The Rise of Exit Taxes

Revolut’s co-founder Nik Storonsky recently moved from the UK to the UAE. The move will likely save him up to GBP 3bn (yes, those are billions) in capital gains tax which he would no longer have to pay in the UK if he were to sell his entire stake in Revolut. This sparked a huge exit tax debate in the UK.

Similarly, Norway increased its wealth tax in 2024 while also having an exit tax. This lead to wealthy people leaving the country and moving to Switzerland. Why Switzerland? Because, technically, Switzerland also has a wealth tax, and Norwegians don’t have to pay Norwegian exit tax if they move to another country with a wealth tax.

Germany tightened its exit tax in 2025 which is no longer limited to business owners and now also targets private individuals.

And finally, as in many things, the US is something of a first mover here: It’s one of only two countries worldwide which tax you regardless of where you live (the other one is Eritrea). So your only option of leaving the US tax system is renouncing your US citizenship, and that comes with an exit tax, too, where your entire net worth beyond a certain threshold gets taxed.

Where does that leave us?

• The financials of most Western countries are looking very bleak, driven by demographics, unsustainable spending on social security and pensions.
• People are increasingly mobile, especially those who can work remotely.

I predict that developed countries will see a drain of skilled people. The developed countries will react to this by introducing and/or increasing exit taxes.

In the past, if you grew up in a developed country, it was quite likely you’d stay there – or even if you moved, you’d likely move to another developed country. Why not move to a developing country? Because:

• No internet.
• No jobs at a comparable salary.
• The “infrastructure” was significantly worse: Electricity, water, crime.
• Getting around while learning a new language is hard. Also, actually learning a new language is hard.
• Staying in touch with people back home was expensive (remember long-distance phone calls?).

But now, all of these things are rapidly changing:

• Developing countries are surpassing developed countries in internet infrastructure: Better coverage, faster speeds, lower cost.
• Many jobs are now remote, with Western salaries.
• Developing countries are rapidly catching up in overall infrastructure, too – no more power cuts.
• Getting around in a country while not speaking the language has suddenly become easy with Google Translate and now ChatGPT. Both tools also have made it much easier to learn the language essentially for free.
• Staying in touch with people back home via video calls is easy.

But that’s not all – in addition, developing countries now offer unique advantages:

• Taxes are lower, either to attract skilled people or simply because social security spending is lower, or both.
• The rental property market is great (low rents, high availability) and not nearly as broken as in Western countries.

The Drain of Skilled People, More Exit Taxes

So now, skilled people with remote jobs only remain bound to their home country by friends and family. All other factors keeping them there have disappeared, and new factors actively pushing them away have emerged (mostly high rents).

At the same time, developed countries are coming under increasing financial pressure, and media-amplified stories like that of Revolut’s co-founder make politicians panic that we have to do something, conveniently ignoring the fact that many people who are leaving the country are not tax optimizers, but normal humans moving in with a partner, moving back to family, moving in search of a better life, or simply moving in search of a better (read: non-broken) housing market.

Fixing these fundamental problems is however a long-term project and not something which neatly fits into the short-term agenda of most policians.

Therefore, the answer is to implement and tighten exit taxes.

This, of course, is not an actual solution: No rational human can be convinced to stay in a country which starts erecting a “Berlin Wall of Exit Taxes” around its borders. On the contrary, it’ll actively drive away even more skilled people because they fear not being able to leave in the future, given the historical tendency of exit tax tightening. And like all tax complications, it mostly just ends up just being a subsidy to tax advisors as people who can hire a fancy tax advisor to set up a fancy solution will always get around it to some degree.

But most importantly, the entrepreneurs will leave.

The effect won’t be visible right now, as tax revenue continues to come pouring in, while existing businesses remain in the country.

But, in any functioning, free economy, businesses have a half life and get replaced with new, better, more innovative businesses.

What happens if no such businesses get built?

We’ll see those effect maybe 10-20 year from now.

In the meantime, we’ll see the rise of exit taxes.

Some background: I had the questionable pleasure of researching Germany’s exit tax for 10 months, scheduling calls with humans (tax advisors) at €200-€450 / hour to answer my ChatGPT-derived questions. I came away thinking that this entire system of gatekeeping information is fundamentally broken and went on to publish my notes on my website on Germany’s exit tax here.