Monaco Taxation


Income Tax


There is no local income tax levied on the revenue of Monegasque citizens and foreigners residing in the Principality, provided that this revenue is not earned in France. French nationals pay tax as per the Franco-Monegasque bilateral convention of 1963.


Inheritance Tax 


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.

  • Other relatives – 13 %
  • Non family parties – 16 %
  • Brothers and sisters – 8 %
  • Uncles, nephews, aunts and nieces – 10 %

 

Property Taxes 


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 20 %

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 (20 %).

 

Corporate Tax


Business entities incorporated and operating in Monaco are taxed on :

Profits

Since 1st January 1963, tax has been levied on profits earned by:

1. 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 Monegasque territory.

2. 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 Monaco corporate entity provisions exist under certain conditions for substantial director’s remuneration to be deducted from pre-tax profits.

Administrative offices are usually taxed at the rate of (33.33 %) on (8 %) of their expenses or effectively at 2.6 %.

Turnover

The Value Added Tax (“Taxe sur la Valeur Ajoute – 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: 20 %
  • Reduced rate: 5.5 %

 

Withholding Tax


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 (20 %) up to 30 June, 2011 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.

 

Other Taxes


Registration Duty

Registration duty is levied on documents to register transfers, and civil or legal acts.

These include:

  • 1 % on leases
  • 0.65 % mortgage subscription Fee
  • 2 % on judgements with convictions
  • 4.5 % to 7 % on the sale of real estate
  • 1 % transaction fees on real estate transfers
  • 7.5 % on property transfers entailing the sale of commercial establishments
  • 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

Fixed Duty

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 compulsory:

  • Certain company acts
  • 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