To move or not to move, taxation is the question

A report on a panel session from the IBA Annual Conference held in Toronto on 6 November 2025

Session Co-Chairs

Inbal Faibish Wassmer  Goldfarb Gross Seligman, Zürich

Sonia Velasco  Cuatrecasas, Barcelona

Speakers

Jérôme Assouline  Sekri Valentin Zerrouk, Paris

Berenice Carrasquedo  BFC Asesores, Mexico City

Kathryn von Matthiessen  Katten Muchin Rosenman, New York

Reporter

Julia Jönsson  Setterwalls, Malmö

Introduction

The panel explored the tax implications of changing residency and how tax policy, politics and personal priorities drive mobility for internationally active families and entrepreneurs. The discussion covered, among other things, exit taxes and dual residency, permanent establishment (PE), controlled foreign corporation (CFC) regimes, new tax law developments and family and succession law issues. Against a backdrop of political volatility and regulatory change, the panel distilled practical guidance drawn from recent cases and experiences in the United States, Mexico, France, Spain and Israel.

Panel discussion

Why people move: beyond taxes

Kathryn von Matthiessen noted the political uncertainty in the US, which has prompted some clients to explore overseas asset placement, alternative citizenships and potential expatriation, while many still move to the US for education and business opportunities.

Regarding Mexico, Berenice Carrasquedo highlighted judicial reform and broader rule of law concerns as drivers of outbound moves, with the US and Spain among the most popular destinations.

Inbound flows to France for study and quality of life related reasons were highlighted by Jérôme Assouline, with some high‑net‑worth individuals departing in light of competition from tax regimes in Italy, Switzerland and Spain.

Sonia Velasco described Spain as a hub for international students, retirees and digital nomads as a result of the ‘Beckham law’ and various startup initiatives. Outbound moves are often triggered by wealth tax exposure.

Inbal Faibish Wassmer added that Israeli inbound and outbound flows are shaped by politics and security; inquiries into moving are increasing in number, even though actual relocations may take longer to execute.

Case studies: current client patterns

Carrasquedo described a Mexican family with homes and businesses operating across Europe. In regard to the case study, she described how maintaining Mexican tax residency when acquiring European apartments required repeated structural reorganisations and careful coordination of the relevant cross‑border employment footprints.

Von Matthiessen spoke about a New York family relocating to Portugal. Invoking the EU Succession Regulation to apply New York law could have required a New York probate, risking a New York domicile claim. A revocable trust holding financial assets was outside the Portuguese estate, while Portuguese law could be applied to other EU assets. The clients preferred accommodating Portuguese forced heirship over potential US tax exposure.

Assouline described a situation where a client relocated to France and benefitted from a five‑year exemption from wealth tax on their non‑French real estate and a French practice that treats all trusts as non‑transparent, regardless of any foreign treatment or control. Most assets were shielded from French taxes until distribution. The family planned their departure by year four to manage the five‑year exemption and avoid exit tax exposure.

Wassmer highlighted a situation involving a split family and in this instance a Swiss‑resident husband was considering moving to Israel before selling a business and retiring. Israel’s ten‑year exemption for new residents, combined with Switzerland’s no capital gains tax, is attractive, but issues related to pension treatment, immigration status, will updates and potential forced heirship require early coordination.

Velasco noted that Spain’s digital nomad visa facilitates remote working but may create PE risks and interacts with residency tests, including the ‘centre of economic interests’. Clarifying the relevant tax, immigration and family law implications is critical to avoid the unintended application of Spanish taxation.

Business taxation: PE, CFC rules and entity classification

Assouline warned that relocating managers to France can create a French PE for foreign companies. French CFC rules may attribute income to French‑resident individuals on holdings of more than ten per cent, where low‑tax criteria are met, and entity classification of foreign limited liability companies (LLCs)/partnerships follows French law, which may diverge from the relevant home country characterisation.

From a Spanish perspective, Velasco dealt with several issues raised by Assouline, and pointed to fact‑intensive CFC recalculations, administratively heavy cost basis determinations (especially for gifted assets) and challenges around step‑ups in legal personalities.

Wassmer stressed that Israel’s ten‑year exemption does not shield businesses from PE taxation and that clients often underestimate PE risk. Determining the cost basis on relocation is another recurring issue.

