TAXATION IN MONACO
2020-08-14
Taxation in Monaco: a unique tax advantage
Taxation of individuals:
No income tax
Since the Sovereign Ordinance of 1869, Monaco has not levied any personal income tax. This exemption applies to all residents, except French nationals, who are subject to the 1963 Franco-Monegasque tax treaty. To benefit from this advantageous tax regime, it is imperative to actually and genuinely reside in Monegasque territory.
Inheritance and gift tax
Inheritance and gift taxes in Monaco vary depending on the relationship between the deceased or donor and the beneficiary. These taxes apply to property located within the territory of the Principality, regardless of the nationality or residence of the parties involved.
Tax rates by relationship :
- Direct (parent-child, between spouses): 0%
- Siblings : 8%
- Between uncles, aunts, nephews and nieces : 10%
- Among other collateral : 13%
- Between non-relatives : 16%
Corporate taxation
Income tax (ISB)
In Monaco, income tax applies only to companies engaged in industrial or commercial activities that generate more than 25% of their turnover outside the Principality. Since January 1, 2022, the standard ISB rate has been set at 25%.
Temporary exemptions for new businesses
New companies can benefit from a progressive exemption from ISB as follows:
- 1st and 2nd years : 0%
- 3rd year : 6.25%
- 4th year : 12.5%
- 5th year : 18.75%
- From the 6th year : 25%
Other tax features
- No withholding tax on dividends and interest.
- VAT : Monaco applies the same rates as France, i.e. a standard rate of 20%, with reduced rates of 10%, 5.5% and 2.1% depending on the goods and services.
Conclusion
Monaco’s tax system, characterized by the absence of income tax for individuals (excluding French nationals) and limited taxation for companies, is a major advantage for individuals and businesses wishing to establish themselves in the Principality. This fiscal attractiveness, combined with an exceptional quality of life, makes Monaco a preferred destination for investors and entrepreneurs worldwide.
Disclaimer: As a Monaco real estate agency, we partner with authorized local companies to assist with relocation, residency, and other services beyond real estate transactions. We do not provide legal advice, and our services should not be seen as legal counsel. For specific needs, we collaborate with local professionals. Information on our website and blog is for general purposes only and does not reflect individual legal procedures.
