General Information
Country Name: Monaco
Currency: Euro (€) (EUR)
Primary Tax Authority: Department of Tax Services (Direction des Services Fiscaux – DSF)
Key Legislation:
- Ordinance 3153 of 1962 (Corporate Tax Law)
- Monaco-France Double Taxation Treaty (1963)
Fiscal Authority Allocation
Centralized Fiscal System:
Monaco operates under a centralized fiscal system where taxes are collected at the national level, with no local or regional taxation.
Corporate Income Tax (CIT)
Standard Rate: 25% (in 2024, aligning with French tax rates)
Monaco’s corporate income tax (CIT) applies to companies earning more than 25% of their turnover outside Monaco. Firms earning all or almost all of their revenue within Monaco are generally exempt from CIT. The standard CIT rate is set to 25% from 2024 onwards, aligning with France’s corporate tax rates.
Exemptions:
Companies generating income exclusively from within Monaco are not subject to CIT, except for certain financial institutions and regulated businesses.
Goods and Services Tax (GST) / Value-Added Tax (VAT)
Standard VAT Rate: 20%
Monaco follows the French VAT system, with a standard rate of 20%. Lower rates of 10% and 5.5% apply to certain categories such as books, food, and medicine. Monaco’s VAT regime is governed by its customs union with France, ensuring harmonized VAT practices.
Personal Income Tax (PIT)
No Personal Income Tax
Monaco is famous for not imposing personal income tax on its residents, except for French nationals. A 1963 bilateral treaty between Monaco and France ensures that French citizens residing in Monaco are subject to French personal income tax laws.
Residence Criteria:
To benefit from Monaco’s tax system, individuals must be residents, meaning they spend at least six months and one day per year in Monaco.
Additional Mandatory Contributions
Social Security Contributions:
Monaco has a mandatory social security system that covers healthcare, pensions, and unemployment.
- Employer Contribution: 24%–30% (depending on the type of employment)
- Employee Contribution: 10%
Withholding Taxes
- Dividends: 0%
- Interest: 0%
- Royalties: 0%
Monaco does not impose withholding taxes on dividends, interest, or royalties, making it attractive for holding companies and financial services.
Transfer Pricing Rules
No Specific Transfer Pricing Rules:
Monaco does not currently have formal transfer pricing rules, though companies doing business with France must comply with French regulations due to the customs union.
Special Tax Regimes
- Holding Companies: Monaco offers an attractive environment for holding companies, with no taxes on dividends, interest, or capital gains.
- Offshore and Financial Services: Certain financial institutions and entities may be subject to special regimes, but the jurisdiction remains favorable for international business.
Other Taxes
- Real Estate Transfer Tax: 4.5%
A tax on the transfer of real estate is levied at 4.5% of the sale price, shared between the state and local authorities. - Excise Duties: Monaco applies excise duties on products like alcohol, tobacco, and fuel, aligned with French rates.
Double Taxation Agreements (DTAs)
Limited DTA Network:
Monaco has signed a few double taxation treaties, primarily with France and a handful of other countries. The treaty with France ensures that Monegasque entities are not subject to double taxation under French tax law.
Local Taxes
No Local or Municipal Taxes:
Monaco does not impose local or municipal taxes. All taxation is handled at the national level, contributing to the simplicity of the tax regime.
Compliance and Reporting
Annual Filing:
While personal income taxes are non-existent, companies operating in Monaco and subject to corporate tax must file returns annually. Filing deadlines and procedures align with French tax requirements, given the close relationship between the two jurisdictions.
Penalties for Late Filing:
Companies failing to file on time may face penalties, though Monaco’s tax system prioritizes simplicity and efficiency in its corporate compliance obligations.
Recent Developments
Increased Transparency:
Monaco has made significant efforts to align itself with international standards on transparency and exchange of information, particularly through the implementation of the Automatic Exchange of Information (AEOI) framework.
OECD Compliance:
The principality is committed to adhering to OECD guidelines, ensuring that Monaco does not serve as a haven for tax evasion or money laundering.
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