Monaco Residency by Investment: The Ultimate Guide

Nestled between the French and Italian Rivieras is a micro-country that has long been one of the world’s great playgrounds of the ultra-rich and famous.

Step forward into the limelight, Monaco, the world’s most famous principality, and home to fast cars, risky bets and beautiful people.

But aside from the glitz and glam, Monaco has other attractions. The financial benefits and tax advantages available here are a massive draw for many wealthy expats looking for a liveable, zero-tax country.

Home to the Grand Prix, world-class casinos and old-school glamour, Monaco is a legacy brand tax haven. 

So, it should come as no surprise that buying a slice of Monaco life will cost you dearly.

Low-tax European countries like Monaco take a bit more planning than their Caribbean or Latin American counterparts.

Choosing an offshore jurisdiction is complex, which is why the Nomad Capitalist team has put together this in-depth guide to the ins and outs of Monaco’s residency-by-investment (RBI) program, covering its eligibility criteria, investment requirements and throwing an objective eye over the pros and cons… 

Benefits of Monaco Residency by Investment

This beautiful Mediterranean city-state and principality has long been loved by the elite. 

Before exploring Monaco’s residency-by-investment program, tax advantages and alternatives, let’s first review the key benefits: 

• Europe and Schengen access: Monaco residency allows for visa-free travel across Europe’s Schengen area.
• Safety and security: Monaco is among the safest countries globally, equipped with advanced security and a visible police presence.
• Luxury lifestyle: Monaco offers an appealing luxury lifestyle with gourmet cuisine, a luxury marina and beautiful homes.
• Taxes in Monaco: The zero-income tax regime of Monaco is a major draw for many, especially for the many millionaires who reside there. Residents can also benefit from no wealth, property, capital gains or local taxes.  
• Easy access: The Nice Cote d’Azur Airport is a 30-minute drive away, making it an excellent base for travelling across Europe.
• No physical presence requirement: No fixed amount of physical presence is required to maintain your residence permit. However, some benefit from spending 183 days a year in Monaco, as this makes you a tax resident. You’ll also need to maintain a physical presence in Monaco if you plan to apply for permanent residency and citizenship later down the line.
• Ideal climate: Monaco sees 300 days of sunshine a year and boasts blue skies all year round. Winters can be chilly, but summers are ideal. 

Monaco Residency by Investment

So, how do you gain residence in an ideal location in one of the safest, wealthiest and most tax-friendly countries?

Residency Requirements

To qualify for Monaco’s Residence by Independent Means program, applicants must:

• Show proof of sufficient funds
• Provide a clear criminal record
• Provide proof of accommodation in Monaco (either a rental or real estate purchase).

Technically, you’ll need to make a €500,000 minimum bank deposit in Monaco to be considered. However, in reality, a minimum of €1,000,000 is required for most banks.

Applicants must also have a net worth of over €2 million or earn at least €300,000 a year.

For real estate in Monaco, applicants must purchase a property for at least €500,000 or rent one for at least one year.

Applicants must show a clean criminal record from the last two countries they resided in (for more than 90 days each year) over the past five years.

Application Process for Monaco Residency

The first step when considering Monaco residency is understanding the real estate options available to you.

Once you have found a property to either rent or buy that meets the criteria for the residency program, you can open a bank account and make the necessary deposit. 

You’ll need to do this in person within Monaco, as banks here follow very strict compliance procedures.

For non-EEA citizens, obtaining a long-stay visa (Type D) through the nearest French Consulate is necessary before applying for residency in Monaco.

Lastly, applicants must engage a local lawyer to collect all documentation and submit the application.

Documents Required

• Passport (original and photocopy) 
• Birth certificate
• Marriage certificate
• Criminal record
• Proof of accommodation
• Health report
• Proof of financial means and employment.

Applicants must then attend an official in-person residency interview.

The application process can be lengthy, especially for non-EEA citizens, often taking four to six months.

Renewals

Once you have been granted residency, you can renew it as long as you continue to meet the residency requirements. 

The renewal process is as follows:

• One year: renew your temporary residence card
• Three years: apply for an ordinary residence card
• Nine years: apply for the privileged resident card, which is valid for ten years
• Ten years: apply for citizenship.

How to Get Monaco Citizenship

While getting residency is a fairly straightforward process if you can afford it, getting a Monaco passport isn’t quite so easy.

Before you can even apply to become a naturalised citizen, you must have lived in Monaco for at least ten continuous years.

For many, the decade-long residency requirement may be unappealing, especially since you can become a tax resident of Monaco and enjoy the 0% personal tax rate without needing full citizenship.

Beyond the long naturalisation period, another substantial drawback is that dual citizenship is not permitted.

