Tax privileges for persons domiciled in Monaco
Independent sovereign state, the Principality of Monaco is renowned for its exceptional taxation. Between exemptions and reduced rates, the system is particularly favorable for residents and businesses of the Principality.
Taxation of natural persons: advantages and particularities
Characterized by a "soft" tax system, the Principality of Monaco has provided several measures for the benefit of its inhabitants.
Property tax and housing tax
In Monaco, there is no property tax or housing tax. Owners and tenants of land are therefore not subject to any tax on their acquisitions.
Monegasques and foreigners residing in Monaco benefit from total exemption from income tax1. However, French residents living in the Principality after January 1957 are not affected by this provision. These remain subject to income tax, with the exception of a few special cases. For example, any French married person can claim the exemption2:
• With a Monegasque spouse;
• With a foreigner residing in Monaco, if the marriage took place before January 1, 1986;
• With a French resident in the Principality, if the latter already has an exemption himself.
Please note, these tax privileges are only granted if the couples have resided in the Principality since the date of the marriage.
Inheritance tax applies to property located in the Principality, regardless of the nationality, domicile or residence of the deceased or donor. However, the tax rate varies according to the degree of kinship between the deceased and his heir or the donor and his beneficiary3.
|In direct ascending-descending line
|Between uncles, aunts, nephews and nieces
|Among other collateral
|Between unrelated people
Taxation of legal persons
Income tax (Impôt Sur les Bénéfices)
Any company, industrial or commercial, achieving more than 25% of its turnover outside Monaco is subject to this tax4. Companies with a turnover of over 75% in the Principality of Monaco are therefore not affected. Taxable profit is calculated after deducting deductible charges. Regarding the tax rate, it is generally set at 33.33%.
In order to encourage the creation of businesses in Monaco, the Principality has set up a tax assistance system. According to the latter, newly created companies in Monegasque territory are exempt from Income tax for two years. Once this period has elapsed, they benefit from reduced taxation for the following three years. The tax will then only be calculated on:
• 25% of the taxable profit in the third year;
• 50% of the taxable profit in the fourth year;
• 75% of taxable profit in the fifth year.
Considering its many tax advantages, the Principality of Monaco remains a privileged territory for any type of investment. With the absence of property and housing taxes, it is ideal for real estate investors.