Monegasque nationals and foreign nationals residing in Monaco are not subject to personal income tax in Monaco.
French nationals residing in Monaco are, however, subject to French income tax (under Article 7-1 of the French-Monegasque bilateral convention of 18 May 1963).
Dividends and capital gains are not subject to taxation.
Real estate tax or local residence tax
No real estate tax or local residence tax is levied in the Principality of Monaco.
Inheritance and gift taxes
Inheritance and gift taxes apply only to assets situated in the Principality of Monaco and do not apply to assets located outside the jurisdiction. The nationality and place of domicile or residence of the testator or donor is thus irrelevant.
The rate of taxation depends on the degree of kinship between the testator (or donor) and the heir (or donee):
- direct line between parents and children, or between spouses: 0%
- between partners of a shared life agreement: 4%
- between brothers and sisters: 8%
- between uncles, aunts, nephews and nieces: 10%
- between relatives other than the above: 13%
- between unrelated persons: 16%
Customs and VAT regulations
The Franco-Monegasque Customs Convention of 18 May 1963 established a Customs union between France and Monaco. French Customs regulations therefore apply in Monaco. Although the Principality of Monaco is a State outside of the European Union, it forms part of the European Customs territory in order to ensure that the bilateral agreement between Monaco and France is enforced. Value Added Tax (VAT) is applied on the same basis and at the same rates than in France.
Corporate taxation: business profits tax
The business profit tax (Impôt sur les Bénéfices) is the only direct corporate taxation levied in the Principality of Monaco.
The tax applies to industrial and commercial activities (irrespective of their legal form) if more than 25% of the business’s turnover is generated outside of Monaco.
The tax rate ranges from 0 to 33.33% on profits accrued inside and outside Monaco.
Companies earning over 75% of their revenue within the Principality of Monaco are thus not liable for business profits tax.