However, a major benefit of opting for citizenship is that your children under 18 will automatically receive Monegasque nationality and enjoy tax advantages down the road.

The Monaco passport is not to be sniffed at: According to the Nomad Passport Index, this passport grants access to 168 countries (108 visa free).

Taxation in Monaco

Monaco abolished income taxes in 1869, making it the only sovereign zero-tax jurisdiction in Europe.

There are no gift or inheritance taxes for direct-line beneficiaries, but depending on the relationship between the deceased and the heirs, there may be minimal tax. 

For example, siblings are taxed at 8%, and gifts to unrelated individuals are taxed at 16%.

Companies incorporated in Monaco are taxed at 33.3% if over 25% of their revenue comes from abroad. However, there are exemptions for newly formed companies. 

If structured smartly, you could only pay 2.8% corporate tax here.

Additionally, a value-added tax (VAT) applies, mirroring France’s rates: 20% for most goods, with reduced rates for essentials.

Despite Monaco’s wealth, these minimal tax exceptions haven’t deterred the ultra-wealthy from seeking residency.

What about French Citizens?

While there is no direct income tax for most, French citizens living in Monaco do not benefit from this exemption.

French citizens have long been at a disadvantage, as a tax treaty means that they can’t take advantage of the tax benefits, including no personal income tax.

However, French citizens born in Monaco are among the lucky few who are exempt from this treaty, and you can take full advantage of the tax benefits, including no tax on personal income, dividends, capital gains or property tax.

Pros and Cons of Monaco Residency

Living in one of the world’s most exclusive countries offers many benefits, but it’s not without its drawbacks, either. 

The Pros of Investing in Monaco:

• Monaco offers zero personal income taxes.
• It’s a safe place where your wealth and personal safety are equally protected.
• No property tax

No capital gains tax.

The Cons of Investing in Monaco

• Monaco requires a ten-year continuous residency and a clean police record for citizenship.
• Monaco is one of the most expensive places in the world to live. 
• Limited supply of property and an expensive housing market.

Alternative Residency Programs Worth Considering

Living like royalty in Monaco is easy to imagine.

After all, this playground of the rich and famous is home to actual royalty and was once home to the most famous Princess of Monaco, Grace Kelly.

However, there are other places with fewer rules and more opportunities, where it’s also possible to live like a king.

Here are some alternatives worth considering:

Malta Global Residence Program

For those with their heart set on the Mediterranean, Malta also offers the Global Residence Program.

To qualify, you must own or rent property in Malta and not be a Maltese or EU/EEA/Swiss national.

If buying in Malta, the property must be valued at least €275,000 (in Gozo or the Southern Region, the minimum is €220,000).

Renting requires a minimum payment of €9,600 annually in Malta (€8,750 monthly in Gozo and the Southern Region).

Significantly, you won’t be taxed on foreign-sourced income unless it’s remitted to Malta, which is taxed at 15%. 

There is no inheritance tax, and foreign-sourced capital gains are not taxed, even when remitted.

Malaysia My Second Home (MM2H) Program

For those who are willing to venture east , Malaysia offers low taxes, excellent real estate and a luxurious lifestyle for a fraction of the cost in Monaco.

To qualify for the five-year residency Malaysia My Second Home (MM2H) Program, you must:

• Be at least 25 years old
• Make a fixed-term deposit of US$150,000 
• Purchase a property for a minimum of RM600,000 (about US$135,000)
• Stay in Malaysia for at least 90 days per year. 

Longer-term options are also available under this program, but they come with higher investment thresholds.

Malaysia is an ideal Plan B residence for expats seeking a welcoming, tax-friendly environment. It offers numerous benefits, including no taxes on foreign-earned income and only taxes on local remittances.

Monaco Residency by Investment: FAQs

Go Where You’re Treated Best

Monaco’s charm appeals to those seeking a luxury lifestyle and the status that goes with it. 

However, there are better offshore jurisdictions for young entrepreneurs looking for a more innovative hub for second residence or citizenship.

Still, Monaco isn’t just for the ultra-wealthy. 

It’s also ideal for retirees seeking sophistication. While it’s pricey, it offers fine dining, luxury living and no income taxes. 

So, for anyone who doesn’t count money as an obstacle, this could be a Mediterranean paradise.

Although citizenship may not be appealing, Monaco’s residency options are attractive due to its de facto participation in Europe’s Schengen Area, offering easy access to Europe and beyond.

At Nomad Capitalist, we call this ‘going where you’re treated best’. It looks different for each of the high-net-worth clients we work with.

That’s why we create and implement bespoke, holistic strategies for successful investors and entrepreneurs to legally reduce their tax bills and diversify and protect their assets. Become a client today.