What are the Personal Income Taxes in Monaco?

Monaco not only offers opulent living standards, it is also attractive for tax purposes due to is reduced or null taxes. Especially, thanks to the absence of income tax.

Ensuring a zero personal income tax in Monaco may not be that simple as it sounds, though. Any newcomer, as a new resident, in Monaco may bear taxes depending on the source and characteristics of his or her income.

Below we address the main characteristics of Monaco’s income tax landscape.

Personal Income Tax

Monaco is known for not taxing personal income. This means that if you live in Monaco, you will not pay any tax on the money you earn, whether it is your salary, money made from investments, capital gains, or payments for being on a company’s board and regardless of their origin (foreign income and Monegasque income). All these are taxed at a zero percent.

If any Monaco resident wants to enjoy tax-free living in Monaco, he or she needs to:

Get official permission to live in Monaco (i.e., residence permit); and then
Be able to request and successfully obtain a tax residence certificate

But remember, it is key to get smart tax advice because it can get tricky. For example, check out the issues we talk about in the next part.

How to ensure the zero Personal Income Tax in Monaco

If you want to enjoy the benefit of not paying taxes in Monaco as a resident, you must first secure residency status in the principality.

To apply for residency in Monaco, you need to show that you have financial resources, find a place to live, and have a record free of any criminal activity.

Once you have got all that resolved, the next important step is to obtain a Monaco Certificate of Domicile for Tax Purposes, also known as tax residence certificate.

To get that tax residency certificate in Monaco, a person must:

- Show a valid “carte de séjour,” which is the official document that says that the person is allowed to live there;
- Statement that the individual does really meet the criteria for being a tax resident, meaning the individual has either spent more than 183 days a year in Monaco or has their center of economic interest there;
- Prove that the individual has a place in Monaco where he or she lives, like showing bills for utilities, a lease, or other legal papers that say the individual has been living there for the past year, whether he or she owns the place, rents it, or lives with someone else;
- Hand over any other papers the Monaco government might ask for if the ones already given do not fully prove the individual is settled in the country.

Residents in Monaco and Foreign Taxes

Newcomers and new tax residents in Monaco might not know that Monaco’s double tax treaties are few, and this could negatively impact those with income from countries with no tax treaty with Monaco.

For example, if an individual moves from France to Monaco, the tax withheld on dividends from the US could jump from 15% to 30% because Monaco and the US do not have a double tax treaty.

Although, Monaco has entered into plenty of treaties to share information, it has only a handful of treaties to prevent double taxation, currently with countries like Guernsey, France, Liechtenstein, Luxembourg, Mali, Malta, Montenegro, United Arab Emirates, Saint Kitts and Nevis, Seychelles, and a few others.

Smart tax planning is key to dodge potential tax leakages. Plus, it is wise to look at the tax rules in other countries, as they all have their own ways of taxing income from different sources.

Monaco also has some tax benefits and advantages for individuals and, in particular, High-Net-Worth individuals that let them cut down their taxes. These tax benefits and advantages include:

No rules on Controlled Foreign Company (CFC), so income in or from companies abroad might not be taxed in Monaco
No tax on wealth
No rules on effective place of management to determine the jurisdiction of tax residence of companies
And chances to set up and planning trusts, foundations, and family offices

For those who dream of living in Monaco to save on personal income taxes and enjoy the high life, getting this residency and tax resident certificate in Monaco is essential.

For years we have been helping foreigners moving to Monaco and getting the resident permit and tax residency in the Principality to benefit from its zero income tax.

Our presence and contacts in Monaco make us an ideal travel partner for this arduous task. If you have questions about Monaco and would like us to help you with the process, please write to us at [email protected] or through the contact form.