Following international standards, the Principality issues tax certificates to prove that individuals own the Monaco tax residency in terms of Personal Income Tax.

In this regard, tax certificate issuance is regulated in the Sovereign Ordinance 8372 of 26 November 2020 amends Sovereign Ordinance 8.566 of 28 March 1986 regulating tax certificates (Journal de Monaco of 4 December 2020).

Thus, under certain conditions, individuals residing in Monaco may apply for a certificate of domicile for tax purposes (“certificat à des fins de formalités fiscales”) being useful for five years, unless circumstances change.

Who can request a tax certificate in Monaco?

To apply for such a certificate, any individual who lives in Monaco must proceed as follows:

If the individual is a citizen of Monaco:

• produce ID/ passport and evidence of Monaco residency.

If the individual is a citizen of a country other than Monaco:

• provide a valid residence permit (carte de séjour).
• declare that they have their main place of residence on the territory of the Principality or that they have the principal center of their activities in Monaco (be aware that lying on this aspect is foreseen in the Criminal Code).
• justify that they occupy a dwelling in Monaco by providing a legal title, a rental agreement, or a certificate of accommodation.
• provide utility bills (water, electricity, and telephone) and any other document that may establish permanent residence (able to prove at least 183 days in the country or a relevant amount of days in the calendar, see our article about the Monaco residency minimum stay).
• provide any relevant documents that may be requested by the Monaco authorities for verification and investigation purposes.

Who can be deemed a tax resident in Monaco?

The individual may only claim to have their home in Monaco if their principal place of residence cannot be determined.

The principal, or usual, place of residence corresponds to the presence of at least 183 days per calendar year in the Principality or, if less than 183 days, if the applicant is physically present in Monaco for a period longer than the number of days spent in other countries.

In terms of the Monegasque authorities, the day of arrival and the day of departure are counted: for example, if an individual arrives in Monaco on a Thursday and leaves the following Monday, the total is 4 nights and 5 days (Thursday, Friday, Saturday, Sunday and Monday).

In practice, the tax authorities usually determine an individual’s residence for tax purposes by examining their bank account statements. The method used is as follows: a bank transaction in a State implies a day spent in that country.

Confidentiality can be ensured by concealing personal data and amounts, the decisive factor being the country of the debit shown on the bank statement.

Additionally, an individual may be deemed a tax resident in Monaco if his / her principal center of activities is in Monaco.

The principal center of activities means the place where the individual makes their principal investments (either banking assets or real estate), and has their registered office or place of effective management of their affairs. It also means where they administer their assets (companies located in Monaco).

These concepts exist in the Common Law equivalent of “Central Management and Control”. They refer to the country of effective management or where strategic decisions are taken. For example, incorporating a single-family office in Monaco as a registered office may help reinforce the effective place of management in the country, as well as the presumption of the principal center of activities.

How to request a tax certificate in Monaco

• The application for a certificate of domicile for tax purposes must be filed in person by the individual at the Directorate of Public Security.
• The certificate expires after one year from the date of issue. However, under international standards, it is valid for five years.
• The certificate is not an obligation for taxpayers under the Common Reporting Standard. Accordingly, financial institutions may not require it as proof of residence. However, we must mention these aspects change every year.
• Any inaccurate declaration falls under the scope of Article 98 of the Criminal Code in Monaco. So ask a tax certificate if you are not a tax resident can end in a criminal case.

Why a tax certificate is important in Monaco?

In practice, the proof of residence that must be provided to obtain this certificate for tax purposes deserves special attention. Especially if you have a secondary residence in a neighboring town or if you have strong economic ties with your home country.

For cases like the one mentioned previously, (strong ties or living partly in the French Riviera), we note that the Monegasque Administration generally wishes to obtain additional documents to ensure that the applicant is not “faking” their residency.

In such a situation, the Administration will request documents such as electricity bills for a dwelling designated as a secondary residence, or bank statements from the applicants.

Thus, if you are thinking of becoming a tax resident in Monaco, we will be pleased to help you. As long as you are committed to complying with the requirements requested by the authorities.

If you are interested in changing your tax residence to Monaco, we recommend reading the report “The definitive guide to living in Monaco”, available for free below. If you have any questions, you can contact us without obligation by emailing [email protected].