Taxation in Monaco and residence: the guide
Synonymous with prestige and luxury, the Principality of Monaco is also renowned for its unique European tax system reserved for its residents. Since 1950, this independent state has signed two tax treaties with France, one on inheritance tax rules and the other on personal and corporate income tax. Discover the particularities of the Monegasque tax system and the taxes that apply to residents and non-residents.
Monaco's unique tax system
The Monegasque system is one of the many advantages for Monegasque citizens and residents. Indeed, the rule is the total absence of direct taxation. There is no wealth tax, no property tax and no housing tax.
However, 2 particular cases are subject to taxes:
- Individuals of French nationality
- Certain companies according to their turnover and activity.
This is one of the reasons why investing in Monaco is particularly interesting. However, some formalities and conditions are necessary to obtain the Monegasque resident card, the precious sesame to benefit from this reduced tax regime.
Taxation for individuals
The basis of taxation for individuals is the non-taxation of income, capital gains and capital, except for people of French nationality who cannot prove 5 years of residence in Monaco on 31/10/1962.
Indeed, since the 1963 tax convention on the taxation of individuals and legal entities, French nationals living in Monaco are subject to taxation on income, wealth and subject to taxes on capital gains and real estate income and are considered French tax residents.
Special cases of French citizens who are not liable for tax and whose income is from a Monegasque source:
- persons belonging to the Sovereign Household;
- civil servants, agents and employees of the Principality's public services who established their habitual residence in Monaco before October 13, 1962.
- French nationals who have married Monegasques or a French person with privileged French status or a person of foreign nationality (under certain conditions)
- persons with dual French and foreign nationality other than Monegasque, on the condition that they settled in the Principality before December 29, 1995 and completed administrative procedures before December 31, 1996.
Only the inheritance rights governed by the 1950 Convention are subject to inheritance tax only in the State where real estate and real estate rights forming part of the estate of a national of one of the two States are located.
This principle also applies to securities such as shares, SICAV (open-end investment fund) and FCP (unit trust), provided that the deceased, at the time of death, has been resident in Monaco for at least 5 years.
The inheritance goods in Monaco are therefore taxed as follows:
- in direct family line: 0%.
- between brothers and sisters: 8%.
- between uncles and nephews: 10%.
- between other collaterals: 13%
- between non-relatives: 16%
Taxation for companies
Since 1963, the income tax (ISB) is applicable to companies which carry out an industrial and commercial activity and which realize more than 25% of their turnover outside the Monegasque territory. The legal form of the company does not determine the application of the tax but it is the nature of the activity and the location of the operations that determine the liability.
Its rate is 33.33% for fiscal years opened before January 1, 2019 and:
- 31% for fiscal years beginning on or after January 1, 2019
- 28% for fiscal years beginning on or after January 1, 2020
- 26.5% for fiscal years beginning on or after January 1, 2021
- 25% for fiscal years beginning on or after January 1, 2022
Companies receiving income from industrial, literary or artistic property are also subject to this tax.
The value added tax is collected on the same basis as the French intra-community VAT regime since the 1963 convention.
The real estate VAT:
Due by the seller, the real estate value added tax applies to sales of building land and buildings within 5 years of completion, made by taxable persons for consideration.
Stamp and registration duties:
On all writings produced in court, registration fees are levied.
Fixed rate: 10 €.
Proportional rate: between 0. 5% and 7.5%.