Last Updated on October 5, 2020
How Does Monaco Make Money to Support Itself?
Mostly import and export duties and sales taxes or value-added taxes. In Monaco, as in most of the E.U., there is a hefty VAT of around 20% on everything you buy. In Monaco’s case, VAT is called TVA – more on that later.
What Are Some Taxes Citizens of Monaco Must Pay?
The short answer is, there are no income taxes in Monaco.
People employed in salaried jobs do have deductions taken at source for benefits like health, disability, pensions, and unemployment. I don’t know if you’d call that a tax.
In France and many countries even Switzerland there is a “Wealth Tax” taking a small % of one’s total net worth. In Monaco there is none.
Can French People Move to Monaco and Avoid Paying the Income Tax?
French citizens can not escape French income taxes by moving to Monaco. But the French can and do live there and work there.
Neighboring France said, paraphrasing:
“We don’t like the idea of our richest and most productive French people moving to Monaco. Or going shopping in Monaco to buy things and escape taxes.”
So France passed laws to the effect that French people who move to Monaco will still be liable for French income taxes.
These Are the Main Ways Monaco Generates Revenues
In the old days, before Princess Grace, the main source was revenues from the Societe Bains de Mer — i.e. hotels and casinos owned by the Principality.
France after a near “war” with Monaco now also collects VAT (called TVA in Monaco) of around 20% on everything but refunds it to Monaco. The refund of these TVA taxes is currently the main source of revenue for Monaco.
All other revenues like hotel taxes, inheritance taxes, port docking fees, corporate fees, building permits, admission to the Aquarium, Doll Museum, etc, these are peanuts compared to the TVA taxes paid into the Monaco treasury by France.