In the Principality of Monaco, a huge number of properties are
held through offshore special purpose vehicles to ensure both
confidentiality and tax efficiency. As a matter of fact, such
structuring allowed owners to benefit from a very tax efficient
structure to transfer Properties in Monaco.
As opposed to the then applicable Monegasque taxes and other
costs of 10% ( +/- 8% of land registry and stamp duties + 2% of
notary fees), the disposal of shares of a foreign entity owning
real estate in Monaco did not trigger any tax consequences in the
Principality of Monaco.
As a consequence, in the last decades, an always growing number
of real estate transactions in Monaco were structured through such
very simple transfer of shares with no payment of any tax, and no
communication whatsoever to the Monegasque Authorities.
At the same time, the income derived from the taxation on real
estate transactions decrease significantly and the Principality
progressively lost a huge part of its tax revenue.
Law NR 1381 Of 29 June 2011 – 4.5% Taxation For
Disposal Of Shares Of Entity Owning Real Estate In Monaco And
Annual Tax Declaration
As a consequence, last year, the Principality of Monaco tax
legislation relating to foreign entities that own real estate
property in Monaco has been substantially modified by the Law Nr
1381 of 29 June 2011, with immediate and significant
From this very same date, the disposal of Foreign Entities
owning a property in Monaco have become taxable at 4.5% of the
asset market value and pertaining rights. This will affect a large
number of entities including companies, foundations, trusts,
certain investments funds and insurance policies.
In order to control the transactions affecting the shares of
foreign entities owning real estate property in Monaco, LAW NR 1381
OF 29 JUNE 2011 also created the obligation to appoint a qualified
Professional Agent in Monaco and to report on an annual basis any
change, if applicable, in the beneficial ownership of the corporate
The first declaration under this law must be completed and files
within the 30th of September 2012, and shall be related
to the period beginning from the 30 of June 2011.
For those who shall not comply and fail to appoint a qualified
Professional Agent in Monaco, an annual tax equal to 1.5% of the
market value of the asset and pertaining rights will be
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The BEPS project is part of wider developments in the international tax field, including plans for automated exchange of information between tax authorities and efforts to improve transparency on tax matters.
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