Von Matthiessen explained that inbound US planning focuses on whether income is effectively connected to a trade or business in the US. Outbound planning must address anti‑deferral rules and passive foreign investment company (PFIC) exposure, and the US imposes burdensome disclosure requirements.

Carrasquedo warned that in Mexico, signing authority over foreign entities may imply Mexican tax residency for the company. Velasco added that Spanish authorities also scrutinise the management and control of foreign businesses and have contested effective management abroad in order to assert that Spanish taxation applies.

Families, property and succession

Von Matthiessen noted high gift and estate tax exemptions (approximately $15m per person). As a result of pre‑residency planning, ultra‑high‑net‑worth couples can retain $30m attributed to their personal names and can use trusts to mitigate transfer taxes. Income tax planning frequently leverages insurance-linked structures. The state‑level marital property and succession rules may vary.

Carrasquedo observed that Mexico’s lack of forced heirship contrasts sharply with other jurisdictions, complicating cross‑border succession. Assouline highlighted the high inheritance tax rates (up to 45 per cent), in contrast to beneficial regimes in neighbouring countries.

Wassmer emphasised that prenups and marital agreements made abroad may not be automatically enforceable in Israel and flagged issues such as the recognition of same‑sex marriages. Velasco stressed the importance of choosing the applicable succession law and explained how ownership allocation and valuation can be central to wealth tax planning. Even intra‑Spanish mobility can affect inheritance tax outcomes.

Exit taxes and retention strategies

Carrasquedo explained that Mexico does not currently impose an exit tax, but the administrative process for ceasing residency is burdensome, requiring advance notice and proof of a new residency, creating timing gaps. Personal income tax is 35 per cent and the dividend withholding tax is ten per cent. Mexico currently has no inheritance or wealth tax, although that may change in future.

Wassmer described Israel’s exit tax: proposals exist, including the need to file within 90 days and pay a depositing tax on bankable assets with a local trustee.

Assouline outlined France’s exit tax, which applies after six years of residence, with deferral generally available until the disposition of assets if requested within 90 days of a departure. Within the EU, deferral is automatic.

Von Matthiessen covered the US exit tax for citizens and certain long‑term green card holders meeting certain thresholds (eg, $2m net worth or average tax liability thresholds). A mark‑to‑market regime applies, with special rules for pensions and trusts. A key trap is exposure for US heirs post‑expatriation, who do not benefit from the large $15m exemption, making pre‑expatriation trust planning essential.

Velasco noted that Spain’s exit tax applies broadly after ten out of 15 years of residence. The authorities have challenged treaty tie‑breaker outcomes (eg, with Italy), although two recent Supreme Court cases provide comfort when another jurisdiction issues a residency certificate. The authorities also focus on determining the centre of economic interests.

Emerging trends and legislative direction

Assouline noted that France is debating proposals on additional taxes, including broader wealth taxation, an extended exit tax period (potentially up to 15 years) and other inheritance changes. New rules around citizenship taxation have been discussed, although not included in the latest draft tax law, as they may infringe some treaty provisions.

Carrasquedo expects no near‑term Mexican tax legislation but flagged increasing discissions on adviser liability. Von Matthiessen noted frequent changes in US immigration rules, rising taxes, tightening CFC rules and the application of Corporate Transparency Act rules for LLCs in New York from 2026.

Velasco described Spain’s constrained government, explaining that there is a current lack of proposed tax increases nor have any new taxes being proposed. She mentioned a new Madrid-regional ‘Mbappé’ regime, which would offer a 20 per cent credit on new worldwide investments, and other attractive regional inheritance tax regimes.

Wassmer highlighted Israel’s expanding transparency and disclosure requirements, with wealth reporting obligations applicable from 1 June 2026 regardless of any exemptions. This aligns with international trends towards certainty and control in regard to taxation.

Conclusion, final remarks and reflection

A question from the audience related to the French treatment of trusts as non-transparent. Assouline explained that this approach applies to all trusts no matter what the structure of control looks like. Different formalities in different countries for the assessment of tax residency were also briefly discussed.

As a last reflection, I found the panel’s mix of more technical descriptions of the rules and practical case references valuable. The current overall trends in relation to exit taxes and tax residency assessments came through clearly. Throughout the panel session, it was clear that the timing and documentation often drive outcomes in regard to relocations and that considerations, apart from the tax perspective, in relation to more sensitive subjects like family and succession planning remain important.