All the property taxes and costs in Monaco that you should know

Monaco, with its favorable tax policies and high-quality lifestyle, continues to draw affluent buyers despite the challenges posed by limited space and high demand in Monaco.

Buying property in Monaco is a complex venture: a blend of high-value transactions, few products available, demanding KYC source of funds requirements and an exclusive off-market (which is why contacts are so important in Monaco).

With an average price per square meter that significantly exceeds other luxury markets, percentage rates and commissions quickly escalate to very high figures, so it is essential to understand the nuances and costs associated with property acquisition.

Thus, here we have a complete guide to all the taxes and costs related to the purchasing and manteinance of a real estate property in Monaco.

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VAT

Value Added Tax (VAT) is levied on the same basis and at the same rate as in France. The intra-community tax regime has been applicable since 1st January 1993.

A VAT may apply when an individual is purchasing to a taxable person established in Monaco a building plot, a new building, or an existing building which involves raising the height or significant renovations.

The rate of taxation for VAT is 20 % for property transactions. For completed properties taxed on the total price, the tax is calculated either on the sale price or on the actual market value of the property if the market value is higher than the price.

Conversely, some purchases are exempt from VAT when the assets to purchase are “old buildings” or properties (i.e. buildings that do not meet the definition of “new buildings”) and land sales (that are not considered building plots).

Transfer Duty

If the VAT is not applicable, for instance with “old real estate properties”, registration duties apply for transfers for consideration of real estate located in Monaco:

4.5% on the market value if the purchaser is a private person or a qualifying Monegasque Personal Civil Company (SCP);
6.5% of the market value for any other purchaser.

Remember that a property is considered “old” and therefore exempt from VAT if it has NOT been completed within the last five years or has NOT undergone substantial modifications, such as significant renovations or an increase in height.

Notary fees

Notary fees are a relevant cost of the transaction in Monaco. The notary acts as a government official who ensures that the transaction complies with Monaco law.

These fees are usually based on a sliding scale depending on the property value, but they can generally be estimated at around 1% to 3% of the purchase price.

For the purchase of a property by a natural person or by a Monegasque civil company with a natural shareholder the fee is 1,5% of the purchase price.

Real estate agent fees

Agents fees payable by the seller are customarily 5% (plus 20% VAT) and those payable by the buyer 3% (plus 20% VAT).

A real estate agent is an individual or a company that will be rendering you support and advice on the Monegasque real estate market. Having local support is key to getting the best price possible, so do not hesitate to contact us and we will put you in touch with agents who have a vast catalogue of excelent Monaco off-market properties.

Due Diligence cost

Conducting due diligence before purchasing real estate in Monaco is crucial from a legal standpoint to avoid hidden charges and ensure the property’s good standing, such as confirming there are no mortgages or debts associated with it.

This process helps in uncovering any potential legal or financial burdens that could affect the property’s value or your ownership rights. To carry out this assessment fees from Monegasque lawyers will be added as additional costs.

KYC

Although this is not a cost as such, it is worth noting that the buyer has to provide comprehensive documentation proving the origin of funds (such as bank statements, income records, and other financial disclosures) to comply with strict anti–money laundering regulations.

These requirements aim to prevent illicit transactions and are enforced by Monaco’s regulatory framework as aligned with international FATF recommendations.

Also, while many buyers choose to purchase property outright, financing options are available through private banks and their specialized mortgage products.

Annual property taxes and wealth tax

Unlike many other countries, Monaco does not levy annual property taxes on residential properties, which is one of the attractive features of investing in real estate in the principality due to its low cost of maintenance in terms of taxes.

Monaco also does not impose a wealth tax, so you can increase your wealth by purchasing one or more properties without fear of increasing your tax bill.

Rental tax

If you ever want to rent out your property, you should know that you won’t have to pay for your income either.

However, rental agreements are subject to the “leasehold duty”: tenants are required to pay a tax amounting to 1% of the annual rent plus any applicable service charges. This tax is payable upon the registration of the lease agreement and is a standard obligation for tenants in the Principality.

It’s important to note that the responsibility of the 1% rental tax falls solely on tenants, not property owners. This system underscores Monaco’s unique tax structure, which favors property owners while placing certain obligations on tenants.

Sale tax

Among the world of Monegasque real estate professionals there is a mantra: property in Monaco always appreciates by 10% per year. Although this is not always exactly the case, it is true that the compound return from simply owning a property in Monaco and waiting can be very high.

So if at some point you decide to sell your house to collect profits (or simply to move elsewhere), you will not have to pay taxes on the sale either.

As we explain in our comprehensive guide to Monegasque taxation, capital gains are not taxed in the Principality, and of course this includes the sale of real estate.

Conclusions

In conclusion, understanding the intricacies of Monaco’s real estate market, including significant transaction costs, VAT implications, and the importance of due diligence, is crucial. Thus, summarizing the costs and taxes on the purchase of real estate in Monaco are the following:

VAT (20%) or transfer tax (in general 4,5%) as taxes to be paid depending on the type of property (new property or not).
Notary fees as the cost of the service provided by the notary.
Real estate agent fees for their functions either helping you to purchase the property or selling it (normally are costs assumed by the seller).
Lawyers’ fees are either for the due diligence of the product to ascertain if there are hidden costs and debts, or for the assistance in front of the notary.

How to take the first step?

At MonacoAdvisers 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 and buy real estate.

We can provide you with the appropriate team for this difficult endeavor. Off-market fantastic real estate, financing from private banks, and exclusive attention are many of the advantages that you can get through our network.

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

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