PERSONAL TAXATION

Income tax

Monegasque nationals and foreign nationals residing in Monaco are not liable for income tax in Monaco.

French nationals residing in Monaco are, however, liable for French income tax (under the terms of the Franco-Monegasque bilateral convention of 18 May 1963).

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 immaterial.

The rate of taxation depends on the degree of relationship 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%

Registration duties and other registration fees

Registration duties and registration fees may be proportional or fixed.

Certain deeds must be registered within the periods laid down in law

These are:

official deeds drawn up by notaries and bailiffs;
private deeds concerning leases, sales of businesses, wills;
conveyance of real estate located in the Principality inter vivos;
certain corporate deeds.

Registration of other deeds is optional.

The advantage of registration is that it confers a fixed date on any deeds so registered.

Other duties are also levied, particularly on alcoholic beverages.

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 as in France. The standard rate of VAT is 19.6% on all transactions liable for VAT except those subject to a reduced rate.

The intra-community VAT system has been in force in Monaco since 1 January 1993.

Corporate taxation: business profits tax

A business profits tax is the only direct corporate taxation levied in the Principality of Monaco.

Companies liable for business profits tax (irrespective of their legal form) are those:

involved in industrial or commercial activities;
and earning 25% or more of their revenue from sources located outside Monaco.

Companies earning over 75% of their revenue within the Principality of Monaco are thus not liable for business profits tax.

The tax rate is 33.33% and applies to all corporate profits net of expenses.