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Monaco: Domestic Corporate Taxation

Calculation of Taxable Base

Generally speaking, taxable income is based on GAAP financial statements. The following are some particular rules applied in Monaco:

  • Directors' fees are deductible up to a maximum based on turnover and the social security ceiling, and there is a reasonableness test;
  • Inventory is normally valued at the lower of cost or market value; cost is determined either by FIFO or by average cost;
  • One half of any increase in research costs is deductible, with an inflation adjustment;
  • Certain types of provision are deductible, including specific loss provisions and provisions against asset valuations;
  • Trading losses can be carried forward and set off against trading profits for a period of five years; trading losses can in some cases be carried back and set off against profits arising in the previous three years - a tax credit is issued;
  • There are some limitations on the deductibility of luxury goods and services, interest on loans, and expenses against foreign source income;
  • Capital gains on the disposal of business assets are taxable as income.

 

 

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