Profit Tax / Individual Tax / VAT / Miscellaneous
The following types of tax, applicable in other countries, are not applicable in the Principality of Monaco:
– Income tax
– Wealth tax
– Land tax
– Housing tax
– Television tax
Companies of any type which carry on a commercial or industrial activity on the territory of the Principality are subject to tax at the rate of 33.33% when at least 25% of their turnover is generated by operations outside Monaco
In 1991, fiscal arrangements were instituted relating to the formation of companies which allow for the exemption of profits made during the first two years and partial taxation only of the profits of the next three years.
In addition, an extra and specific reduction is provided for in the case of scientific and technical research activities.
Administrative offices, which are not basically commercial, are not subject to a tax on profits, but to a levy of 2.66% of the total of the expenses incurred in running the office.
Dividends paid by Monégasque companies to their shareholders are not taxed.
Individual Tax
- INCOME TAX
Income tax in the Principality of Monaco was abolished in 1969, under the Sovereign Order signed by H.S.H. Prince Charles III.
The general rule is still applicable for Monégasque citizens and all other foreigners, except French citizens who have become residents since January 1957 who continue to be liable for French income Tax.
- INHERITANCE TAX
Monégasque law makes no provision for inheritance tax and claims no tax on direct donations or on donations between husband and wife. The tax due in other cases of donations is attractively low:
– Brothers and sister 8%
– Uncles, aunts, nieces and nephews 10%
– Collateral other than sisters, brothers,
uncles, aunts, nieces and nephews 13%
– Non-related persons 16%
Transfer dues, according to internal Monégasques law, only apply to real estate located in the Principality of Monaco or with situs in Monaco at the date of Death or donation, whatever the place of residence and nationality of the deceased or donator.
The existence of the French-Monégasque Customs Union means that V.A.T. is applicable at the same rate as in France. European community tax is applicable since
January 1, 1993.
The following are subject to V.A.T.:
- On the one hand, the operations due to economic activity carried out for a fee by a tax payer, i.e. by a person acting on an independent basis as of custom or occasionally, whatever his legal status;
- On the other hand, the operations expressly named by law as being subject to V.A.T. (delivery of goods to oneself, certain purchases, imports…)
- And lastly, operations which would normally be exempt, but which become eligible for the application of V.A.T. according to a choice made by the person carrying them out (operation carried out by persons performing exempted commercial activities, banking and financial establishment operations, empty property rentals for industrial, commercial or professional use).
The most frequently applicable rates are as follows:
Normal rate 20.6%
Reduced rate 5.5%
The normal rate, 20.6% is used when there is no reason to apply the reduced rate.
The reduced rate, 5.5% is applicable as follows:
– On various services: transports of travelers, hotel or furnished accommodation, certain shows (cinema, theater, concert…), entrance fees for certain attractions (museums, monuments, cultural exhibition), private television subscription, provision of meals in works cafeterias, services related to the supply and evacuation of water;
– On certain products: water, food products (except alcoholic beverages and certain solid food product), medicines (except medicines which are reimbursed to social security contributors belonging to the 2.10% category), products with agricultural origins, books, special apparatus and equipment for the handicapped, certain products for animal feed.
- PROPERTY ADDED VALUE TAX
V.A.T. is applicable on operations contributing to the production and commissioning of real estate.
It is based on:
– The sales price, the amount of compensation or the value of the social rights corresponding to the gain, plus the additional charges;
– The real, venal value of the property, if this real market value is higher than the price, the amount of the expenses or the value of the social dues, increased by the charges.
V.A.T. is generated by the act which defines the transaction, or if no such act exists, the transfer of ownership.
However, V.A.T. is not applicable to operations involving buildings or parts of buildings of over five years of age or, which, during the five years following completion, have already been sold to a person other than an estate or property agent. Such operations are normally subject to transfer dues.
The V.A.T. rate applicable on property transactions, whatever their nature, is 20.6%.
- REGISTRATION DUTY, FISCAL STAMPS AND VARIOUS TAXES AND LEVIES
Registration duty is levied on formalities to register transfers or civil or legal acts. It is either proportionate or a fixed amount.
Some of the most frequently used rates of taxation are as follow:
* 1% on leases,
* 2% on judgments with conviction,
* 3% on acts containing mortgage commitments for the engrossed documents,
* 5% on movable property sales, duty is reduced to 2% in the case of certain public sales and auctions,
* 6.5% on the sale of real estate,
* 7.5% on property transfers entailing the sale of commercial establishments,
* 1% transaction fees on real estate transfers,
* 0.65% mortgage subscription fee.
Fixed duties; a general fee of 5 Francs.
Fiscal stamps are placed on all documents for civil or legal acts and inscriptions which can be produced as evidence before a court of justice
The cost is either fixed or depends on the format of the document established. Fiscal stamps are also a form of duty for this accomplishments of administrative formalities (certificate of residence, work permit, Livret de Famille, passport).
Registration of the following documents is compulsory and must be accomplished within the appropriate time limits:
– public acts drawn up by notaries or bailiffs ,
– legal acts,
– private acts for leases, sales commercial establishments, wills,
– real estate transfers concerning living persons when the real estate is located in the Principality of Monaco,
– certain company acts.
Other acts may also be subject to registration, but it is not compulsory unless the said document is to be produced before justice or the authorities.
Other taxes and duties are also levied:
– corporation dues on the manufacture, circulation and consumption of alcohol,
– warranty tax on manufactured metal goods,
– duties on alcoholic beverages,
– warranty tax on precious metal goods.
In the Principality of Monaco, these taxes and duties are subject to the same regulations as in France. They are established on the same basis and applied at the same rate. Since January 1, 1993, the general conditions for the exchange of products subject to excise within the European Community are also applicable in Monaco.
It is not compulsory to register the following types of documents:
– public administration and general interest documents,
– civil status documents and the issues of certified copies of the same,
– passports,
– mortgage registration statements, mortgage transcripts, certificate of non-registration as a mortgage delivered by the Registrar.
For more information, please contact the Tax Department:
Direction des Services Fiscaux
57, rue Grimaldi
MC 98000 Monaco
Principality of Monaco
Tel: 011.377.93.15.81.04 or 24
Fax: 011.377.93.15.81.55