Are you an American who dreams of living in Monaco, the glamorous and tax-free principality on the French Riviera? If so, you might be wondering what it takes to relocate to this small but prestigious country, and what legal issues you need to consider. Whether you are looking for a lifestyle change, a business opportunity, or a retirement destination, Monaco might be the perfect place for you.

In this post, we will share with you some of the benefits of living in Monaco as an American, and some of the steps you need to take to become a resident in the Principality.

Residence in Monaco

Generally, the most common ways to get the residency in Monaco are:

• Getting residence through employment.
• Getting residence by setting up a business in Monaco.
• Getting residence by investment in Monaco, a sort of Golden Visa.
• Getting residence as a retired individual.

Despite the way in which you may want to move to Monaco, there are three levels of residence in Monaco: temporary, ordinary and privileged.

Getting residency in Monaco for the first time would imply obtaining a temporary residence card, the so-called “carte de sejour temporaire”. Its duration would be twelve months, with the option to be renewed twice.

Once the initial duration plus the two renewals are done, the applicant may upgrade to an ordinary residence card, the”carte de sejour ordinaire”. The duration of this would be three years, with the option to be renewed as often as needed.

Please note that keeping the temporary or ordinary residence in Monaco would imply that the individual must spend, at least, three months a year residing in Monaco. Otherwise, the temporary or ordinary residence permit may be lost.

Finally, after nine years of residency in Monaco, the individual may apply for a privileged residence card, the so-called “carte de sejour privilegie”, with a duration of ten years. Keeping this type of residence obliges the individual residing in Monaco at least 183 days each year.

Getting the Monaco residency will give you the freedom to live and work in Monaco and to start a business there.

What are the steps to get the residence permit?

The residence application process in Monaco for non-EU citizens is not simple and will require some paperwork. In fact, the Government will require several documents to guarantee that the individual qualifies for the residency. The key steps to get any of the residence permits available in Monaco are as follows:

First: getting a long-stay visa

Non-UE nationals can visit Monaco visa-free, to the extent they have a Schengen visa. However, those who wish to become resident in Monaco must apply for a long-stay visa, i.e., visa Type D. This visa should be requested before your nearest French embassy or consulate.

Non-UE nationals, like American, who have been living in France for over a year can apply to transfer their residency to Monaco and skip the long-stay visa application process.

Second: proof of accommodation in Monaco

The Government asks that any foreigner wishing to reside in Monaco must provide with one of the following proofs of accommodations in Monaco:

• The deed to a house or apartment in Monaco. The deed should be addressed to the applicant’s name.
• A proof supporting that the applicant is the director or shareholder of a company which owns a house or apartment in Monaco.
• A lease agreement in Monaco with a duration of at least one year.
• A proof supporting that the applicant is living with a close relative in Monaco.

Please note that the authorities in Monaco would assess those proofs under a substance over form approach. In fact, authorities may ask for factual other than formal evidence, like:

• Electricity contract for the property in Monaco where the applicant lives.
• Size of the property in Monaco, which must correspond and be proportional to the number of people living there.

Third: proof of sufficient financial resources

Applicants must support that they have sufficient financial resources by proving:

• The applicant has an employment contract. In this case, an evidence of the salary must be provided.
• The applicant is self-employed in Monaco. An extract from the corresponding public registry must be provided.
• The applicant is a director of a Monaco resident company. In this case, an extract from the corresponding companies house must be provided.
• The applicant is an entrepreneur in Monaco. A statement from the Department of Economic Expansion confirming the admissibility of the entrepreneurial request must be provided.
• The applicant is financially supported by a spouse or partner.
• The applicant is retired. The corresponding retirement certificate must be provided.
• Providing a bank letter from a Monaco bank stating that the applicant has sufficient savings to live in the country. Note that the necessary sum is not determined by law but by the banks directly.

Fourth: filling of additional information

Applicant must prove its good character through the filing of a copy of his/her criminal records information from the last two countries in which he/she has resided during the last five years before moving to Monaco. The good character report should state that the applicant is criminally clean. Otherwise, the entrance to Monaco may be denied.

