INHERITANCE, GIFT AND WEALTH TAXES IN MONACO

Understanding Monaco’s Tax System

Monaco, known for its favorable tax environment, extends its benefits to inheritance, gifts, and wealth taxes. This guide provides an overview of how these taxes operate in the Principality, shedding light on key aspects that individuals should be aware of.

WEALTH TAX

Embarking on indefinite residence in Monaco involves navigating a more intricate path. While EU citizens enjoy visa-free access for short stays, those planning to make Monaco their abode for over three months must apply for a Carte de Séjour (residency permit). This application process entails furnishing a valid passport, evidence of accommodation, and financial statements.

GIFT TAX

Monaco’s alluring tax advantages have magnetized the global elite for years. With zero income tax for residents and accommodating corporate tax regulations, Monaco has become a haven for those aiming to optimize their financial standing. However, this favorability comes at the cost of an exorbitant living standard, and property prices that rank among the world’s highest.

INHERITANCE TAX

Beyond the veneer of extravagance, Monaco extends an unparalleled Mediterranean lifestyle. Boasting breathtaking beaches, world-renowned cuisine, and a pulsating social scene, the principality exerts an irresistible allure. Monaco’s compact dimensions ensure that convenience and luxury are within arm’s reach, ideal for those who seek both

TAX RATES IN MONACO BASED ON RELATIONSHIP

In the context of an inter vivos inheritance or gift, the tax rates in Monaco are determined by the degree of relationship:

Direct parent-child relationship or between spouses: 0% tax rate.
Between brothers and sisters: 8% tax rate.
Among uncles, aunts, nephews, and nieces: 10% tax rate.
Between collaterals other than direct siblings, uncles, aunts, nephews, or nieces: 13% tax rate.
Between non-relatives: 16% tax rate.

THE FRANCO-MONEGASQUE TAX CONVENTION OF 1 APRIL 1950

This convention exclusively concerns the application of inheritance tax between a French deceased individual and their heirs.

REAL ESTATE AND PROPERTY RIGHTS

In the context of real estate and property rights (e.g., flats, offices, car parks, cellars), inheritance tax is subject to the laws of the country where the property is located. For instance, if a French deceased individual residing in France owns a flat in Monaco, their heirs will not be subject to inheritance tax if they are the deceased’s children.

FINANCIAL ASSETS

Financial assets such as shares and bonds are exclusively subject to inheritance tax in the country where the deceased individual was a resident. A noteworthy point is that under this convention, only French nationals who have resided in Monaco for more than five years are considered domiciled in Monaco.

ESTATE PLANNING IN MONACO

Through a will, a deceased individual can organize the distribution of their assets. If the deceased is a resident of Monaco but desires their country of nationality’s inheritance law to apply, they can opt for this through Law n°1448 of 28 June 2017. This legal provision enables the deceased to specify that the inheritance law of their country of nationality should govern the distribution of their assets.

Optimizing Tax Considerations in Monaco

Monaco’s advantageous tax system extends to inheritance, gifts, and wealth taxes, providing individuals with a favorable environment for preserving and passing on assets. By understanding the nuances of tax rates, relationships, and applicable laws, individuals can make informed decisions regarding estate planning and taxation. Whether you’re considering gifting, inheritance, or wealth management, Monaco’s tax system offers opportunities to optimize your financial strategy while ensuring compliance with the relevant regulations.