Profits Tax

Profits tax is levied on net profits at a rate of 33,33% and applies to :

(1) Foreign and local enterprises, which include companies, branches, partnerships, and sole proprietors which engage in industrial or commercial activities in Monaco and whose turnover is derived at least 25% directly or indirectly from non Monegasque sources; and
(2) Companies whose activities in Monaco consist of receiving proceeds from the sale or licensing of patents, trade marks, manufacturing processes or formulae, and literary and artistic copyrights, irrespective of their source.

Consequently the enterprises referred to in (1) above which derive more than 75% of their turnover from Monegasque sources are exempt from profits tax.

Headquarters operations are often given favourable tax status and advance rulings may be negotiated with the Monegasque tax authorities. In principle, they are taxed by reference to the profits normally realised by a Monegasque enterprise conducting the same activities, using the prices which this enterprise would invoice for its services to a third party. In practice, due to the difficulties in establishing such a profit, they are normally taxed on a notional net profit, agreed in advance with the Monegasque tax authorities. The notional net profit is expressed as a percentage of local expenditure and is usually fixed at 8%.

Social Security

Employers are required to make contributions to social security, pension, and unemployment organisations for each employee. In addition, life insurance cover and supplementary pension benefits have to be provided for executives. The total contributions are relatively high; rising to as high as 40% for Employers and 15% for Employees.
Monaco has social security agreements with both France and Italy so that contributions paid in one state are treated as qualifying contributions in the other state.