Real Estate Laws and Taxation in Monaco: Complete Guide
Real estate in Monaco is a particularly attractive sector due to its privileged location, luxurious lifestyle, and advantageous taxation. Understanding the laws and taxation that govern this market is crucial for any investor or resident wishing to establish themselves in the principality. In this article, we provide an in-depth analysis of the regulations and tax specifics of real estate in Monaco.
The Laws Governing Real Estate in Monaco
Acquisition of Real Estate
In Monaco, the acquisition of real estate is accessible to both residents and non-residents. No particular restrictions apply to foreigners, making it a preferred destination for international investors. The real estate transaction must be conducted before a Monegasque notary, thereby guaranteeing the legal security of the operation. Notaries play a central role by verifying the compliance of the transaction, ensuring that all legal obligations are met, thus protecting both the buyer and the seller.
Rental of Real Estate
The rental market in Monaco is governed by rules aimed at protecting both landlords and tenants. In most cases, residential leases are concluded for a minimum duration of one year, automatically renewable unless otherwise notified. Rents are freely set by the parties, and termination usually requires a minimum notice period of 3 months before the lease expires.
If you plan to buy real estate with the intention of renting it to a third party, or if you intend to become a tenant, be aware that there are also two main laws that may govern rental leases: Law 887 and Law 1291. Each has a specific scope and focuses exclusively on rental issues. These laws do not govern purchase and sale transactions.
Construction and Renovation
Any construction or real estate renovation in Monaco must receive approval from local authorities. Projects must comply with the principality’s strict architectural and environmental standards. The Department of Prospective Planning, Urban Development, and Mobility (DPUM) plays a central role in this process, ensuring that projects comply with current regulations. The procedures often include several validation steps, including environmental impact studies and public consultations, aimed at preserving Monaco’s unique architectural heritage.
To carry out renovation work in a residential apartment in Monaco, it is essential to follow certain rules and procedures. The work must not affect common areas or the exterior appearance of the building, and the agreement of co-owners is required for structural modifications. A work declaration must be submitted to the property management, and DPUM authorization is required for certain types of work. Finally, a compliance inspection is necessary after the completion of the work to ensure conformity.
Real Estate Taxation in Monaco
Transfer Taxes
When acquiring real estate in Monaco, the buyer must pay transfer taxes. These taxes cover registration fees and notary fees, ensuring transparency and security of the transaction.
| Total (% On the property value) | Notary (% On the property value) | Registration (% On the property value) | |
| Acquisition by a private individual or a Monegasque Société Civile Immobilière of a new property, off-plan or under construction | 2,5% | 1,5% | 1% |
| Acquisition through an offshore or foreign company | 6,25% | 1,5% | 4,75% |
| Acquisition through the regime of property traders (professionals only) (4 years to resell) | 1,5% | 1,5% | Pénalité 6% + frais de mutation 4,75% si + 4 ans) |
| Acquisition of shares in a Monegasque company owning a property | 11,5% | 1,5% | 10% |
| Acquisition of shares in a Monegasque company owning a property | 4.75% + transfer fees | Notary or lawyer fees | 4,75% |
| Acquisition of a property in life annuity (calculated on the value of the lot + 10 years of annuity if existing) | 6,25% | 1,5% | 4,75% |
Value Added Tax (VAT)
VAT applies to real estate transactions in Monaco, particularly when selling new properties. The current VAT rate is 20%, in line with the rate applied in France. Real estate operations involving significant renovations may also be subject to VAT, depending on the extent and nature of the work.
Inheritance Taxes
Inheritance taxes in Monaco vary depending on the relationship between the deceased and the heir. Direct heirs, such as children and spouses, benefit from a total exemption. For other heirs, rates vary and can go up to 16%. This exemption for direct heirs constitutes a significant tax advantage for wealthy families residing in Monaco.
Property Tax and Residence Tax
Unlike many countries, Monaco does not levy an annual property tax. This significantly reduces the annual cost of owning real estate in the principality, adding further appeal for investors and residents.
The Advantages of Real Estate Investment in Monaco
Economic and Political Stability
Monaco enjoys remarkable economic and political stability, making it a safe destination for real estate investments. The principality also benefits from an efficient administration and high-quality public services, ensuring an exceptional living environment for its residents.
High-End Real Estate Market
The Monaco real estate market is synonymous with luxury and prestige. Properties in Monaco are often located in high-end residences with premium services such as concierges, swimming pools, and fitness centers. The real estate offerings include apartments with sea views, sumptuous penthouses, and exclusive villas.
Exceptional Quality of Life
Monaco offers a unique quality of life with a pleasant Mediterranean climate, exceptional security, and a high standard of living. Residents benefit from top-notch health and education services, as well as a rich cultural and sports life. Its privileged location, just 20 minutes from Nice Côte d’Azur International Airport, which offers flights to more than 120 destinations in 45 countries, is a major asset for the cosmopolitan population of the Principality.
Real estate in Monaco presents exceptional opportunities for investors thanks to a combination of protective laws and significant tax advantages. The principality attracts investors from around the world, drawn by the stability of its real estate market, its luxurious lifestyle, and its favorable taxation. Whether you are considering buying, renting, or investing in real estate in Monaco, it is essential to understand the laws and tax rules in force. By surrounding yourself with competent professionals, you can successfully navigate this unique market and fully enjoy the advantages offered by Monaco.
