The Principality of Monaco has long been a magnet for wealthy individuals and foreign investors looking for a tax-friendly environment to do business, invest in real estate, or simply enjoy a high life.

Many clients interested in moving their tax residence to the Principality ask us if foreigners in Monaco have to pay any special taxes compared to nationals or if on the contrary there is any tax regime that is beneficial for foreign residents.

Let’s try to solve these doubts.

Monaco taxes at a glance

Unlike many other countries, Monaco does not impose income taxes on individuals, making it an ideal location for people looking to maximize their earnings.

To respond to our customers, this 0% income tax policy fully extends to foreign investors and non-residents who wish to engage in business within the principality.

However, there are some aspects of taxation in Monaco that should be pointed out, especially relevant for non-Monegasque nationals.

Main taxes paid: Corporate and VAT

While Monaco is almost a country without direct taxes for individuals, it does have corporate income tax, transfer tax, and VAT. However, these are relatively low and are designed to encourage business within the country. The corporate income tax only applies to businesses that generate more than 25% of their turnover outside of Monaco, promoting local economic activity.

However, those who are willing to invest in the country as non-residents are almost exempt from taxes.

Monaco is particularly welcoming to foreign investors for several reasons:

• No tax barriers: there’s no ‘tax barrier’ to cross-border financial flows in Monaco. This means no withholding tax on dividends, interest, or royalties paid by Monaco-based entities to non-Monaco beneficiaries.
• Capital gains and shareholder benefits: shareholders are not taxable on capital gains incurred upon the sale of shares in a Monaco company. Additionally, no withholding tax will apply in Monaco on director fees and/or dividends paid by the Monaco company.
• Favorable real estate taxes: while there are no property taxes in Monaco, rental properties are subjected to a 1% tax of the annual rent plus estimated service charges, payable by the tenant. This leasehold duty, however, is manageable with the possibility of paying in installments for contracts lasting more than three years.

Indeed, the only tax similar to the non-resident income tax is the leasehold duty, which is a tax with a rate of 1% of the rent amount and the costs corresponding to the entire period for which the tenant occupies the property.

This tax must be paid in full when someone registers the tenancy agreement contract. It is mandatory to register the tenancy agreement, under pain of penalties, within the three months that follow the signing of the contract. So this tax can not be avoided.

Key points

• Absence of Non-Resident Income Tax: Monaco does not levy income tax on individuals, including foreign investors and non-residents.
• Absence of withholding taxes at source: investing in Monegasque companies has a main advantage, no withholding taxes when repatriating dividends or distributing interests.
• Reduced tax for renting: Unlike France or other European countries with rental withholdings of up to 24% in some cases, Monaco’s 1% payment is among the most advantageous in the world.

Monaco’s tax regime is a testament to the principality’s commitment to fostering a business-friendly environment.

With no personal income tax, no tax barriers for cross-border financial flows, favorable policies for shareholders and real estate investors, and a straightforward corporate tax structure, Monaco stands out as a haven for foreign investors and non-residents.

Whether you’re looking to buy companies, engage in business, or invest in real estate, Monaco offers a uniquely advantageous platform to grow your wealth in a tax-efficient manner.

How to take the first step?

At Monaco Advisers we have been helping entrepreneurs, high-net-worth individuals, sportsmen and women, and people from the world of cryptocurrencies to transfer their tax residency to Monaco for years.

Our presence and contacts in Monaco make us an ideal travel partner for this arduous task. So if you have questions about Monaco and would like us to help you with the process, please write to us at [email protected].

If you are interested in changing your tax residence to Monaco, we recommend you to download and read our updated report “The definitive guide to living and paying taxes in Monaco”, available for free below.