Monaco Taxation
There is no local income tax levied on the revenue of Monégasque citizens and foreigners residing in the Principality, provided that this revenue is not earned in France. French nationals pay tax as per the Franco-Monégasque bilateral convention of 1963.
Inheritance taxes on Monaco-based assets are not levied between husband and wife or children. A sliding scale of rates applies between 8% and 16% for more distant inheritors.
The tax rate payable for a property purchase varies as a function of the age and use of the property as follows:
(1) New property - when purchasing a new property (of up to 5 years of age) the purchase price includes the VAT of 19.6%.
(2) Older property for residence - for the purchase of an older property, where the intention is to reside in the property and the property is to be kept for the next 4 years, there is a registration fee payable of 7.5% and the legal costs of the notaire in the vicinity of 9 to 10% of the purchase price.
(3)Older property for speculation - the purchaser of a property that is older and is purchased with the intention of reselling within the next 4 years, benefits from a lower tax rate.The registration fee is at 1.0% and
the legal costs of the notaire around 2.5% of the purchase price.However,
for these rates to apply the property must be resold in the following 4 years after purchase and when resold a VAT is payable on the profit margin at 19.6%.
Business entities incorporated and operating in Monaco are taxed on :
(1)Profits
Since 1st January 1963, tax has been levied on profits earned by:
- All firms involved in
industrial or commercial activities on Monegasque territory if over 25% of
their turnover originates from operations carried on either directly, or
through an intermediary, outside Monégasque territory.
- All firms whose activities
in Monaco consist of receiving:
a)either revenues from the
transfer or licensing of patents, trademarks,manufacturing procedures or methods, or
b)revenues from literary and
artistic rights.
The present tax rate is 33.3%.
It should be noted that in the case of a Société Anonyme Monégasque, provisions exist under certain conditions for substantial director’s remuneration to be deducted from pre-tax profits.
(2) Turnover
The Value Added Tax (“Taxe sur la Valeur Ajoutée – TVA”) is collected in the Principality of Monaco on the same basis and at the same rates as in France.The European Community VAT system came into effect on 1st January, 1993.
The
most commonly used tax rates are:
- normal rate:19.6%
- reduced rate:5.5%
The normal rate of 19.6% is used wherever the reduced rate cannot be applied.
(3) Expenses (in case of the“Bureau Administratif”)
Adminsitrative offices are usually taxed at the rate of 33.3% on 8% of their expenses or effectively 2.6%.
Monaco introduced a withholding tax along the lines of the Swiss model on the 1 July, 2005 as a result of negotiations following the introduction of the European Savings Tax Directive.
The rates of withholding tax are 15% in the first three years, 20% in the next three years and 35% thereafter.
The withholding tax is levied on interest paid to people non-resident in the Principality but resident in a member state of the EU.
(1)Registration duty
Registration duty is levied on documents to register transfers, and civil or legal acts. These include :
-1% on leases,
-2% on judgements with convictions,
-3% on acts containing mortgage commitments for the engrossed document,
-5% on movable property ales, duty is reduced to 2% in the case of certain public sales and auctions,
-6.5% on the sale of real estate,
-7.5% on property tranfers entailing the sale of commercial establishments,
-1% transaction fees on real estate transfers,
-0.65% mortgage subscription fee.
(2) Fixed duty : 10€
Fiscal stamps are placed on all documents for civil or legal acts and inscriptions which can be produced as evidence before a court of justice.
Registration of the following documents is complusory :
-publics acts drawn up by notaries or bailiffs,
-private acts for leases, sales of commercial establishments , wills,
-real estate transfers concerning living persons when the real estate is located in the Principality of Monaco,
-Certain company acts.
Please contact us for further information
