Monaco abolished personal income tax in 1869 and has not reintroduced it. The Principality funds itself through value added tax, corporate tax on internationally trading companies, registration duties and state property income. The absence of income tax is the single reason most foreign residents move there. It does not apply equally to everyone, and it does not by itself end tax liability in the country a person leaves.

What Monaco does not charge

Personal income tax. Zero for residents, with one exception covered below. Salaries, dividends, interest, rental income from foreign property and business distributions are all received untaxed in Monaco
Capital gains tax. None on the disposal of private assets
Wealth tax. None
Property tax. No annual tax on holding residential property
Council tax. None

What Monaco does charge

Value added tax. Applied on the French system through the customs union, at the standard French rates
Corporate tax. 25%, but only where more than 25% of a company's turnover comes from outside Monaco. Companies trading mainly inside the Principality pay none
Registration duty on property transfers. Charged on purchase, at a rate that depends on whether the buyer is a person or a company
Inheritance and gift tax. Charged by relationship, not by residence
Social contributions. Paid by employers and employees on Monaco employment, funding the local health and pension system

Inheritance and gift tax by relationship

Spouses and direct line, meaning parents, children and grandchildren: 0%
Siblings: 8%
Uncles, aunts, nieces and nephews: 10%
Other relatives: 13%
Unrelated parties: 16%

The tax applies to assets located in Monaco, regardless of where the deceased lived. Foreign assets fall under the rules of the country where they sit.

The French exception

Nationals of France living in Monaco are taxed by France on worldwide income as though they still lived in France. The rule comes from the Franco-Monégasque tax convention of 18 May 1963, signed after France imposed a customs blockade in 1962 over French citizens moving to Monaco to escape French tax.

The rule attaches to nationality, not to where a person actually lives
The exemption covers French nationals who could prove five years of habitual residence in Monaco as at 13 October 1962, and in defined cases their descendants
Acquiring Monégasque nationality does not remove the French tax position
No other nationality is treated this way by its home country under a Monaco-specific treaty

The United States exception

The United States taxes its citizens and permanent residents on worldwide income wherever they live. Moving to Monaco does not change that.

US citizens continue filing US returns and paying US tax on worldwide income
Monaco charges no income tax, so there is no foreign tax to credit against the US liability. The usual foreign tax credit produces nothing
The foreign earned income exclusion covers only earned income, up to an annual cap, and does not reach investment income
Monaco and the United States have no income tax treaty
Ending the liability requires renouncing citizenship, which triggers the US expatriation tax for those above the wealth and income thresholds

For US citizens seeking a lower rate without renunciation, Puerto Rico operates a separate regime under US law. See low tax countries.

Leaving your current country

A Monaco permit does not by itself end tax residence elsewhere. The country being left applies its own test, and several charge tax on departure.

Residence tests applied by the country you leave

Days present, commonly 183 in a tax year
Location of a permanent home available to you
Centre of vital interests, meaning family, business and social ties
Habitual abode
Nationality, in the French and US cases above

Keeping a home, a spouse, a business or school-age children in the former country commonly defeats the claim to have left, whatever the permit says.

Exit taxes

France charges an exit tax on unrealised gains on substantial shareholdings when a resident leaves
Germany, Spain, Norway, Canada and Australia each operate a form of departure charge
The charge can exceed several years of the tax saved by moving
Rules and thresholds differ in every case, and change often

Treaties, and why their absence matters

Monaco has very few double taxation treaties. France is the principal one
Without a treaty, foreign withholding tax on dividends and interest stays payable at the full domestic rate of the source country
A Monaco resident holding shares in a country that withholds 30% on dividends pays that 30% and has nothing to offset it against, because Monaco charges no tax to credit it to
The zero rate applies to income arriving in Monaco, not to income taxed before it leaves its source
Jurisdictions with broad treaty networks, such as Malta, Cyprus and Switzerland, produce a better outcome on withholding than Monaco does

Reporting and transparency

Monaco participates in the Common Reporting Standard, so banks report account details to the country of tax residence
Monaco signed the OECD multilateral convention on mutual administrative assistance in tax matters
Beneficial ownership of Monaco companies is registered
The banking secrecy that once attached to the Principality no longer describes how it works

The tax residency certificate

Monaco issues a certificate of tax residence separately from the residence permit
The certificate is what a foreign tax authority asks for
Issuance depends on genuine presence, and applicants are generally expected to spend a substantial part of the year in Monaco
Holding a carte de séjour while living elsewhere produces neither the certificate nor the tax outcome

Who actually benefits

Nationals of countries that tax on residence rather than nationality, who genuinely relocate and can prove it
Holders of income streams that arrive without foreign withholding, such as business profits from a Monaco company or gains on private asset sales
Those whose departure from their previous country is clean, with no retained home, family or business ties

Those who benefit least are French nationals, US citizens, anyone whose income arrives after heavy foreign withholding, and anyone who cannot afford genuine full-time presence. Presence costs are set out in cost of living in Monaco, and permit conditions in Monaco residency.

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