Monaco transfer pricing and normal foreign conditions

Source-cited draft. Checked 25 October 2026. No named Monaco professional has reviewed this Guide. It produces a working paper, not a filing or a final tax position. Read the country gap register before use.

Who this applies to

Tax year 2026. Ordinance 3.152 article 14 first addresses non-normal commercial or financial conditions with any foreign resident or established person, not only transactions with a specified ownership percentage. It then expressly addresses capital/management participation, dependence/control and common-control indirect profit transfers. Its first limb refers to ISB, turnover taxes and other named taxes. Screen all foreign conditions before narrowing the analysis to a group relationship. Art. 14.

This Guide covers the normal-conditions adjustment rule and working-paper arithmetic. Apply the ordinary pricing and ISB evidence duties below to relevant foreign dealings. Separately screen multinational groups under Ordinance 6.713, arts. 2–7: group reporting is not an exemption from article 14, and country-by-country figures alone cannot establish an adjustment (art. 9).

Rates, bands and thresholds

Item	Amount or rule	Period	Official source
Article 14 first-limb relationship threshold	No ownership percentage specified in that limb	2026	Art. 14
Ordinary ISB rate on an established taxable adjustment	25%	2026	Art. 21
CbCR group exclusion	Prior-year consolidated revenue strictly below EUR 750 million; equality is not excluded	2026	Ordinance 6.713, art. 2(3)
CbCR notification	Last day of the group reporting year	2026	Art. 4
CbCR report	Within 12 months after reporting-year end	2026	Art. 6
Non-employee fee/commission disclosure	More than EUR 75 per recipient; first three months of the year	2026	Ordinance 3.152, art. 23(5)

The base

1. Obtain the contracts, invoices, counterparties, ownership/control and functions, assets and risks. Identify the foreign commercial/financial condition actually imposed.
2. Evidence normal market conditions or usual service tariffs. Article 14 requires restoration of the accounting/tax result to normal conditions. A quoted “market price” is an assumption until comparability evidence supports it.
3. For controlled enterprises, reconcile profits transferred through purchase/sale pricing or any other means, including common-control arrangements. Avoid counting the same adjustment under multiple limbs.
4. If precise adjustment evidence is unavailable, article 14 permits comparison with similar normally operated enterprises. This is not authority to invent a markup.
5. Reconcile the adjustment to the ordinary ISB result, losses and credits; do not assume every adjustment produces immediate cash tax. Arts. 7, 14, 21–22.

Payments of specified fees, royalties, commissions and similar non-salary items to Monaco residents also face article 12: the recipient must be independent and the payer must substantiate a genuine arrangement not concealing realised/transferred profit. A domestic payment is not automatically deductible because article 14 concerns foreign relations. Shareholder interest and executive remuneration need separate articles 9 and 13 checks. Arts. 9, 12–14.

Deadlines and filing

For ordinary ISB, include the accounting-to-tax reconciliation and article 23 disclosures by the return deadline: within three months of year end, or before 1 April next year if no year closes. Record counterparties, terms and evidence in the review file. Keep contracts, transaction-level calculations, comparables, invoices and actual payment evidence with the books available for DSF examination under article 24. Foreign-language accounting requires a sworn translation on request. Commercial Code article 13 requires the commercial books to be kept for ten years; retain the associated pricing evidence so that the accounting/tax reconciliation can be examined. Commercial Code, arts. 10–13. Article 23(5) separately requires non-employee commissions, brokerage, fees, royalties and similar remuneration above EUR 75 per recipient to be declared in the first three months of the year. Failure can deny deduction, subject to its precise first-infringement correction relief; disclosure is not a tax withheld from every payment. Art. 23.

Country-by-country reporting

For a non-excluded multinational group, identify Monaco-resident constituent entities, the ultimate parent and any valid substitute reporting parent using Ordinance 6.713 article 2. Every Monaco constituent entity notifies DSF by the reporting year's last day: its ultimate/substitute-parent status, or the identity and tax residence of the reporting entity. A Monaco-resident ultimate or substitute reporting parent transmits the report to DSF within twelve months of group year end. The report aggregates revenue, pre-tax result, tax paid/accrued, capital, retained earnings, employees and tangible assets by jurisdiction, and identifies each constituent entity and activity (arts. 3–6). A constituent entity is not automatically a reporting parent.

For a calendar 2026 reporting year, notification is due 31 December 2026 and the report 31 December 2027. Determine reporting-parent status separately from whether exchange arrangements are effective; the substitute-parent definition has specific no-report, missing qualifying agreement and notified systemic-failure branches. Ministerial Order 2019-37 implements transmission through the EAI portal. Register the reporting entity (name, type and address) and its primary user (name, email, mobile and function). Supply a valid identity-document copy crossed in black and white and the entity representative’s signed authorisation using the annex model; changes require an updated authorisation. Article 6 permits direct online entry or an uploaded file in the OECD-recommended format. The legal service window is Monday–Friday 08:30–18:00 excluding legal holidays. These are the published legal onboarding steps; no taxpayer account or report was submitted. Order 2019-37, arts. 1–7 and annex. Ordinance 6.713, arts. 2–9.

