After the Nazi annexation of Austria in 1938, Kallir faced persecution not only for being Jewish, but for supporting the Schuschnigg government. He sold the Neue Galerie to his secretary, Vita Kūnstler, who preserved the gallery as best she could and voluntarily returned it to Kallir after World War II. Because work by the modern artists the gallery represented was not subject to Austria's export laws and was in most cases, considered by the Nazis to be "degenerate", Kallir was able to bring a significant portion of the gallery's inventory with him into exile. Kallir and his family initially emigrated to Lucerne, Switzerland, but Kallir traveled to Paris, where he founded the Galerie St. Etienne, when he was not granted a Swiss work permit. Since the French would not admit his wife and two children, the Kallir family emigrated to the United States in 1939, where he founded the Galerie St. Etienne in New York.