Taxes in Monaco: Personal, Corporate, and Goods & Services Tax Explained
Understand how Monaco’s unique tax system impacts individuals, businesses, and transactions, with key details on obligations and compliance requirements.
Monaco is often associated with luxury and a favorable tax environment, attracting individuals and businesses seeking financial efficiency. While offering significant advantages compared to many countries, the Principality maintains specific rules that residents, companies, and consumers must understand.
This article outlines how taxes function in Monaco, covering personal obligations, corporate policies, and taxes on goods and services, providing necessary information for those considering living or operating there.
Personal Tax Obligations
Monaco generally does not levy personal income tax on its residents, a principle dating back to 1869.1Mon Service Public. Tax In Monaco Individuals establishing residency are typically not taxed on salaries, investment income, or capital gains. Monaco also imposes no wealth tax or annual property taxes. This applies if the individual genuinely resides and centers their activities in the Principality.
To benefit from this environment, establishing residency is necessary. This usually involves demonstrating substantial ties, such as residing in Monaco for over 183 days per year or making it the center of one’s economic interests. Simply owning or renting property is insufficient; genuine presence is required.
A notable exception involves French nationals. Under a 1963 bilateral convention between France and Monaco, French citizens who moved to Monaco after October 13, 1962, generally remain subject to French income tax. Exemptions exist for those who resided there before this date, meet specific family criteria involving Monegasque citizens, or fall into certain official categories. French nationals born and continuously residing in Monaco may also be exempt. Dual French-Monegasque citizens are treated as solely Monegasque under the convention.
While income and wealth are largely untaxed, Monaco levies inheritance and gift taxes on assets physically located within its territory, regardless of the deceased’s or donor’s residency (subject to a 1950 Franco-Monegasque inheritance tax agreement). Tax rates depend on the relationship between the parties involved.
- Transfers between spouses or in the direct line (parents/children) are exempt (0%).
- Partners in a civil union face a 4% rate.
- Siblings are taxed at 8%.
- Uncles/aunts and nephews/nieces at 10%.
- Other collateral relatives at 13%.
- Unrelated persons at 16%.
Corporate Tax Policies
Monaco applies Corporate Income Tax (CIT), known locally as Impôt sur les Bénéfices (ISB), to certain business activities. Liability depends primarily on the nature and location of a company’s operations.
Companies engaged in industrial or commercial activities are subject to CIT if 25% or more of their turnover comes from outside Monaco.2Mon Entreprise. Corporate Income Tax Conversely, businesses generating over 75% of revenue within the Principality are generally exempt. Companies earning income from licensing intellectual property rights are also liable for CIT. Administrative offices may be taxed on a flat-rate basis linked to operating expenses under specific conditions.
The standard CIT rate is 25% for financial years starting on or after January 1, 2022. Taxable profit is calculated by deducting allowable costs, including operating expenses and asset depreciation, from gross revenues. Depreciation is typically calculated using the straight-line method, with common rates varying by asset type (e.g., 2-5% for commercial buildings, 20-25% for vehicles).
Specific rules apply to deductions. Director remuneration must correspond to genuine work and be reasonable; limits apply based on turnover for smaller companies. Net financial expenses (interest paid less interest received) are deductible up to the higher of €3 million or 30% of Tax EBITDA, with stricter rules for interest paid to related parties.
Company losses can generally be carried forward indefinitely to offset future profits, though the amount usable per year is capped at €1 million plus 50% of the taxable profit exceeding that threshold. Monaco offers a start-up scheme providing a full CIT exemption for the first two years, followed by a phased-in tax rate over the next three years. An R&D tax credit is also available for eligible research activities.
Taxes on Goods and Services
Value Added Tax (VAT), or Taxe sur la Valeur Ajoutée (TVA), is the primary tax on goods and services in Monaco. It functions as an indirect tax included in the final price paid by consumers. Due to a 1963 customs agreement with France, Monaco is part of the EU VAT area, applying French VAT rules and rates.3Mon Entreprise. Value Added Tax
The standard VAT rate is 20%, applicable to most goods and services.
Reduced rates apply to specific categories:
- 10%: Covers items like certain pharmaceuticals, passenger transport, restaurant services, hotel accommodation, and some home repairs.
- 5.5%: Applies to essential goods such as most food products, water, energy, books, art, certain event tickets, and goods for people with disabilities.
- 2.1%: Levied on specific essential items like certain medicines and newspapers.
A zero rate (0%) applies to exports and related services. Specific VAT rules also govern real estate transactions.
Monaco also imposes excise duties on products like alcohol and tobacco, mirroring French regulations. Duties apply to certain beverages, including mineral waters and sugary drinks. Registration duties, ranging from 0.5% to 7.5%, apply to certain legal acts and transfers, such as lease agreements.
Filing Requirements
Administrative requirements vary by tax type. Companies subject to CIT must file an annual tax return (“Déclaration des Résultats”) with the Department of Tax Services within three months of their fiscal year-end (e.g., by March 31st for a December 31st year-end).4Portail du Gouvernement – Monaco. Department of Tax Services Final CIT payment is due with the return.5Mon Entreprise. How To Declare and Pay Corporate Income Tax Four provisional payments are typically required during the year. Companies must retain accounting records for at least 10 years.
Most individuals residing in Monaco have no income tax filing obligations. However, French nationals subject to French tax must file with the French authorities. Obtaining and maintaining proof of Monegasque residency (like a carte de séjour or certificat de domicile fiscal) is an administrative process relevant for confirming tax status.6Mon Service Public. How To Apply for a Residence Certificate for Tax Purposes
For inheritance and gift taxes on Monaco-based assets, heirs must file an inheritance tax declaration (déclaration de succession). Lifetime gifts involving Monaco assets require formal registration, often via a notary, triggering the tax payment. Foreign entities owning property in Monaco must file annually regarding beneficial ownership changes through a Monegasque tax representative.