Monaco Corporate Income Tax

Corporate profits tax (Impot sur les Benefices, ISB)

Monaco levies a corporate profits tax (ISB) only on companies that earn more than 25% of their turnover outside the Principality, or that derive income from licensing patents/IP and royalties. New genuinely-new businesses benefit from a five-year graduated exemption. The standard rate is 25%.

• Standard ISB rate — 25% percent (Sovereign Ordinance no. 3.152 of 19 March 1964 (Impot sur les Benefices))
• Scope — who is liable — Companies carrying on commercial or industrial activity that generate more than 25% of turnover outside Monaco; also companies whose income derives from selling/licensing patents, trademarks, processes or artistic/intellectual property (Sovereign Ordinance no. 3.152 of 19 March 1964)
• Domestic-only companies — Companies earning at least 75% of turnover within Monaco are not subject to ISB (Sovereign Ordinance no. 3.152 of 19 March 1964)
• New business relief — years 1 and 2 — Full exemption — no ISB on profits in the first two years (Sovereign Ordinance no. 3.152 of 19 March 1964 (new-activity relief))
• New business relief — year 3 — Tax charged on 25% of profit (effective rate approx 6.25%) percent (Sovereign Ordinance no. 3.152 of 19 March 1964 (new-activity relief))
• New business relief — year 4 — Tax charged on 50% of profit (effective rate approx 12.5%) percent (Sovereign Ordinance no. 3.152 of 19 March 1964 (new-activity relief))
• New business relief — year 5 — Tax charged on 75% of profit (effective rate approx 18.75%) percent (Sovereign Ordinance no. 3.152 of 19 March 1964 (new-activity relief))
• New business relief — year 6 onward — Tax charged on 100% of profit at the full 25% rate percent (Sovereign Ordinance no. 3.152 of 19 March 1964 (new-activity relief))
• Tax base — Net taxable profit after deducting all business expenditure, including reasonable remuneration of entrepreneurs/executives; a capped deduction scale applies where turnover is under EUR 3.5m (services) or EUR 7m (other activities) (Sovereign Ordinance no. 3.152 of 19 March 1964)
• Withholding tax on dividends — 0% — Monaco imposes no withholding tax on outbound dividends percent ((approx — confirm)) (Monaco tax code (no dividend withholding))
• Withholding tax on interest — 0% — Monaco imposes no withholding tax on outbound interest percent ((approx — confirm)) (Monaco tax code (no interest withholding))
• Withholding tax on royalties — 0% — Monaco imposes no withholding tax on outbound royalties percent ((approx — confirm)) (Monaco tax code (no royalty withholding))
• ISB return filing deadline — Annual return due within 3 months of the financial year-end ((approx — confirm with Direction des Services Fiscaux)) (Sovereign Ordinance no. 3.152 of 19 March 1964)