a bank guarantee at 0.5%-2% of the guaranteed amount per year, or a pledge with a one-time cost) and the fiscal representative (EUR 1,500 to EUR 15,000 per year depending on complexity). For an intermediate case, expect EUR 15,000 to EUR 25,000 per year over 2 or 5 years depending on the portfolio value.

Can the paragraph V deferral be denied by the tax authorities?

Yes, if the proposed security is deemed insufficient or illiquid. The taxpayer may then offer a replacement security of at least equal value (LPF, art. R 277-4) or challenge the refusal before the tax interim-relief judge within fifteen days (LPF, art. L 279), but in practice these timeframes do not allow the project to be usefully delayed.

Sources & case law

Article 167 bis CGI (IV: as-of-right deferral; V: on-request deferral, guarantees of 12.8% of the gross amount); article 238-0 A CGI (list of non-cooperative states and territories); Law No. 2018-1317 of 28 December 2018, art. 112 (extension of paragraph IV as from 1 January 2019); Decree No. 2019-868 of 21 August 2019 (CGI, Annex III, art. 41 tervicies A: Form 2074-ETD and proposal of guarantees 90 days before the transfer); LPF, art. R 277-4 and L 279. Doctrine: BOI-RPPM-PVBMI-50-10-30 (deferral); BOI-RPPM-PVBMI-50-10-50 (reporting obligations). France–UAE tax treaty of 19 July 1989, supplemented by the protocol of 6 December 1993.

Frequently asked questions

Article 167 bis of the French Tax Code (CGI) establishes a targeted regime for the taxation of unrealized capital gains that applies, upon the transfer of one's tax domicile out of France, to certain categories of assets — essentially corporate rights, securities or rights of a similar nature, earn-out claims and, where applicable, deferred capital gains. The regime requires the members of the tax household to hold, directly or indirectly, a holding of at least 50% of the profits of a company subject to corporate income tax, or for the aggregate value of the corporate rights, securities or rights to exceed EUR 800,000. Form 2074-ETD, together with Forms 2042 and 2042 C, is filed in the year following that of the transfer (CGI, Annex III, art. 41 tervicies). The interaction with a move to the United Arab Emirates of the deferral regimes provided under paragraphs IV and V of article 167 bis calls for a specific analysis of the provisions in force on the date of the transfer, paragraph V opening an optional deferral, conditional on an express application and on the provision of security within the procedural framework set out in particular by Decree No. 2019-868 of 21 August 2019.
Yes. Shares or units of a SARL, SAS, SA or of an SCI subject to corporate income tax fall within the scope of the exit tax upon a change of domicile, where the thresholds of article 167 bis, I CGI are met — interests in real-estate-heavy companies covered by article 150 UB CGI being excluded. Even without a sale, the difference between your acquisition price and the market value of the securities at the date of transfer is taxable. Holding structures and chains of shareholdings must be reported in full.
Yes. Article 167 bis CGI provides for an automatic payment deferral (paragraph IV) for moves to an EU or EEA state that has entered into a recovery assistance agreement with France, and for an optional deferral upon application (paragraph V) for other destinations, including the United Arab Emirates. This optional deferral requires security (bank guarantee, mortgage, pledge) and the designation of a fiscal representative accredited in France. The tax remains assessed; actual payment is deferred until the sale, buyback, redemption or cancellation of the securities.
Failure to report exposes you to a reassessment of the tax on unrealized capital gains, together with the standard penalties: late-payment interest at a rate of 0.20% per month (article 1727 III CGI), a 10% surcharge for failure to file (article 1728 1. a) CGI), raised to 40% in the event of a deliberate omission (article 1729 a) CGI) or to 80% in the event of fraudulent practices (article 1729 c) CGI). The statute of limitations for reassessment is three years (article L. 169 LPF), extended to ten years where undeclared foreign accounts are involved.

Manage your exit tax with GEOTAX

The exit tax calls for a careful analysis of the taxable base, the holding thresholds, the payment deferral and the security. GEOTAX reviews your assets, assesses your unrealized capital gains and manages the 2074-ETD return as well as the setup of the deferral for moves to the UAE.

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