Fact check: Does Monaco pay zero taxes?

29.10.2024 - 07:07 / euronews.com

A video has gone viral on social media showing a road crossing the border between France and Monaco, with the former's Rue des Martyrs de la Résistance on one side which looks a bit rough around the edges compared to Monaco’s Rue Bellevue on the other.

The video has been shared thousands of times on TikTok and X, with captions in multiple languages claiming that Monaco has zero taxes.

The post implies that Monaco maintains its pristine streets without taxation, that taxes aren't needed for good public services and therefore that a libertarian tax regime is the way to go.

The claims aren't quite accurate though.

It's true that the principality doesn't levy a personal income tax on its residents, nor does it impose capital gains or net wealth taxes, for example.

However, other taxes do exist, such as a 33.3% tax on profits earned on the sale of real estate. Companies with profits of more than 25% that come from outside of Monaco are also taxed at a rate of up to 33.3%.

The former is particularly significant because Monaco has some of the highest property prices in the world: according to the most recent figures from the principality's statistics agency, the average cost per square metre in Monaco hit €51,418 in 2023, representing an almost 40% rise in a single decade.

It also charges a 20% VAT rate, which is bolstered by its status as a top tourist destination: Monaco generates billions of euros every year thanks to its location on the Mediterranean coast, its casinos and luxury hotels.

Furthermore, despite its lower corporate tax rates, the country charges thousands in registration and licensing fees for companies, and it charges stamp duties on documents.

French nationals resident in Monaco do have to pay income tax, based on France's tax system.

Income tax brackets in France are progressive from 0% to 45%: you only have to start paying tax on earnings above €11,294 per year, while the highest rate of income tax is paid by those earning €177,106 or more annually.

Nevertheless, Monaco is able to provide high-quality public services on a low tax regime due to a number of factors, such as its tiny size and huge wealth per capita.

The country generates significant revenue from financial services: it's a well-known financial hub, specifically for private banking and wealth management, pulling in wealthy individuals who handle their vast sums of money through Monaco's banks.

Its luxury goods and services sector also serves as a significant wealth generator. VAT on the sale of goods such as watches, jewellery and clothing, combined with boutiques and expensive restaurants, contributes substantially to the city state's GDP.

A country as large and diverse as France meanwhile needs significant revenue from tax to fund