Real Estate Taxation in Monaco: Clarity and Consistency

Contrary to popular belief, Monaco’s tax framework - though famously light - is far from empty. It follows a deliberate philosophy built on simplicity, stability, and transparency, forming one of the pillars of the Principality’s global appeal to investors and residents.


1. Income tax: simply non-existent

No personal income tax applies in Monaco. Rental income from residential or commercial properties is not subject to declaration or deduction. Effectively, gross income equals net income, minus operating costs or loan interests. That said, certain nationals (notably U.S. citizens and most French residents) remain taxable in their country of origin due to bilateral treaties.


2. Capital gains: fully exempt

Real estate capital gains are not taxed in Monaco. This complete exemption supports long-term value preservation and market fluidity.


3. Wealth tax: nowhere to be found

Monaco imposes no wealth or property tax. Residents are not subject to annual taxation on their real estate assets, locally or abroad (subject to international treaties). Ownership is thus stable and free from recurring burdens.


4. Local taxes: none whatsoever

Monaco levies no property tax and no habitation tax. Whether occupied, rented, or vacant, a property generates no annual local charge - a sharp contrast with neighbouring systems such as France’s.


5. Acquisition costs: the only tangible burden

Transaction costs depend on the structure and nature of the acquisition. Here are the main applicable rates (transfer duties + notary fees):

6. Inheritance duties: simple and reasonable

Succession tax applies only to assets located in Monaco, based on the relationship between the deceased and the heir:

This clarity favours intergenerational wealth transfer and long-term estate planning.


7. Specific cases: VAT and the 3% tax

Real estate VAT
The 20% VAT applies exclusively to new developments sold by a promoter and is already included in the sale price.

The 3% tax: scope, base and compliance
France’s “3% tax” targets legal entities (Monegasque or foreign) that own real estate in France, directly or indirectly.
- Entities covered: civil or commercial companies, and interposed vehicles such as holdings, trusts, or foundations.
- Tax base: the fair market value of the asset as of January 1st each year.
- Purpose: to counter opacity and identify ultimate beneficial owners (UBOs).

Key principle
In practice, the tax is not meant to be collected if the entity annually discloses its beneficial owners to the French tax authorities and keeps the declaration current, typically before March 31st

Compliance essentials
1. Map the ownership structure (direct and indirect).
2. Identify the UBOs (natural persons).
3. Submit the annual transparency report by March 31st.
4. Maintain documentation (org charts, UBO registers, supporting evidence).

Points to note
- Indirect holdings through multiple layers are fully within scope.
- Failure to comply may trigger the 3% levy on market value.
- Complex setups (co-ownership, restructurings, trusts/foundations) require tailored advice.

In essence: if you hold French property through an entity, you must declare your beneficial owners annually - or risk the 3% tax being applied.


Conclusion

Monaco’s tax structure ensures that profitability flows from the asset itself, not from fiscal engineering. An investor’s performance depends on the intrinsic quality of their property - not on tax arbitrage.