Inheritance and Donations
It is exceptional how the Principality handles the question about heritage, and the focus placed on your children. For each family, the question of inheritance is highly important; therefore, it is important to have a good understanding on this topic.
Many people believe that since the Principality of Monaco offers zero personal income tax, it also offers zero percent inheritance tax. Unfortunately, this is not exactly true.
The zero percent inheritance tax in Monaco is only valid in the direct line of descendants.
Regarding inheritance tax, and purely based on inheritance taxation, many other countries offer much better conditions. For example, Monaco’s neighbour Italy also offers a zero percent inheritance tax, and more importantly, it applies on indirect decent lines as well.
It might be a surprising fact, that the Principality of Monaco protects the primary family member and not the relatives; therefore, Monaco supports the direct line of descendants.
Monégasque law makes no provision for inheritance tax and claims, no tax on direct donations or on donations between husband and wife. The taxation level highly depends on the family relationship level; therefore, tax rates vary from 0% to 16%.
The tax due in other cases of donations is attractively low: − Direct line of descent: 0%
− Brothers and sisters: 8%
− Uncles, aunts, nieces and nephews: 10%
− Collateral other than sisters, brothers, uncles, aunts, nieces and nephews: 13%
− Non-related persons: 16%
Transfer dues according to internal Monégasque law only apply to real estate located in the Principality of Monaco or with situs in Monaco at the date of death or donation, whatever the place of residence and nationality of the deceased or donator.
Also, it is good to know that in the Principality, the surviving widow does not have the classical protection of La Reserve (Last will), and furthermore, the widow has no right on the assets.
In many ways, Monaco’s legislation is much more attractive since it protects your children.
However, it is important to note that Monaco is not unfavourable with the indirect descendant, such as a widow. For example, in the case you have three children, the widow has the choice:
− to accept one quarter of the total asset
− to get the right to use the assets until her death
By choosing the right to use the assets, the widow accepts that after her death, all the assets will belong to the children. During her lifetime, the widow may rent out the assets, but she cannot sell them.
We can state that in the Principality, the children are the biggest beneficiaries of all your wealth and assets, not your spouse.
The complete Monégasque system protects the children and their future, and this could be a very positive reason and a more beneficial one than the pure percentage of taxation on the heritage itself.
By relocating to the Principality of Monaco, one can secure the future of his/her children, protecting them from the endless legal battles over the assets. All the legal systems within the Principality are there to protect your family and to serve in the best interests of your children in every aspect.
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