This article is taken from The In-House Lawyer. Each country chapter is written by a firm ranked by The Legal 500 in an easy to use Q&A format.
This country-specific Q&A provides an overview of the legal framework and key issues surrounding Private Client law in Monaco.
This Q&A is part of the global guide to Private Client.
For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/private-client-3nd-edition/
1. Which factors bring an individual within the scope of tax on income and capital gains?
There is not any income tax or capital gains tax in Monaco.
One exception to this rule applies to French nationals residing in the Principality who are subject to French income tax under the 1963 Bilateral Convention between France and Monaco.
Other jurisdictions may tax capital gains or income earned in Monaco based on international tax treaties or based on their own taxation rules.
Monaco has signed international tax treaties related to the elimination of double taxation with Guernsey, Liechtenstein, Luxembourg, Mali, Malta, Mauritius, Montenegro, Qatar, Saint Kitts and Nevis, and Seychelles.
2. What are the taxes and rates of tax to which an individual is subject in respect of income and capital gains and, in relation to those taxes, when does the tax year start and end, and when must tax returns be submitted and tax paid?
N/A. See Question 1.
3. Are withholding taxes relevant to individuals and, if so, how, in what circumstances and at what rates do they apply?
Withholding taxes does not apply because there is no direct taxation of individuals in Monaco.
4. Is there a wealth tax and, if so, which factors bring an individual within the scope of that tax, at what rate or rates is it charged, and when must tax returns be submitted and tax paid?
There is no wealth tax in Monaco.
5. Is tax charged on death or on gifts by individuals and, if so, which factors cause the tax to apply, when must a tax return be submitted, and at what rate, by whom and when must the tax be paid?
Both gift tax and inheritance tax are only applicable to assets located in Monaco. Other factors, such as nationality, or the place of domicile / residence, are irrelevant.
Gift tax is applicable to gifts evidenced in writing and/or a notarized deed that must be recorded.
The donee pays the gift tax (unless agreed otherwise) whereas the heir pays the inheritance tax.
The rates of taxation are the same for the two taxes and depend on the degree of relationship between the testator (or donor) and the heir (or donee):
• direct line between parents and children or between spouses: 0%
• between brothers and sisters: 8%
• between uncles, aunts, nephews and nieces: 10%
• between relatives other than the above: 13%
• between unrelated persons: 16%