Securing tax residency in Monaco to take advantage of tax breaks and benefits while not physically residing there has grown more difficult and challenging, particularly given the intensified vigilance and information exchange among European tax authorities.

It is essential to recognize that in the current era of financial and tax transparency, trying to support residency in Monaco without concrete evidence is not just challenging but it may also derive into significant legal consequences.

Misunderstanding Surrounding Residency in Monaco

The old image of Monaco, with its banking and tax secrecy and underpopulated urban landscape, has been transformed. Now, Monaco presents itself as a brilliant tax-efficient hub within Europe, famous for its top-tier financial services and lifestyle, right in the heart of the European continent.

The government is focused on making sure that residents are truly part of this lively community, insisting on substantial physical presence in the Principality, strict tax compliance, and a commitment to contributing positively to Monaco’s prosperous future.

The importance to stay in Monaco as many days as possible

Maintaining a long-term physical presence in Monaco is critical for several reasons. The key three factors to bear in mind regarding the minimum number of days required to stay in Monaco include:

• Meeting the tax residency criteria and addressing international tax issues to be recognized as a full tax resident of Monaco.
• Applying and getting a tax certificate from the Monegasque Tax Authorities.
• Renewing the “Carte de Séjour,” or residency permit.

In this respect, contrary to common misconceptions, merely leasing a property in Monaco is insufficient for establishing tax residency in the Principality. Authentic residency demands considerable time spent within Monaco’s borders, often exceeding 183 days annually. Staying in Monaco for a minimum number of days also helps to mitigate some tax risks for instance in the departure State or in the State where the individual may derive income and gains.

For example, dividing your time between places like Cannes or Como and Monaco, with the major part of your days spent outside the Principality, could lead to being classified as a tax resident of France or Italy, respectively.

This highlights the necessity of fully understanding and satisfying the residency criteria set by Monaco to legally enjoy its favorable tax policies.

The required minimum stay in Monaco for tax purposes

Unlocking the benefits of tax residency in Monaco and its associated tax exemptions and benefits is subject to the fulfilling of the Principality’s residency mandates, which generally cover:

• Spending more than 183 days per year in Monaco (these days do not need to be continuous).
• Alternatively, establishing Monaco as the central hub of economic interests, which can reduce the required physical presence in the country. This can be achieved through investment in financial assets, real estate, or by creating a Special Purpose Vehicle (SPV) or a family office within Monaco.

Moreover, securing a tax residence certificate from the authorities in Monaco serves to corroborate the residency status in the country, thereby aligning with Monaco’s legal framework as well as fulfilling global tax responsibilities.

In this context, it is crucial to spend a significant number of days in Monaco, as the Monegasque tax authorities will require the following for the issuance of a tax certificate:

• Verification of a valid administrative residence permit, known as the “Carte de séjour”;
• A sworn declaration that the individual fulfills the tax residency criteria, which entails either residing in Monaco for over 183 days annually or having the center of economic interest in the Principality;
• Evidence of occupying a residence in Monaco over the past year, such as utility bills, lease agreements, or other acceptable proofs under Monegasque Law, whether the property is owned, rented, or shared;
• Submission of any additional documents that may be requested by the Administration to demonstrate a firm residence in the country, should the aforementioned evidence be insufficient.

To summarize, based on our experience, the Monegasque Administration frequently requests supplementary documentation to substantiate genuine residency in Monaco, including items like utility bills, gym memberships, and similar evidence.

However, the mere fact of obtaining tax residency in Monaco, and supporting it through the corresponding tax residence certificate, does not automatically secure tax advantages; adherence to Monaco’s laws and the scrutiny of international tax authorities is equally imperative.

The required minimum stay for the renewal of the resident permit

Beyond tax considerations, spending a considerable number of days in Monaco is also vital for the renewal of your residency permit before it expires. The Monegasque authorities mandate the following during the renewal process, which necessitates time spent within the country:

• The aforementioned tax certificate for fiscal reasons.
• The most recent electricity bill pertaining to your place of residence.

Lacking these two documents could jeopardize the renewal of your residency permit for immigration purposes, potentially leading to its cancellation, what may also derive in challenging the tax residence in the country as described above.

At Relocate&Save, with our branch MonacoAdvisers, we have been helping foreign entrepreneurs, high-net-worth individuals, sportsmen and women, and people from the world of cryptocurrencies to transfer their tax and administrative residency to Monaco for years.

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