AG: Polish exit tax overreaches on pre-move gains, losses ignored

Advocate General Juliane Kokott has advised the Court of Justice to strike down two features of Poland's exit tax on individuals while sparing a thirdEuropa: taxing gains that arose before the taxpayer ever became Polish tax resident, and counting latent gains without latent losses, both breach the free movement of workersEuropaEuropa, but letting the taxpayer pay over up to five years in instalments is proportionateEuropa. The Opinion of 15 October 2026 in Case C-430/25 (Gena) responds to three questions from the Warsaw Voivodeship Administrative Court about the Polish tax on unrealised gains triggered when a worker moves his tax residence out of Poland.

The case concerns AR, an Italian and United States citizen who has lived and worked as an employee in Poland since August 2022 and has been subject to unlimited Polish income tax since 1 January 2023. He intends to keep Polish residence until at least 1 January 2028, then stop working, move to Germany, where he owns property, and transfer his tax residence. Before arriving he had built up substantial private wealthEuropa, mostly shares acquired privately and through employee incentive schemes plus bonus stock units; at the move it should exceed PLN 4 million. A ruling of 31 December 2024 by the Director of National Tax Information told him all of it, including pre-arrival assets, would face exit tax, and AR challenged it as contrary to Union law. The questions concern only the shares.

Polish law charges 19% on unrealised gains where a taxpayer under unlimited liability changes residence so Poland loses disposal-taxing rightsEuropa; for non-business assets only specified personal estate counts, and only after five years' Polish residence in the preceding ten. Tax falls due above PLN 4 million in market valueEuropa; on request payment may be spread over up to five years.

First, taxing gains that arose abroad before any Polish liability breaches Article 45.Europa Exit tax is a restrictionEuropa — the leaver pays on never-realised gains while the stayer pays only on actual disposals — and identical computation does not remove it, as the Court held in Commission v Spain. The only accepted justification, balanced allocation of taxing powers under territorialityEuropa, cannot carry gains generated neither in Poland's time nor on its territoryEuropa; it encroaches on the States actually competent and serves, at best indirectly, revenue-raising. Second, counting latent gains while excluding latent losses also breaches Article 45.Europa Poland itself nets realised gains against realised losses when a resident sells shares, so leaver and stayer are comparable for measuring portfolio performance; ignoring losses makes exit tax systematically higher on the same portfolio. Third, a deferral capped at five years with instalments survives.Europa Immediate collection restricts movement, but effective recovery is a legitimate interest distinct from allocation: tracing a departed taxpayer's assets grows harder with time and some may never be sold, so waiting for disposal would jeopardise collection the Court has recognised. The Court has accepted five-year deferral before, and the Union legislature set five years as the general corporate rule in Article 5(2) of Directive (EU) 2016/1164, with no objective reason to treat individuals differently. The Opinion proposes the Court rule that Article 45 TFEU precludes the pre-residence extension and the gains-without-losses base, but not the five-year instalment deferralEuropa.EuropaEuropa The Court itself has yet to rule.Europa Legal basis: Article 45 TFEU, with the Polish Articles 30b, 30da, 30db and 30de and Article 5(2) of Directive (EU) 2016/1164 as context.