Requirements of Being Eligible for Monaco Tax Advantages
Table of tax rates in Monaco by category
Tax Name
| Rate (%)
| Comment
|
|---|---|---|
Personal income
| 0
| of the annual rent plus estimated service charges
|
Rental Income
| 1
| |
Capital Gains
| 0
| |
Wealth
| 0
| Except for French nationals residing in Monaco
|
Property
| 0
| |
Inheritence
| 0-16
| based on how close the inheriting relatives are
|
Corporate profits
| 33.33
| |
Corporate income
| 0
| Exceptions: * Commercial and industrial Monegasque companies that have 25 per cent of their turnover outside of Monaco. ** Proceeds from sales in Monaco for patients, trademarks, copyrights, processes, formulas
|
Table of Tax rates in Monaco by category
Introduction
Monaco, the tiny country enclave within the French Riviera has long been known not to have any personal income tax. It is also knows as the residence and playground of the rich folks. In this article I will describe the requirement to be eligible for the zero personal income tax bracket. As I will go in dept with the details, you will also see why the rich folks live in Monaco.
Requirements of Residency
Monaco erased all personal income tax in 1870, during the rule of Prince Charles III. Corporate income taxes have also been lowered to only a few percentage of their profit. Since then the tiny country has made its agenda to be recognized as a tax haven. Recently it has been under wide attack internationally, most particularly the Euro zone (as Monaco is in a customs union with France, and France has replace the Frank with the Euro, Monaco has also adopted the Euro (Monegasque Euro)). There is an exception from under the no income tax law; foreign nationals (most notably French nationals) living within the borders of Monaco. Here is where we arrive to the first requirement to be eligible for nil tax rate. To be eligible you need to have a residence Card to Monaco. There are 5 requirements to receive a Monegasque Residence Card:
- has to be at least 16 years of age,
- has to be a EU member (plus a few other western European, non-EU countries). Non-EU member country nationals have to possess a long term French visa before application of Monegasque Residence card,
- deposit at least 100 000 Euro in a Monegasque Bank, have private health insurance,
- buy residential place,
- has to live in Monaco at least 6 months of the year.
Residence Card
Residence Cards are issued for the following number of years: 1, 3 10. Upon the expiry of the residence Card, you need to renew it. Each yearly period card has to renewed twice before the longer period card can be applied for When the three 1 year Residence Card expires, you can extend it by 3 years, after that by 10 years. After the 10 year Residence Card expires , you can apply for Monegasque citizenship. If your father is a Monegasque citizen, you also receive Monegasque nationality by right.
Below is a list of Monegasque Banks:
Berthing a yacht, or sailing boat in a marina in Monaco is not a viable option for residence Card. Living in a hotel is not a viable option either
Opening a Bank Account
As mentioned before, one requirement of receiving a residence Card in Monaco is to deposit at least 100 000 Euros in a Monegasque Bank . Once that 100 000 Euros has been deposited, you have to make sure that you maintain a minimum balance in the bank same as the initial deposit requirement. Of course, Monegasque banks are offshore banks, and as such, they do not disclose any information about you.
Apartments, and villas in Monaco are quite expensive. The best and easiest way to acquire a residential space is to use a real estate broker
Residential Space
The other requirement of being eligible for an application for residence Card in Monaco is that you have to acquire a living space. To accomplish this requirement you have 2 options:
Buy and apartment, penthouse
Buy a villa, townhouse
The real estate brokerage activities are quite expensive (as pretty much everything in Monaco) Below is a table that describes the fees and commissions of real estate brokerages operating in Monaco:
Administrative Costs of Buying Property
Fee name
| rate (%)
| Payer
|
|---|---|---|
Registration fee
| 7.5
| buyer
|
Notary’s fees
| 1.5-2.5
| buyer
|
Estate Agent’s Fee
| 3 (+20.6% VAT
| buyer
|
5 (+20.6% VAT)
| seller
| |
Costs paid by buyer
| 12.62-13.62
| |
Costs paid by seller
| 6
| |
Roundtrip Transaction Costs
| 18.65-19.65
| |
Source: Global Property Guide
Property prices vary widely within Monaco. The central parts of Monte Carlo are the most expensive (most notably around the Casino), east and west of it prices drop by 10-15 percent. The “cheapest” area is the newest district (which was reclaimed from the sea and was built in the 1970s) Fontvieille. Buying a property is very unrestrictive for foreigners. A public notary is needed to make sure that all contracts, and requirements are fully accomplished according to the relevant rules and regulations of Monaco. The transaction takes place in 2 steps:
Signing the contract (with broker or seller). At this point usually 10 per cent of the purchase price is paid as collateral to the notary,
Approval by the notary.
Sometimes a pre-contract must be signed.
Property Prices
As you have probably guessed property prices are quite high in Monaco. Although property prices depend on many factors (Monegasque property prices are set by free market supply and demand), I have not seen apartments below 800 000 Euros. 40 sqm apartments begin at 900 000 Euro. That means price/sqm in Monaco is 10 000 Euros.
Lawyers and Attorneys
Lawyers and attorneys specializing in buying property in Monaco are listed below (source: Global Property Guide):
Berg & Duffy
Le Regina 15, bd des Moulins Monte Carlo MC98000
Tel: +377 97 97 87 77
Fax: +377 97 97 87 78
Email: jpduffy@bergduffy.com
Web: Official Website
Cabinet Pasquier-Ciulla & Zabaldano
Pasquier-Ciulla Christine (avocat-défenseur) 2 Rue De La Lüjerneta, AthosPalace, 98000
Tel: 984224
Fax: +377 97 984225
Donald M. Manasse
4, Boulevard Des Moulins Monte Carlo 98000
Tel: 502921
Fax: +377 93 508208
Email: dmm@manasselaw.com
Frank Michel
19 Boulevard Des Moulins, 98000 Monte Carlo
Tel: 502161
Fax: +377 93 250703
Gazo Géraldine
3, av. de Grande Bretagne Les Floralies 98000
Tel: 706110
Fax: +377 97 706111
Groom Hill Law Offices
24 Boulevard Princesse Charlotte 98000 Monte Carlo
Tel: 309719
Fax: +377 92 160695
Jean-Charles S Gardetto
19 Boulevard Des Moulins, 98000 Monte Carlo
Tel: 161617
Fax: +377 93 504241
Lawrence Graham
Est Ouest 24 bd Princesse Charlotte MC 98000
Tel: +377 93 10 55 10
Fax: +377 93 10 55 11
Email: info@lg-legal.com
Licari Jean-Pierre (Avocat)
20, av. de Fontvieille 98000
Tel: 059072
Fax: +377 92 056076
Maurizio Cohen
3, avenue de Grande Bretagne Monte Carlo 98000
Tel: 25 75 10
Fax: + 377 93 50 00 69
Conclusion
Utilizing the taxing benefits of Monaco requires a Monegasque Residence Card. The requirements of the Monegasque Residence Card, are straight and forward, however certain rules are taken very seriously and has to be completed fully. Monaco is an expensive place, so if you have the money to move there, you really have to calculate and consider whether it is worth it not pay taxes but live in the expensive Monaco, or to continue paying your taxes at a much cheaper country. In general, to have a comfortable life in Monaco, you need to have at least 1.5-2 million Euros.
