VAT System in Monaco: Detailed Guide

Overview

Monaco is often assumed to have its own tax rules across the board. VAT is the clearest exception. Under the Franco-Monegasque customs convention and fiscal convention of 18 May 1963, the Principality applies French value added tax — same scope, same rates, same deduction mechanics — while administration, registration and filing are handled locally by Monaco's Department of Tax Services (Direction des Services Fiscaux).

Two consequences follow, and they shape almost everything below:

• Monaco sits inside the EU VAT territory through France. Monegasque VAT numbers use the FR prefix and appear in the EU VIES registry.
• Trade with France is domestic, not cross-border. Goods move between the two territories without customs formalities.

For a shorter orientation, see the VAT registration and obligations guide. For the wider tax picture, see Monaco's tax system and company taxation.

VAT Rates

Four rates apply, identical to the French schedule.

Worked example (standard rate): a service priced at €100 excluding VAT carries €20 of VAT; the customer pays €120, and €20 goes to the tax authority less any deductible input VAT for the period.

A common trap: restaurant meals are 10%, not 5.5%. The 5.5% rate covers unprepared food you buy to take home, not food served to you. Hotel accommodation is likewise 10%, not the standard rate.

Exempt Activities

Some activities fall outside VAT entirely. The main exemptions are:

• Banking, financial and insurance services
• Medical and paramedical services provided by licensed practitioners, including dental care
• Education delivered by recognised institutions
• Certain non-profit and charitable activities

Exemption is not the same as zero-rating. A business making only exempt supplies charges no VAT — and correspondingly cannot deduct the input VAT it pays on its own purchases. That distinction matters when modelling costs for a clinic, a school or an insurance intermediary.

Registration

Who must register

Any business carrying out taxable activity in Monaco registers with the Department of Tax Services. In practice this happens at the point of business creation, alongside the business registration formalities.

Foreign companies performing VAT-taxable operations in Monaco without an establishment there must register through an accredited tax representative — this is a firm requirement, not an option.

The franchise en base threshold

Monaco applies the French small-business exemption (franchise en base de TVA). Businesses whose turnover stays under the threshold do not charge VAT and do not file VAT returns — and equally cannot deduct input VAT.

The French thresholds in force for 2026 are €85,000 for sales of goods and €37,500 for services, with tolerance ceilings of €93,500 and €41,250 respectively. Cross the tolerance ceiling and VAT becomes chargeable from that day; stay between the two and you remain exempt for the current year but become liable from the following January. A proposed single €37,500 threshold was dropped from the French 2026 budget, so the two-tier structure stands.

Because these figures move with French finance legislation, confirm the current thresholds with the Department of Tax Services or your accountant before relying on them.

Voluntary registration below the threshold

Registering voluntarily lets you recover input VAT on equipment, professional fees and premises, and gives you a VAT number that EU business customers expect to see. The cost is real compliance work — periodic returns, invoice discipline, record-keeping. For a service business with low purchasing, the exemption is often the better deal; for anyone investing in fit-out or equipment, registration usually pays for itself.

Obtaining an intra-community VAT number

Even VAT-exempt persons who make intra-community acquisitions of goods, or buy or supply intra-community services, need an intra-community VAT number. The request is made on a dedicated form (Demande d'attribution d'un numéro de TVA intracommunautaire) filed with the Department of Tax Services.

Department of Tax Services (Direction des Services Fiscaux) Terrasses de Fontvieille, 24/26 rue du Gabian, MC 98000 Monaco Tel. (+377) 98 98 81 21 / (+377) 98 98 81 22 Monday to Friday, 9:30–17:00

The number issued takes the form FR + two-digit key + company identification number, and can be checked by any counterparty through the EU VIES database.

Filing and Payment

Registered businesses file periodic VAT returns with the Department of Tax Services — monthly or quarterly depending on turnover — declaring:

1. Output VAT — VAT charged on sales, broken down by rate
2. Input VAT — deductible VAT paid on business purchases
3. Net position — output minus input: payable to the Treasury if positive, carried forward as a VAT credit or refunded if negative

Late payment carries late-payment interest of 0.20% per month of delay, counted from the first day of the month following the month in which the tax fell due until the last day of the month of payment. Failure to file attracts a fixed penalty that escalates substantially once the Department has issued a formal notice. Neither is punitive at first, which is exactly why a missed deadline is worth regularising immediately rather than waiting for the next return.

