Monaco

2012 Tax rates of Monaco

Corporate tax

Rate

The standard corporate tax rate of Monaco ranges from 0 to 33.33%. If the profits are generated within Monaco it’s tax exempt, if more than 25% of the company’s turnover is generated outside of Monaco, a flat rate of 33.33% is levied.

When levied, the rate of business profits tax is 33.33%. Reduced rates apply to newly incorporated entities: a new trading entity less than 50% of whose share capital is held directly or indirectly by other companies pays a reduced rate of business profits tax on its activities for the first 5 years after its incorporation, as follows:

0% payable in the first 2 years.

Tax calculated on 25% of the reduced profits in the third year.

Tax calculated on 50% of the reduced profits in the fourth year.

Tax calculated on 75% of the reduced profits in the fifth year.

Tax calculated on 100% of the reduced profits in the sixth year.

Taxation of dividends

There is no taxation of dividends in Monaco.

Capital gains

There is no taxation of capital gains in Monaco.

Losses

Trading losses can be carried forward and set off against trading profits for a period of 5 years. Trading losses can in certain cases be carried back and set off against profits, arising in the previous 3 years, a tax credit is issued.

Withholding tax

There is no withholding tax in Monaco.

 

Individual tax

General

Monegasque residents  is considered a resident for tax purpose.

Taxable income

Residents of the Monaco Principality do not pay any income tax on Monegasque sourced income.

Rates

Zero rate.

Capital Gains

There is no capital gains tax levied for Monegasque residents.

Deductions

Deductions are not applied in Monaco.

Real Estate

There is no real estate tax for Monegasque residents.

Net Worth Tax

Monaco does not levy any net worth tax for Monegasque residents.

Inheritance Tax

Inheritance tax for Monegasque residents is only levied on assets situated in Monaco, and do not apply to assets located outside this jurisdiction. The rates varies depending on the relationship between the donor and the donee.

Brothers and sisters is 8%.

Uncles, aunts, nieces & nephews is 10%.

Other relatives is 13%.

Unrelated persons is 16%.

Social Security

Social insurance contributions is payable by the employers, and the contribution is between 28% to 40% (averaging 35%) of gross salary including benefits, and the employee pays a further 10%-14% (averaging 13%).

An employee who is paid part of his wage by way of stock options which can be cashed in and sold at a future point in time, may be required to pay social insurance on the value of the option at the time it is realized as if the option had been a salary.

The Principality has concluded social security agreements with France and Italy for retirement and medical expense coverage.

VAT

Monaco levies VAT of a standard rate of 19.6%, however most services and products will only be 5.5%. According to the French-Monégasque Customs Union, this means that V.A.T. is applicable at the same rate as in France. European community tax is applicable since January 1, 1993.

VAT is also applicable for property sales, but any properties over 5 years old are exempt from the tax.

 

Other

Tax year. Calendar year.

Tax treaties. Monaco currently has 19 treaties.

Filing requirements. Advance payments of one fifth of the previous year’s tax bill are due on February 20th, May 20th, August 20th and November 20th. Tax returns are due three months after the end of the year. Any balance of tax due is immediately payable.

Registration (for VAT purpose). Corporations carrying out business in Monaco must register for VAT.

 

Links

Tax authorities. Direction des Services Fiscaux

Consulate

Local Tax Resources

Chamber of commerce

(Online realtor/stock exchange)