If you want to invest in real estate in Monaco, become a Monegasque resident or set up a business on the Rocher, you must be aware of the tax system in Monaco. In this article you will find all the information you need to know about taxation in Monaco.
Taxation on people
Did you ever dreamed of being exempt from income taxes? Monaco did it! Exemption from income tax was passed in 1869 on the Rocher. It has been in place ever since, which helps make Monaco so attractive. In practice, if you live in the Principality, you do not pay income tax. Unfortunately for you, this will not be the case if you are of French nationality. Indeed, following the signature of a bilateral agreement in 1963 between France and Monaco, French nationals who settled on the Rocher after January 1957 must pay income tax in France.
In addition, in the tax system in Monaco, there is no taxation on real estate. You will therefore automatically benefit from the property tax and housing tax exemptions. Finally, there is no wealth tax.
Inheritance tax applies to all property located in Monaco, regardless of the nationality and place of tax residence of the deceased (or the donor). The level of taxation applied depends solely on the family situation between the deceased and his heir:
0 % if direct filiation (parents-children, spouse),
8 % between brothers and sisters,
10 % between uncles, aunts, nephews and nieces,
13 % for any other family relationship,
16 % between non-relatives.
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When it comes to corporate taxation, the tax system in Monaco is also very favorable. Thus, in the context of your company, there is only one situation where you will have to pay a tax: if your company realizes more than 25% of its turnover (in commercial or industrial activities) out of Monaco. In this situation, you will have to pay a tax equivalent to 33.33% of your profits. But again, the Monegasque tax system provides flexibility. Indeed, it is possible to deduct the expenses related to the remuneration before the establishment of the amount of the taxable profit. Thus, a scale exists to establish the amount of deductible expenses for companies whose turnover is less than 3.5 million euros (service companies) or 7 million euros. If your company generates a higher turnover, the international (or European) practices in place will be applied to determine the amount of expenses related to the remuneration to be deducted.
This corporate tax also applies to companies located in Monaco whose only activity is to collect income related to patents or literary or artistic property rights.
The Principality also encourages the creation of promising companies through its tax policy. Thus, if you create a start-up and you are in the conditions described above, you will not have to pay corporation tax for two years. Then from the third year, a progressive tax (25%, 50%, 75% then 100% in the sixth year) will apply on your profits.
If you want to set up a real estate project in Monaco, do not hesitate to contact our real estate agency. We will explain in detail the taxation in Monaco. In addition, we will show you the tax benefits that apply specifically to your situation and we will assist you in your dealings with tax services in Monaco.
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