Monaco’s tax system is advantageous (fiscalité douce) for individuals whose tax domicile is in Monaco. They do not pay direct tax, with the exception of residents of French nationality who are covered by a tax treaty signed between France and the Principality. The only direct tax in Monaco is on companies. Only companies engaged in industrial and commercial activities are subject to corporate income tax.
Monaco, a country renowned for its advantageous tax system
Monaco’s tax advantages are just one of the many reasons to live in Monaco. The Principality of Monaco is renowned for its low tax rate for individuals established in the Principality for tax purposes. As such, they are not subject to direct taxation.
Establishing your tax domicile in Monaco exempts you from income tax. This exemption only applies to individuals actually established in Monaco, i.e. those with a Monegasque residence permit.
To become a resident of Monaco, you must have a residence in the country. The purchase of a property fulfils this condition. As the Principality does not impose any nationality criteria, a foreign resident can buy a property in Monaco without any problem.
Taxation of persons resident in Monaco
If you want to know how to invest in Monaco, real estate is a very interesting option. Buying a property in the Principality allows you to establish your tax domicile here. Being registered in Monaco for tax purposes offers a number of tax advantages, including exemption from income tax.
This exemption does not apply to individuals of French nationality. French nationals are covered by a tax treaty between France and Monaco. Under the applicable provisions, they are considered to be French residents for tax purposes.
By way of exception, certain French residents are considered to be outside the scope of this tax treaty:
- French nationals who can prove 5 years’ residence in Monaco on 13 October 1962;
- French nationals born in Monaco who have been domiciled in the Principality since birth.
Taxation applicable to companies established in Monaco
Monaco has a single direct tax system. Tax on profits applies to certain companies. including those that generate more than 25% of their sales outside Monaco.
For the Monegasque authorities, the legal form of the company is of little importance. The application of corporate income tax depends on the nature of the business. Only a company that exercises an industrial or commercial activity is subject to this tax.
The tax rate is 33.33% for any financial year beginning before 2019, 31% from 2019, 28% from 2020 and 26.5% from 2021. From now on, the tax rate will be 25% for any financial year beginning on or after 1 January 2022.
Other duties and taxes applied by the Monegasque authorities
Individuals domiciled in Monaco for tax purposes do not pay tax on their personal income. These tax advantages encourage many foreigners to take up residence in Monaco.
However, indirect taxes are still applied by the Monegasque authorities:
- value added tax (VAT) levied at the same rates as in France;
- VAT on the sale of building land and the supply of buildings;
- stamp and registration duties levied on civil and legal acts;
- taxes on insurance policies, beverages and precious metals.
Buying a property in Monaco is an excellent way to become a fully-fledged resident. As a specialist in the Monegasque market, our Coletti Real Estate agency can help you realise your investment plans in the Principality. You’ll benefit from the many advantages of Monaco’s tax system.
