Effective Tax Rate on Rental Income
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The Principality did away with all forms of personal income tax in 1870.
Individuals do not pay tax on income. French nationals residing in Monaco may be subject to French income taxes unless they can prove that they had been habitually resident in Monaco for at least five years by 12 October 1962.
Rental properties are taxed at 1% of the annual rent plus estimated service charges. This tax is payable by the tenant.
There is no capital gains tax, except for French residents.
Monaco does not levy net wealth taxes. It should be noted that French nationals who transfer their residence or domicile to Monaco after 1988 are subject to the French net wealth tax on their worldwide property. Other French nationals who are residents abroad are subject to the tax on their French property only.
There are generally no property taxes in Monaco.
Monaco does not have a general corporate income tax but, under the terms of its tax treaty with France, it levies a tax on the profits of enterprises engaged in certain business activities.
The following are liable to tax in Monaco:
- Enterprises carrying out commercial or industrial activities in Monaco if 25% of their company turnover results from operations outside Monaco.
- Companies whose activity in Monaco consists of collecting the proceeds of the sale or licensing of patent rights, trademarks, manufacturing processes and formulas; or literary or artistic copyrights.
The current profits tax rate is 33.33%. The tax base is its annual worldwide income earned or deemed to be earned through a business in Monaco. Business expenses are normally deductible unless they are connected with foreign income which is not taxable.
Losses on the sale of real estate can be carried forward to offset against future profits for a maximum of five years.