Discover the attractiveness of Monaco’s luxurious lifestyle and its tax advantages! Monaco offers a tax-efficient landscape to elevate your business ventures, secure prime real estate investments, or enjoy opulence.

Individuals from around the globe, interested in relocating their tax domicile to Monaco, often ask questions about the fiscal obligations that await them in Monaco. Is there a disparity in tax treatments between foreign residents and Monegasque nationals? Or perhaps, does Monaco extend a favorable tax regime that benefits its international citizens?

Let’s address the taxes that actually applies in Monaco and confirm whether Monaco is a tax-free jurisdiction.

Personal Income Tax and Wealth Tax

Monaco offers financial freedom. Personal earnings and wealth are kept free from personal income taxes and wealth tax respectively. Hence, Monaco allows optimizing personal income and wealth without the burden of income and wealth taxes.

This 0% income and wealth tax advantage is generously extended to all, including non-residents as foreign investors and aspiring residents who choose to conduct their business affairs within the principality.

Corporate tax and VAT

Although Monaco is a tax-free country for individuals due to the cero income and wealth tax, the principality does effectively levies corporate income tax, transfer tax, and VAT. These taxes are set at modest rates to promote the business and economic environment in the country.

Corporate income tax is tailored to support local commerce, applying solely to companies with over a quarter of their revenue originating from international sources.

VAT is applied to any type of purchase-sale transaction of a large variety of goods and services generally at the standard rate of 20%.

Non-resident Income and Capital Gain tax

For global investors as non-resident in Monaco, the country offers several tax advantages and benefits:

• Free cross-border transactions: Monaco eliminates the ‘tax burden’ for international financial exchanges. For instance, there is no withholding tax on dividends, interest, or royalties paid from Monaco-based companies to recipients outside the principality.
• Investor-friendly capital landscape: In Monaco, shareholders enjoy tax-free capital gains from the sale of shares in local companies. Furthermore, director fees and dividends paid by Monaco entities are also free from withholding tax.
• Advantageous property tax conditions: Monaco’s real estate scene is free from property taxes. Tenants of rental properties are subject to a nominal 1% tax on the annual rent plus any service charges. This leasehold duty is a small price to pay for the privilege of residing in one of the world’s most exclusive locales.

Hence, in Monaco, the closest equivalent to an income tax for non-residents is the leasehold duty, set at a rate of 1% of the total rent and associated costs for the duration of the tenancy. This duty is payable in full upon the registration of the lease agreement, a compulsory step that must be completed within three months of signing the contract to avoid penalties. As such, this tax is an inescapable aspect of the tenancy process in Monaco, ensuring compliance and contributing to the principality’s fiscal structure.

Key takeaways

The key characteristics of the tax landscape in Monaco are:

• Zero Individual Income and Wealth Tax: The principality stands out for not imposing any income and wealth tax on its inhabitants, a policy that extends to foreign investors and non-residents alike.
• No Withholding Taxes: A key benefit of investing in Monaco’s companies is the absence of withholding taxes on dividends or interest paid out by Monaco’s companies, making it financially attractive for repatriation of earnings.
• Minimal Rental Tax: Contrary to the higher rental tax rates of up to 24% found in France and other European countries, Monaco’s nominal 1% tax rate on rental income positions it as one of the most favorable rental markets globally.

Monaco’s tax framework is a clear example of the principality’s dedication to promoting an environment focuses on business and economic growth.

Monaco distinguishes itself from other countries due to its tax attractiveness for international and non-residents investors due to the absence of personal income and wealth tax, no barriers for cross-border transactions, and policies that benefit shareholders and property investors. Hence, from corporate acquisitions to entrepreneurial ventures and property investments, Monaco presents an exceptional opportunity to keep and increase your wealth with a large tax benefits and advantages.

At Relocate&Save / MonacoAdvisers we have been helping entrepreneurs, high-net-worth individuals, sportsmen and women, and people from the world of cryptocurrencies to invest in Monaco and transfer their tax residency to the Principality 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].