Taxation in Monaco
Property and capital gains are all tax-exempt.
Taxation process
Property and capital gains are all tax-exempt.
The Principality’s aim is to promote the development of businesses and services, particularly in the tourism and financial sectors. As a result, corporation tax is simplified provided certain criteria are met:
However, a new business enjoys significant tax advantages as it does not face the 33.33% tax until after the fifth year of operation, gradually paying a tax that increases over time to reach, notoriously, 33.33% of 75% of income.
To avoid paying direct tax (as individuals), the company must achieve 75% of turnover within the Principality of Monaco.
For companies whose turnover exceeds 25% outside the Principality, including via intermediary companies and trusts.
In addition, companies located in the Principality that offer licences for the use of copyright, patents, trademarks or industrial techniques will be subject to tax.
Over the last few decades, the Principality of Monaco has changed its economic strategy to diversify its sources of income, which were once almost exclusively dependent on tourism and casinos. The lack of internal resources and the Principality’s geographical size are the main causes of its economic subsistence dilemma. For this reason, the financial services sector has grown considerably, constituting a significant part of Monte Carlo’s economy. As a result, several financial institutions have established offices where they conduct their business. In particular, dividends and profits from the sale of shares or other financial instruments are not subject to taxation in the Principality. There is virtually no tax on property. In addition to co-ownership charges, there is a registration tax on rental contracts equivalent to 1% of the annual rent.
Succession tax
for property located in :
For direct descendants or children: 8%.
In the case of brothers and sisters: 10%.
Between nephews and uncles: 13
For family members: 16
For those who are not related: 20%
All forms of property transfer must take into account the costs associated with the legal process (stamps, public deeds, transcripts, registrations, etc.).
With the exception of French citizens, residents of the Principality are exempt from income tax. The absence of personal income tax, however, applies only to entities or individuals who are genuinely and successfully established within the Principality’s borders. Irrespective of the domicile of the deceased or donor, nationality or place of residence, inheritance or gift tax applies to assets located within the Principality’s borders or having their taxable base there (subject to the provisions of the Franco-Monegasque Convention of 1 April 1950).
In the Principality, corporation tax is the only direct tax levied on economic and industrial activity.
Regardless of their legal structure, companies that carry out industrial or commercial activities and generate more than 25% of their income outside Monaco are subject to corporation tax. The location of the business and the type of activity carried out determine the tax payable. After deducting all expenses, including the remuneration of the operator, directors or managers who successfully carry out their roles within the company, the taxable profits are determined. Capital gains arising from the transfer of fixed assets are subject to various regulations and are not subject to tax if they are reinvested. The tax rate is 33.33%. Moreover, from 2019 until 2022, this rate should only represent 25% of the total.
PERSONAL TAX
Property costs in the Principality are high. But for most, this is offset by the tax exemption available to Monaco residents. Personal income tax: Income tax exemption for citizens of Monaco is one of the key features of the Principality. Capital gains and income are exempt from tax. French and US citizens also benefit.
Capital tax: Private capital is not subject to taxation in Monaco.
Donations and inheritance tax: It is true that Monaco has an inheritance and gift tax (transaction tax).
Property transfer taxes: for a straightforward transaction, registration duties for property transfers (including notary fees) are 6% at the time of purchase. If a more complex legal system is used, it is 9%. Local taxes: The Principality of Monaco does not impose any property taxes.
VAT: 20% is the value added tax.
Departure tax: There is no departure tax for individuals leaving Monaco to live abroad. Tax advantages for foreigners moving to Monaco: A unique tax structure does not apply to foreign citizens moving to Monaco.
CORPORATION TAX
Where the majority of a company’s operations are carried out within the Principality, companies established in Monaco are exempt from tax. Companies generating more than 25% of their income outside the Principality are subject to a tax of 33.3%.
Heritage Planning and Protection
Every family should take the time to consider its estate plan carefully. Like a tailor-made suit, estate planning is most successful when it is done with precision and at the right time. The benefits of appropriate tax optimisation also combine with the benefits of capital, allowing assets to be transferred to future generations in a risk-free and economically efficient way.
A range of legal and tax strategies can be used to protect your assets effectively: These tools aim to limit the extent of asset liability and protect private property from potential attack by third parties.
Most individuals and families who correctly use legal and financial tools to protect property and transfer it to subsequent generations in a tax-efficient manner should have access to estate planning for successors and tax optimisation strategies. It is commonly accepted that these tools are only for people with significant assets, or High Net Worth and Ultra High Net Worth Individuals. The range of planning and asset protection options is considerable; from small endeavours such as insurance, it can include a variety of legal entities and businesses operating in national or international markets.
TAXES
Corporation tax: 3.33% is the corporate income tax rate. The rates are applied at a reduced rate for a newly incorporated company:
Payable 0% for the first two years
Tax is calculated on 25% of profits from the 3rd year.
Tax is calculated on 50% of profits from the 4th year.
Tax is calculated on 75% of profits from the 5th year onwards.
Tax is calculated on 100% of profits from the 6th year onwards.
Translated with DeepL.com (free version)
VAT
Monaco and France both have the same VAT rate. The corresponding term in French is TVA, or value added tax. There are three rates:
9.6% – Standard rate
5.5% – Reduced rate
2.1% – Very reduced rate: extremely rare
Is Monaco a tax haven?
We’re talking about one of the smallest sovereign states in Europe. Its importance has grown considerably in recent years as a service centre and landmark for travellers, casinos and tourism. Many wealthy European families have called the Principality their home since 1869, and thanks to the decree of Prince Charles III, they are exempt from paying income tax as residents of the Principality.
Since then, many entrepreneurs have taken advantage of the Principality’s advantageous tax structure by using this strategy to avoid paying tax in their home countries. For this reason, a lot has changed here now. The Principality has made itself available to work with the European authorities to provide the data needed to carry out the necessary residence checks, making it more difficult than before to obtain many tax advantages.
What is the Principality of Monaco's tax system like?
We are talking about the one and only country in Europe that still has no personal income tax.
Individuals living in Monaco are exempt from all income tax. The only people who are exempt are individuals who have the
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