Record retention: accounting records and supporting documents — issued and received invoices, sales and purchase registers, payment evidence, customs paperwork — must be kept for a minimum of 10 years. See accounting obligations for the full requirements.

Input VAT Deduction

Fully deductible

• Goods bought for resale, raw materials and supplies
• Office equipment, furniture and business software
• Professional services: legal, accounting, consulting
• Business premises, utilities and business insurance
• Marketing and advertising

Restricted or excluded

• Passenger vehicles — VAT on purchase is generally not deductible; commercial vehicles are treated differently
• Fuel — deductibility varies by fuel type and vehicle category
• Entertainment and gifts — restricted, with value limits on gifts
• Personal-use items and anything attributable to exempt activities

Conditions

Deduction requires a compliant supplier invoice showing the VAT charged and, for B2B transactions, both VAT numbers. Keep proof of payment and be able to justify the business purpose — this is the first thing examined during an audit. Verify unfamiliar EU suppliers' VAT numbers through VIES before treating an invoice as reverse-charged.

Cross-Border Transactions

With France

Neither import nor export. The 1963 customs union means goods circulate freely between Monaco and France with no customs formalities, and supplies are invoiced under domestic rules. This is the single most misunderstood point in Monegasque VAT.

With other EU member states

Standard intra-community rules apply.

• B2B supplies of goods to a VAT-registered business in another member state: exempt in Monaco, with the customer accounting for VAT in their own country. Both VAT numbers must appear on the invoice and the customer's number should be validated in VIES.
• B2B services: reverse charge — you invoice without VAT and the customer self-assesses.
• B2C sales: the customer's country rate generally applies once distance-selling thresholds are exceeded.
• Recapitulative statements must be filed for intra-community supplies.

With non-EU countries

Exports outside the EU are zero-rated provided the goods physically leave EU territory and you hold customs proof of export; input VAT remains recoverable. Imports from outside the EU are cleared by French customs, with VAT due on the customs value plus duties and freight, then recovered as input VAT on the next return. See customs and import/export procedures.

Digital services

Software, apps, e-books and streaming follow the place-of-supply rules: B2C is taxed at the customer's country rate, B2B is reverse-charged to the customer. Businesses selling digitally across the EU generally use the One Stop Shop to report in a single return rather than registering in each member state.

Special Regimes

Margin scheme. Dealers in second-hand goods, works of art, antiques and collectors' items can account for VAT on their margin rather than the full selling price, where the goods were acquired without deductible VAT. Buy at €500, sell at €800, and VAT applies to the €300 margin. Eligibility conditions and documentation requirements are strict — relevant in Monaco for the art, classic-car and jewellery trades.

Reverse charge on B2B services. The supplier invoices without VAT and the business customer self-assesses in their own jurisdiction. It removes cash-flow friction on international B2B work but requires accurate customer status verification.

Professional Support

Most Monaco businesses outsource VAT compliance to an accountant or fiduciary. Typical market pricing:

• Periodic VAT return preparation and filing: €200–€800 per month, depending on transaction volume
• Annual compliance package: €2,000–€10,000
• Support during a tax audit: €1,000–€5,000+

Given that deduction errors and missed intra-community formalities are the most common findings in an audit, the fee is usually smaller than the exposure. See accountants and fiduciaries in Monaco and official tax and social contacts.

Key Takeaway

VAT is the one area where Monaco is not a tax exception: the Principality applies the French system in full, at French rates, inside the EU VAT territory via France. Get three things right and most of the complexity disappears — apply the correct rate (10% for restaurants and hotels catches people out), remember that France is domestic rather than foreign, and keep invoice-level documentation for ten years.

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Information current as of July 2026. VAT rates and franchise en base thresholds follow French finance legislation and can change annually. Confirm current figures with the Department of Tax Services or a qualified adviser before relying on them.