The Property Banks Buyers Guide to Monaco
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.