Monaco is famously associated with a favourable tax regime. This is a place where you are free to develop your business and preserve your capital in all serenity. In 1869 the Principality abolished the personal income tax, a benefit it enjoys to this day.
Only a few countries in the world offer its businessmen favorable tax conditions, including Andorra, the UAE, the Bahamas and Portugal. Monaco is the only one, however, to exempt its residents from income tax altogether, also offering a high standard of living, a mild Mediterranean climate and a great geographic location.
Most Monaco residents, regardless of citizenship, pay no tax on income, dividends or capital gains, largely explains the country’s great appeal to wealthy foreign investors and businessmen.
Becoming a Tax Resident in Monaco
To enjoy all the tax benefits, you need to open a bank account in Monaco, purchase or rent a property, prove your financial solvency and actually reside in the country for more than six months a year.
There is an option of opening a company without a Monaco residency. In that case, however, the owner will have to pay tax in his home country. Furthermore, it is highly recommended to choose a Monegasque passport holder or resident as a partner to increase your chances of a government approval.
Please check all the information on opening your company on this official website.
Who is taxable in Monaco?
Is it true that there are no taxes in Monaco at all? Or some exceptions apply? Monaco residents are generally exempt from income, wealth or local property taxes. But it is not exactly the same thing for everyone.
The most common exception applies to the neighboring France. Under a 1963 bilateral agreement, French citizens residing in the Principality continue to pay income tax in their home country. This measure was introduced to prevent tax emigration. The only exception applies to those who proved their Monaco residency before October 1962.
The exceptions may also be citizenship-based, with the USA being its clear example. The US tax system is founded on the global taxation principle. Americans are required to declare and pay tax on their income regardless of their country of residence.
It must be said that some countries may, in special cases, also tax certain types of income (dividends at source, for example).
No Income Tax: How is Monaco Financed?
Monaco generates revenue through indirect taxes, including the VAT, aligned with the French system. Additionally, corporate tax applies to companies performing significant operations outside the Principality.
According to the Monaco’s Tax Office, a Monaco-based company is subject to a corporate income tax (Impôt sur les bénéfices) if more than 25% of its profits is made outside the Principality or if its operations have a global nature. “Impôt sur les bénéfices” is around 25%, a rate comparable to the one in France. Tax reductions apply to start-up entrepreneurs and research. In addition, the employer pays social security contributions and administrative fees.
It must be said that the Principality has not expanded its network of double taxation treaties. Income made in the USA or Switzerland may thus be highly taxed at a source.
Recent updates
As of 2024, a new tourist tax for non-residents staying in Monaco hotels is applied: €7 per night in a five-star hotel, €5 in a four-star hotel, €1-€3 for lower categories. The tourist tax is automatically included in the hotel bill and is payable on site.
In 2024, Monaco was sadly added to the FATF (anti-money laundering) grey list, leading to increased financial controls, funds verification and stricter requirements for Monaco residents and banks.
In 2025, the Principality renewed its transparency agreements with the EU, fostering tax information exchanges.
Despite these minor changes, in 2026 Monaco still maintains its position as one of the most attractive tax destinations in the world.
