In this section:
- Monaco
Residence and Liability for Taxation
- Monaco
Social Security Taxes
- Monaco
Stamp Duty
- Monaco
Inheritance and Gift Taxes
- Monaco
Value Added Tax
Monaco Residence and Liability
for Taxation
Only French nationals pay income tax in Monaco.
The amount payable is assessed
according to the principles of
French tax law and is paid directly
to the French Government. By way
of exception French nationals
do not pay income tax if any one
of the following 3 situations
apply:
- they
had been habitually resident
in Monaco for five years on
October 13, 1962 and they hold
dual French and Monegasque nationality;
- they
are attached to the Prince's
household; or
- they
are the French spouses of foreigners
residing in Monaco and the marriage
took place before January 1,
1986.
According to a revision of the tax treaty
between Monaco and France agreed
in 2001, French nationals who
took up residence in Monaco after
1989 began to pay French wealth
tax from 2002.
For other than French nationals, residence
is not an issue affecting taxation
in Monaco, since income tax and
capital gains taxes do not apply.
However, if an individual is in
business as a sole trader or on
his own account, he will be taxed
according to the principles of
the the Business Profits Tax (see
Direct Corporate Taxation).
All employees in Monaco are liable to pay
social insurance contributions;
see below.
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Monaco
Social Security Taxes
Social insurance contributions payable by
employers and employees are high.
The employer's contribution is
between 28%-40% (averaging 35%)
of gross salary including benefits
and the employee pays a further
10%-14% (averaging 13%).
An employee who is paid part of his wage
by way of stock options which
can be cashed in and sold at a
future point in time may be required
to pay social insurance on the
value of the option at the time
it is realized as if the option
had been a salary.
Social insurance contributions, amounting
to nearly 50% of salary, are a
major disincentive to the hiring
of staff and in many ways detract
substantially from the advantageous
income tax regime which exists
in Monaco.
The Principality has concluded social security
agreements with France and Italy
for retirement and medical expense
coverage.
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Monaco Stamp Duty
Stamp Duty, Capital Transfer Tax and Registration
Fees are payable on transactions
evidenced by the official registration
of documents in various public registries.
It is mandatory to register inter
vivos transfers of real estate located
in the principality, the official
documents of notaries and bailiffs,
private agreements concerning leases,
wills, agreements evidencing the
sale of businesses and certain other
legal and corporate documents and
instruments.
The following rates of tax are payable:
- 7.5%
on the registered value of a business
sold;
- 4.5%
to 7.5% of the registered
value of real estate sold (which
includes other associated fees);
- 3% of the value of a registered mortgage
(which includes other associated
fees);
- 2%
of the value of a civil judgment
registered;
- 5%
on the sale of personal assets
unless they are sold by auction
in which case the tax is reduced
to 2%;
- 1%
on the registered value of a short
term lease which value is determined
according to set formulas;
- 6.5%
on the registered value of a long
term lease which value is determined
according to set formulas.
- 0.65%
on mortgage subscription fee
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Monaco Inheritance and Gift Taxes
Inheritance and gift taxes are only payable
by residents on assets situated
in Monaco and do not apply to
assets located outside the jurisdiction.
The tax payable arises on a transfer
made at the time of a person's
death or on a transfer made by
way of inter vivos gift.
Gifts located within Monaco which are left
to charitable institutions or
to the nation are exempt from
this tax whether the transfer
occurs on death or inter vivos.
The rates of tax payable depend on how close
the relationship is between the
donor and the donee with the general
rule being that the more distant
the relationship the higher the
tax payable.
The rates payable on transfers of property
situated in Monaco whether by
way of inter vivos gift or on
death are as follows:
- Direct
line spouses (wife, parents
and children), nil;
- Brothers and Sisters, 8%;
- Uncles, Aunts, Nieces & Nephews, 10%;
- Other
relatives, 13%;
- Unrelated persons, 16%.
If the
deceased is a French national
who had been resident in Monaco
for five years at the time of
his death then assets located
in Monaco are governed by the
laws of Monaco whereas assets
located in France are taxed according
to the principles of French tax
law.
Monaco
does not give tax credits for
death duties, inheritance taxes
and gift taxes. Thus if a person
dies with assets in Monaco and
tax has already been paid on the
transfer of those assets by the
laws of another jurisdiction Monaco
will levy its own taxes if tax
is payable under its own internal
laws.
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Monaco Value Added Tax
For the purposes of VAT Monaco is part of
the European Union. The Principality
adopts the French system for collection.
French customs operate the levying
of VAT which relates to non European
Union transactions whereas the
Monegasque authorities operating
the levying of VAT on all other
transactions.
Two rates of VAT apply: the normal rate of
19.6% (which is the standard rate
in France) and a reduced rate
of 7%, which applies to water,
food products, medicines, books,
special equipment for handicapped
people, hotel accommodation, public
transport services and public
entertainment services.
The standard rate of VAT is payable on sales
of real estate whose construction
was completed less than 5 years
ago and which have never been
transferred for value. Real estate
which has been constructed more
than 5 years ago and which has
already had one purchaser who
paid market value does not attract
VAT.
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