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Inheritance tax
As you can always read from various media sources, the Principality of Monaco offers zero percent of inheritance tax, which is not quite true. The zero percent tax is only valid in direct line of descendants. The taxation level highly depends on the family relationship level; therefore, tax rate varies from 0% to 16%.
If you create a comparison purely based on the inheritance taxation, the result could be surprising. Just to give you an example, Monaco’s neighbour country Italy also offers zero percent of the inheritance tax, and in Italy it is applies on indirect lines as well.
Monégasque law makes no provision for inheritance tax and claims, no tax on direct donations or on donations between husband and wife.
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 Monégasques 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.
In the Principality of Monaco, the inheritance percentage is not as important. Monaco’s legislation is much more attractive since it protects your children. In the Principality, the widow who survives does not have the classical protection of La Reserve (Last will). Furthermore, the widow has no right to the assets.
In case you have three children, the widow has a freedom of choice to decide:
- to accept one quarter of the total asset
- or 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 belongs to the children. During her lifetime, the widow may rent out the assets but she cannot sell them.
The complete system protects the children and their future, and this could be a very positive reason, a more beneficial one than the pure percentage of taxation on the heritage itself.
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