Monaco tax system - taxation of Monaco companies and individuals: VAT, income tax and capital gains. Tax treaties of Monaco.

Monaco does not levy personal income tax. However, French citizens residing in Monaco, with some exceptions, must pay French income tax.

Monaco has a territorial system of taxation. The tax base is defined as the company's worldwide income generated (or deemed to be generated) in Monaco.

The corporate income tax rate is 25%.

Not all companies pay corporate income tax.

This tax is paid by:

1. Enterprises, irrespective of their legal form, that carry out industrial or commercial activities in Monaco, if at least 25% of their revenue arises from operations carried out directly or indirectly outside Monaco; and
2. Companies (societes) whose activity in Monaco consists of collecting revenue from:

• Selling or licensing patents, trademarks, manufacturing processes and formulas, or
• Literary or artistic copyrights.

When determining the revenue from foreign activities, the following is taken into account:

• Sale of goods abroad or sale of goods intended for export (regardless of whether the goods are delivered in Monaco or abroad). Retail cash sales and sales of real estate located in Monaco are not taken into account.
• Provision of services, if the services are provided, the rights are sold or the rented goods are used outside Monaco.

Operations carried out abroad through a permanent establishment, dependent agent, or forming a full commercial cycle abroad are not taxed in Monaco (since Monaco uses a territorial principle of taxation), but are taken into account when determining the turnover from operations outside Monaco. The management/service activities of the headquarters of international groups of companies, although do not qualify as industrial or commercial activities, may be taxed in Monaco in respect of the contribution of the headquarters to the general turnover of the group, determined according to special rules.

Received dividends can be exempt from tax. The exemption depends on the size of the equity holding in the company distributing the dividend.

There are no CFC rules.

Monaco does not levy withholding tax.

VAT is charged according to the French VAT rules.

The standard VAT rate is 20%.

Some goods and services are subject to the reduced rates of 10%, 5% and 2.1%.

Social security contributions are payable by employers at the rates from 28% to 40% and by employees at the rates from 10% to 14%. There are salary ceilings for the assessment of contributions.

Inheritance and gift tax is levied at the rates from 0% to 16% depending on the degree of relationship between the parties.

Stamp duty and registration duty are levied on various transactions at fixed and progressive rates ranging from 0.5% to 7.5%.

Stamp duty is levied on documents used for civil and legal purposes and on documents required as legal proof in court.

Stamp duty is either applied at a fixed rate, or according to the size of paper used.

Spain has concluded 8 Double Tax Treaties (DTC) and 23 Tax Information Exchange Agreements (TIEA) with the following jurisdictions:

8 DTСs: Guernsey, France, Luxembourg, Mali, Mauritius, Qatar, Saint Kitts and Nevis, Seychelles;

23 TIEAs: Andorra, Argentina, Australia, Austria, Bahamas, Belgium, Czech Republic, Denmark, Faroe Islands, Finland, Germany, Greenland, Iceland, India, Italy, Liechtenstein, Netherlands, Norway, Samoa, San Marino, South Africa, Sweden, United States.

Monaco has also signed and ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The Multilateral Convention entered into force for Monaco on May 1, 2019.

There is no exchange control in Monaco.