Tax Residency in Monaco - Introduction
Obtaining tax residency in
Monaco is appealing to many high net worth individuals due to its favorable tax regime.
Famously, Monaco does not levy personal income tax, which makes the process and requirements of obtaining tax residency an important step.
Understanding Tax Residency in Monaco
Tax residency in Monaco is officially recognized through the issuance of a tax residence certificate by the Principality's authorities.
This certificate, known as the "certificat à des fins de formalités fiscales," serves as proof of residency for fiscal purposes.
Criteria for Tax Residency
General
To qualify as a tax resident, applicants must meet specific criteria laid out in
Sovereign Ordinance No. 8,372 dated November 26, 2020.
The criteria, which are controlled by the Monegasque government, include:
Administrative Residency
Applicants must hold a valid "carte de séjour," or administrative residence permit.
Physical Presence or Economic Ties
Applicants should either:
- Spend more than 183 days per year in Monaco, or
- Demonstrate their center of economic interest in Monaco.
Proof of Residence
Applicants need to prove their residence in Monaco by showing ownership, rental agreements, or cohabitation within the last year, supported by utility bills or other approved documents.
Additional Documentation
Depending on the case, additional documents such as bank statements or electricity bills might be required to further prove the legitimacy of the residency.
Why Become a Tax Resident in Monaco?
Monaco's tax policy offers multiple benefits for residents:
- No personal income tax (except for French nationals).
- No Controlled Foreign Corporation (CFC) rules.
- No wealth taxes, capital gains taxes, or taxes on dividends.
These policies make Monaco an attractive destination for individuals seeking to optimize their tax liabilities.
Applying for Residency
For EU and EEA nationals, applying for residency involves submitting a valid identity card or passport, along with the necessary forms provided by the Monegasque government.
For those outside the EU/EEA, other specific requirements may apply.
Conclusion
For many high net worth individuals, tax residency in Monaco is seen as the holy grail. However, other nil personal tax jurisdictions, such as the UAE, also offer a similar light touch.
However, if one is looking to switch one's tax residency to another place, then this is not a task to be taken lightly. You need to plan and plan early.
The road to becoming a tax exile is peppered with bear traps.
Final thoughts
If you have any queries about this article on Tax Residency in Monaco, or tax matters in Monaco more generally, then
please get in touch.