Taxation in Monaco: what taxes exist and what does not apply

Taxation in Monaco

Monaco's tax environment is one of its most distinctive features and a significant draw for international residents and businesses. The Principality does not levy personal income tax on most residents, and there is no wealth tax, capital gains tax for individuals, or annual property tax. However, Monaco is not entirely tax-free, and understanding the system is important.

Personal income tax

Monaco has no personal income tax for its residents. This applies to all nationalities with one notable exception:

French nationals who became residents of Monaco after 13 October 1962 remain subject to French income tax under the Franco-Monegasque Tax Convention of 18 May 1963. They must declare their worldwide income to the French tax authority as if they lived in France. French nationals settled in Monaco before that date (and their qualifying descendants) enjoy the same treatment as other residents.

For all other nationalities, income earned worldwide is not taxed in Monaco. This is the single most significant tax advantage of Monaco residency.

Corporate tax

Monaco does levy a corporate tax, known as the impot sur les benefices, but it applies only in specific circumstances:

• Businesses that derive more than 25 per cent of their turnover from outside Monaco are subject to the tax
• The rate is 25 per cent on profits (aligned with the French corporate tax rate)
• Businesses operating entirely within Monaco are generally exempt
• Certain activities and holding structures have specific rules

Professional advice is essential when structuring a business in Monaco.

VAT (TVA)

Monaco applies value-added tax (TVA) at the same rates as France, as part of the customs union between the two countries:

• Standard rate: 20%
• Intermediate rate: 10% (restaurants, transport, renovation works)
• Reduced rate: 5.5% (food, books, energy)
• Super-reduced rate: 2.1% (certain medicines, press)

VAT is included in displayed prices in shops and restaurants, as in France.

Inheritance and gift tax

Monaco levies inheritance and gift taxes, but the rates depend on the relationship between the parties:

• Direct line (spouse, children, parents): 0%
• Siblings: 8%
• Uncles, aunts, nephews, nieces: 10%
• Other relatives: 13%
• Unrelated parties: 16%

Only assets physically located in Monaco are concerned.

What Monaco does not tax

• Personal income (for non-French residents)
• Capital gains for individuals
• Wealth or net worth
• Property (no annual property tax)
• Dividends received by individuals

Important considerations

• Monaco's tax advantages are legitimate and well-established, but residents must ensure they are not also tax-resident in another country that would tax their worldwide income
• Many countries have tax treaties and substance requirements; simply having a Monaco address may not be sufficient to escape tax obligations elsewhere
• Professional tax advice is strongly recommended before relocating to Monaco for tax reasons
• Monaco cooperates with international tax transparency initiatives, including automatic exchange of financial account information