Penalties and interest

Article 14 supplies the adjustment authority, not a complete separate TP penalty schedule. For an ISB assessment, articles 34–37 contain the ordinary declaration/payment and adjustment sanctions. Article 35 provides conditional late-payment 3% within the first month after due date plus 1% per additional month or fraction; article 36 permits up to 150% on good-faith assessments/adjustments, and article 37 four times the tax for bad faith/fraud. Determine procedure and facts before applying a penalty. An ordinary proposed ISB adjustment must state its reasons and gives the taxpayer twenty days to accept or make observations; disagreement can go to the statutory commission and the complaint route (arts. 26–27, 41). Arts. 34–37.

CbCR has distinct sanctions: article 4 notification failure EUR 750; late article 5 report EUR 10,000, EUR 50,000 where filed within thirty days after formal notice, and EUR 100,000 without regularisation within that period. Incomplete/inaccurate reporting attracts EUR 150 per defective item, raised to EUR 250 without correction within thirty days of notice, with the combined article 13 cap EUR 100,000 per reporting entity/report. Apply the actual notice stage and breach; do not add all tiers mechanically. A complete corrected report cancels/replaces the former report. The article 15 control/sanction limitation is 31 December of the third following year, subject to interruption by formal notice. The special 2018 transitional remission is not a 2026 exemption. Ordinance 6.713, arts. 11–15.

Cross-border points

Check the counterparty jurisdiction independently for deductibility, withholding, corresponding relief and treaty coverage. This Guide does not promise a corresponding adjustment or a mutual-agreement route. Do not treat an ISB adjustment as automatically the same VAT base adjustment: article 14 mentions multiple taxes, whose own rules still need analysis. Apply the CbCR screen above and the cross-border Guide for financial-account self-certification. Multinational minimum-tax implementation is outside this ordinary pricing Guide. Arts. 14, 22; Project 1.129, project status only.

Two worked examples that recompute

Underpriced foreign sale

Assume 100 units sold to a controlled foreign company at EUR 800 per unit. Reliable comparable evidence establishes EUR 1,000 under equivalent conditions. Revenue is understated by EUR 20,000. For an otherwise fully taxable ordinary ISB business with no losses or credits, the incremental ISB is EUR 5,000. Article 14 controls the adjustment; EUR 1,000 is an assumed evidenced price, not a safe harbour.

name: Foreign sale normal price adjustment
inputs:
  units: 100
  charged: 800
  normal: 1000
steps:
  - booked: units * charged
  - normal_revenue: units * normal
  - adjustment: normal_revenue - booked
  - extra_isb: adjustment * 0.25
expected:
  adjustment: 20000
  extra_isb: 5000

Excess foreign finance charge

Assume a booked EUR 10,000 foreign finance charge, with independently supported normal terms giving EUR 6,000, and all other deduction rules already satisfied for that EUR 6,000. The EUR 4,000 excess is added back and incremental ordinary ISB is EUR 1,000, assuming no losses/credits. This is not an approved interest rate and does not replace article 9's separate financial-expense restrictions.

name: Foreign finance normal terms with separate deduction tests assumed
inputs:
  booked_charge: 10000
  normal_charge: 6000
steps:
  - addback: max(0, booked_charge - normal_charge)
  - extra_isb: addback * 0.25
expected:
  addback: 4000
  extra_isb: 1000

Ask the client first

• Which foreign counterparties, ownership/control and actual arrangements exist?
• What contracts, functions and comparable prices or service tariffs support the terms?
• What domestic fees, royalties, financing and executive payments also need deduction tests?
• What group size, reporting entities and other-country filings are involved?
• What periods, losses, credits or existing adjustments affect the tax result?

Sources

Official source and provisions read	URL	Read on
Ordinance 3.152, arts. 7, 9, 12–14, 21–23, 34–37	https://legimonaco.mc/tnc/ordonnance/1964/03-19-3.152	2026-10-24
Ordinance 6.713, group/parent definitions, notification/report, risk-use and sanctions, arts. 2–15	https://legimonaco.mc/tnc/ordonnance/2017/12-14-6.713/	2026-10-25
Ministerial Order 2019-37, arts. 1–7 and authorisation annex	https://legimonaco.mc/tnc/arrete-ministeriel/2019/01-14-2019-37/	2026-10-25
Commercial Code, arts. 10–13, books and retention	https://legimonaco.mc/code/code-commerce/	2026-10-25
Project 1.129, project status only	https://legimonaco.mc/projet/1.129	2026-10-24

Not yet confirmed: a separate prescribed master/local-file instrument, safe harbours and advance/corresponding-agreement procedures. No exemption from article 14 or ordinary books/evidence duties is inferred. These specialist instruments and multinational minimum-tax calculations require a separate determination; the ordinary pricing working paper and CbCR filing screen above still apply.

Contributed by Michael Cutajar.