Monaco: Living There - Tax Issues

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Living There

The Monegasque tax system applies to all residents, regardless of their nationality, except for French nationals. Monegasque law imposes no income tax, capital gains tax, wealth tax or withholding tax on residents, except for French nationals who must pay their tax dues to the French authorities.

There is no rental income tax if the property owner is an individual .

Businesses also do not pay income taxes, unless more than 25% of their turn-over is outside Monaco, in which case, they pay a corporate tax rate amounting to 33 .33%.

In order to determine their taxable net rental income, local companies are allowed to deduct general operating expenses, management fees for directors, and depreciation taken on capital assets, provision, which is a temporary write-off for a potential charge which is tax deductible .

The only direct taxes existing in Monaco are:

• Commercial and industrial profit tax
• Registration and stamp duty
• Mortgage duty

All Monegasque businesses, which are subject to profits taxation, are exempt for their first two years of existence after which they are taxed at a reduced rate for the following three years . Tax due on profits is as follows :

While no tax is applicable on real estate, a habitation tax does exist for all those renting apartments. The rate is 1% of the annual rental, and is payable by the tenant .

Foreigners are welcome to establish residency. However, given the physical size of Monaco, some degree of control is exercised.

A Monegasque residence card must be secured for any individual over sixteen years of age who wishes to spend more than three months. Becoming a Monegasque resident via the residence card will depend upon whether or not the applicant is a national of a state in the European Economic Area (EEA) which spans the European Union states, Liechtenstein, Norway and Iceland.

A non-EEA national is required to obtain a long-stay visa from the French authorities before making an application in Monaco for a Monegasque residence card. The application for a long-stay visa is generally lodged with the French Consulate in the territory where the individual resides and takes about three months to secure.

EEA nationals are not obliged to obtain a long-stay visa from the French authorities. They can apply for a residence card directly in Monaco. The process takes an average of one and a half months.

The first residence card (carte de séjour) obtained is valid for one year and is renewed twice, after which it is replaced by a card valid for three years. This is also generally replaced twice at intervals of three years, after which a ten-year residence card is issued.

Residency applicants must establish a local bank account and deposit around € 100,000, take out private health insurance, live there for six months of the year, as well as buying a property.

If a person is holding a residence card, he is expected to live in the locale for six months of the year to maintain residency.

In 2000 a significant change occurred in that foreigners, regardless of their nationality, holding a Monegasque residence card may use it as a travel document and circulate freely for up to three months within the 15 countries currently forming part of the Schengen area (France, Germany, Austria, Belgium, Spain, Greece, Italy, Luxembourg, the Netherlands, Portugal, Denmark, Iceland, Norway, Sweden, and Finland).

Obtaining a residence card in no way confers Monegasque nationality on the holder. Only after ten years’ residence (and very exceptionally after five years), may a resident apply for Monegasque citizenship. Alternatively, any person whose father is a national of Monaco can acquire Monegasque nationality as of right.

Monaco - more data and information

• Lawyers (attorneys) with property law practices in Monaco

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