Following the recommendations of the MONEYVAL Committee Report, published in December 2022, the Principality of Monaco has begun to reform its legislation to combat money laundering, the financing of terrorism and the proliferation of weapons of mass destruction.

One of the laws passed is Law no. 1.548 of July 6th, 2023 containing various tax provisions aimed in particular at making the tax regime applicable to transparent companies more attractive and, at the same time, increasing the taxation of opaque companies.

As a result, from 1 October 1st, 2023, the following duties, applicable to all deeds submitted for registration, will be increased:

Fixed registration duty (levied on all deeds that are not subject to registration duty at a proportional rate under Law no. 580 of July 29th, 1953 adjusting registration and mortgage duties or under any other law) is now €50 instead of €10 (unchanged since the changeover to the euro).

This amount must be paid in the following cases in particular: transfer of property located abroad and registration of foreign deeds and judgments, increase in the share capital of commercial companies, deeds carried out by foreign companies, filing of a declaration of no change in beneficial owners (Law no. 1.381 of June 29th, 2011 on registration duties payable on transfers of property and property rights).

Proportional duties, in particular those payable on transfers of real estate and property rights

• Increase of the duties from 4,5 % to 4,75 % for:
  
  transfers of property and other transactions (listed in items 1° to 8° of Article 13 bis of Law no. 580 of July 29th, 1953) carried out for the benefit of a natural person or a transparent entity (civil company registered in Monaco other than in the form of a public limited company or a limited partnership, whose partners are exclusively natural persons acting on their own behalf where their identity is known to the Department of Tax Services);
  
  acts reducing the share capital of all legal entities referred to in article 2 of the aforementioned Law no. 1.381 of June 29th, 2011, which hold rights in rem over real estate located in the Principality, regardless of where their registered office is located or the legislation applicable to them, resulting in the allocation of these rights to one or more natural persons identified as the beneficial owner;
  
  the change of the beneficial owner or one of the beneficial owners of any legal entity holding rights in rem over one or more properties located in Monaco (article 13 of Law no. 1.381 of June 29th, 2011).

• Increase of the duties from 7.5% to 10% for transactions carried out for the benefit of opaque entities:
  
  transactions listed in numbers 1° to 8° of article 13 bis of Law no. 580 of 29 July 1953* carried out for the benefit of a legal entity whose beneficial owners are not: - natural persons acting on their own behalf; or - legal entities for which the official documents making it possible to ascertain the identity of the beneficial owners on the day the transaction is carried out are brought to the attention of the Department of Tax Services by an authorised agent (article 5 of Law no. 1.381 of June 29th, 2011);
  
  any transaction carried out by a structure other than a non-trading company registered in Monaco, whose partners are not exclusively natural persons acting on their own behalf and where their identity is not known to the Department of Tax Services (article 13 of Law no. 1.381 of June 29th, 2011).

Registration duties applicable to property transactions subject to VAT.

Law no. 1.548 adjusts the tax regime for real estate transactions subject to VAT provided for by law no. 842 of March 1st, 1968, which exempted, under certain conditions, the payment of registration duties for real estate transactions subject to VAT.

It replaces this total exemption with a 50% reduction in the registration duties applicable to:

• deeds evidencing either the sale or transfer to a company of building land or property treated as such by article 2 of Sovereign Order no. 3.982 of February 29th, 1968, or the payment of compensation of any kind to persons who have a right of ownership or enjoyment over such property or who occupy it de jure or de facto under certain conditions
  
  - the deed of purchase must include an undertaking by the purchaser to carry out, within a period of 4 years from the date of the deed, the work required to erect a building or group of buildings, to restore buildings to their original state, to complete buildings under construction, to build new premises on top of existing buildings or to convert buildings to a new use ;
  - the purchaser must provide proof, no later than 3 months after the expiry of the 4-year period, that the planned work has been carried out by producing a certificate issued by the Department of Public Works and Social Affairs;
   
• real estate transactions involving land intended for the construction of detached houses, but only up to a certain surface area (2,500 sqm per house or the minimum surface area required by the road regulations, whichever is greater);
• plots of land intended for the construction of apartment buildings, provided that the buildings to be erected, together with their courtyards and gardens, cover the whole of the land acquired.

The Valeri Agency team, always up to date with the Principality's legislation and tax situation, will be able to give you the best possible advice and help you with all your property projects, and much more besides.

Don't hesitate to contact us!