Additionally, applicant must provide with: a valid passport copy; health report and birth certificate. Depending on the personal circumstance of the applicant, other documents may be required.

Fifth: payment of fees

Applicable fee depends on the type of residence permit:

• Temporary (12 months): €80.
• Ordinary (3 years): €100.
• Privileged (10 years): €160.

These fees do not include fees and expenses related to the translation of documents, health check, etc.

Sixth: proceed with filing and attend a residency interview

The filling could be done online or by post to Direction de la Sûrté Publique, Stade Louis II, entrée B, étage 1.

Applicant must hold an interview with the Residents Section of the Directorate of Public Security. This meeting could be done online. Applicant must bring all the required documents, as described above, to said interview. Generally, the interview implies answering questions on family, education, work and qualifications matters, among others.

Following the interview, your application will be processed and authorized. For non-EU citizens it takes from sixteen to twenty weeks to receive the Monaco residency card.

Would an American living in Monaco pay taxes there?

Monaco does not currently have any direct tax. In other words, Monaco does not levy any taxes on income derived by residents. In fact, the income tax was abolished there in 1869. Monaco is also attractive since it does not levy taxes on capital gains and wealth.

There is neither gift tax in Monaco to the extent assets are gifted to a direct line relative, like a parent, spouse, or child. Similar rule applies to inheritance tax.

With respect to properties, there is no property tax in Monaco, but a 1% rental tax is levied as well as a real estate tax which is triggered when a property is sold.

And what about US taxes?

The United States levies tax on worldwide income obtained by its citizens and residents.

Moving to Monaco would not preclude the United State from levying taxes on income obtained by US citizens and US residents, including green card holders. These individuals may find two particular situations:

• The tax compliance for these individuals is burdensome since they must comply with important US tax filings as they were in the United States.
• These individuals cannot mitigate any US taxes under a double tax treaty since there is no tax treaty between the US and Monaco.

But, could US citizens and US residents living in Monaco mitigate personal income taxes in the United States?

The answer is yes. Although, the specific situation of each individual should be assessed on a case-by-case basis, the followings options could be considered:

• Opting for some tax exemptions on foreign income. Certain non-US sourced income may benefit from a tax exemption in the US This exemption is available to both US citizens and US residents.
• US residents may end from being subject to US taxes if they relinquish their green card. However, this option should be properly considered since specific rules may apply. For instance, those who held the green card in, at least, 8 of the 15 years prior to relinquishment may continue being taxed in the United States.
• US citizens may totally give up their US citizenship as a result of getting the citizenship of other country. Identifying a country offering an attractive citizenship in a short period of time, in the sense of not having to reside or stay in that country for long period of time, is key.

In case of US residents relinquishing their US green card and US individuals giving up their US citizenship, they may also face the US exit tax or US expatriation tax. Certain exceptions are available on this exit tax, a proper advice should be seek prior giving up the US citizenship or relinquishing the green card to get and ensure a tax efficient exit from the United States.

Could an American get the Monaco citizenship?

Yes, an American could get the citizenship in Monaco. However, you should know that getting the citizenship in Monaco is not an easy process. To get this citizenship at least the following two matters should be considered:

• To opt for the Monaco citizenship, the applicant must have resided in Monaco for, at least, ten continuous years.
• Monaco does not allow dual citizenship. Hence, applicant must give up his/her other citizenships.

MonacoAdvisers has advised and helped several US nationals moving to Monaco. Assisting them with US taxes, and with the application for the residence permit and tax registration in Monaco.

Our presence and local contacts in Monaco make MonacoAdvisers the perfect partner to trust at the time of addressing questions related to residence permits and tax matters in Monaco. In addition, our presence and local contacts in the United States make us the perfect advisor to trust the planning and managing of US taxes.

If you have any questions and would like to receive tailored advice on how to move to Monaco as a US nationals, you can write to us at o [email protected] or through the contact form.