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RESIDENCE, THE PURCHASE AND RENTAL OF PROPERTY,
TAXATION AND RELATED MATTERS
1. INTRODUCTION
Monaco has been an independent state since 1215 and today
comprises a total area of 195 hectares (approximately three quarters
of a square mile). The official language is French.
2. RESIDENCE
There are essentially three ways in which a Monaco residence
permit ("carte de séjour") may be obtained :
firstly, by virtue of the applicant having been offered employment
by a company registered in Monaco ; secondly, in conjunction
with a request by the applicant to establish a new business in
Monaco (in which event, the obtaining of a residence permit will
be dependent on the business licence application being approved)
; thirdly, if the applicant is a retired individual who does
not propose to carry on any sort of commercial or business activity.
The procedure for applying for a residence permit is dependent
on whether or not the applicant is a national of the European
Community :
(i) European Community nationals
Since March 1998 a simplified procedure has been introduced
whereby application for a residence permit is now made directly
to the Foreign Residents Section of the Sûreté Publique
in Monaco. The application must be supported by various documents,
including evidence of accommodation in Monaco (generally speaking
a lease of title deeds to the property in question). In the case
of an applicant proposing to take up employment in the Principality
a contract of employment duly certified by the Monegasque authorities
must also be supplied. In the case of a retired applicant, evidence
of financial means (normally a bank reference) must be submitted.
The application procedure generally takes four to six weeks,
at the end of which a "carte de séjour", initially
valid for a one year period, will be issued.
(ii) Application by non E C nationals
Application must first be made for a French visa at the French
Consulate in the country in which the applicant is then resident.
The documentation to be supplied with the application is essentially
the same as for EC nationals (see (i) above) with the exception
that, instead of the lease or title deeds of the applicant's
accommodation in Monaco, an undertaking to produce, within three
months of making the application, evidence of having such accommodation
will normally suffice.
The visa process generally takes not less than three months ;
once issued the applicant will then be required to attend an
interview with the Monegasque authorities.
Providing that the authorities are satisfied with the application
generally a "carte de séjour" will then be issued,
normally within a fortnight from the date of interview.
3. PURCHASE AND RENTAL OF PROPERTY
There are no significant restrictions on the purchase or rental
of property in the Principality by foreign nationals. In particular,
it is not necessary to be a resident of Monaco to own or lease
property ; a considerable amount of property is purchased by
non-residents purely for investment purposes.
Monegasque conveyancing procedures are largely identical to
those in France, title being passed by means of a deed of conveyance
("acte de vente") executed with a local notary.
Property lettings are generally for between one to three years.
A significant percentage of property in Monaco is available for
letting only, not for purchase, and it should be noted that there
is no particular advantage in purchasing rather than leasing
as regards an application for a residence permit.
There are no restrictions on the purchase of property by overseas
companies ; indeed a considerable amount of property in Monaco
is purchased in this way, there being no adverse tax considerations
(unlike the situation in France) and potentially some advantages
(for example, the ability to place the shares of the company
in a trust).
Notary fees and registration duties are payable by the purchaser
when property is acquired. These total approximately 9% of the
purchase price but there is a reduced rate of approximately 2.5%
where property is acquired directly from the original developer.
Estate agency commission is payable by both vendor and purchaser
(at a rate of 5% by the Vendor and 3% by the purchaser, in each
case plus V.A.T. at 19.6%) and by the tenant as regards a letting
(at a rate of 10% on the first year's rental, again plus V.A.T.).
The purchaser's commission of 3% is not, however, payable where
the property in question is new and is being purchased directly
from the developer.
4. TAXES
a) Income tax and capital gains tax
There is no income tax or capital gains tax in Monaco.
b) Inheritance tax
Foreign residents are subject to inheritance tax on their
Monaco assets (including share certificates and securities held
in a Monaco bank) but not on foreign assets. The rate of tax
depends on the relationship of the deceased to the beneficiary.
The rates range between nil as between husband and wife and children,
up to a maximum of 16% in respect of unrelated third parties.
c) Value added tax TVA (taxe sur la valeur
ajoutée)
Monaco's indirect taxation regime is virtually identical to
that of France. The present standard rate of tax is 19.6% with
various lower rates for such items as books and food.
d) Property taxes
There are no property taxes as such in Monaco, the only exception
being an annual tax payable in respect of rental property, equal
to 1% of the annual rent plus estimated service charges. This
tax is payable by the tenant, not the landlord.
5. BANKING, EXCHANGE CONTROL AND CUSTOMS REGULATIONS
By virtue of various treaties between France and Monaco, Monaco
is part of the French banking system and the Euro is the local
currency. French exchange control regulations, to which Monaco
was subject, have now been removed and funds can accordingly
be freely transferred in and out of the Principality. There are
no restrictions on the opening of bank accounts in Monaco by
foreigners (whether or not resident in Monaco) or by overseas
companies.
There has been a customs union with France since 1865 as a
result of which Monaco is today part of the French customs zone.
As a matter of practicality, therefore, the French customs deal
with all Monaco's customs requirements and the two countries
are considered as a single area for customs purposes.
6. BUSINESS IN MONACO
The administration and management of an individual's personal
affairs and investments from Monaco are not subject to taxation
nor is any prior authorisation from the Monegasque government
required.
However the establishment of a business in Monaco is subject
to prior government authorisation, a process which generally
takes at least three months and involves a detailed scrutiny
and analysis of the financial soundness of the founders, the
commercial viability of the project and the potential benefits
which the proposed company can be expected to bring to the Principality.
Since 1963, Monaco has applied a profits tax (at a
present rate of 33 1/3%) on any business deriving more that 25%
of its turnover outside the Principality. Whilst purely Monegasque
businesses (such as hotels, shops, etc) are, therefore, not subject
to tax and although there are also favourable tax rates for companies
providing administrative and management services to their overseas
affiliates, it will be appreciated that Monaco is not a "tax-heaven"
as such for businesses generally.
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