Critical for Americans: Monaco's zero income tax provides NO benefit to US citizens. The US taxes citizens on worldwide income regardless of residence. You will pay full US federal taxes (and potentially state taxes) on all income. Moving to Monaco does not reduce your US tax burden.
Monaco Tax System
Monaco is famous for its lack of personal taxes. For residents (except French citizens), there is:
| Personal income tax |
0% |
| Capital gains tax |
0% |
| Wealth tax |
0% |
| Property tax |
0% |
| Inheritance tax (for Americans) |
0% |
| VAT |
20% (aligned with France) |
| Corporate tax |
25% (with exceptions) |
What Monaco Doesn't Tax (Non-French Residents)
- Salary income
- Investment income (dividends, interest)
- Capital gains on any assets
- Real estate holdings (no property tax)
- Net worth (no wealth tax)
- Inheritances (for non-French recipients)
- Gifts (for non-French recipients)
But the US Taxes All of This
As a US citizen, you owe US federal income tax on worldwide income regardless of where you live. Monaco's zero taxes mean you get NO foreign tax credit—you pay the full US rate with no offset. In many ways, you're worse off than living in a high-tax country where you'd at least get credits.
French Citizens Exception
The 1963 Franco-Monegasque Treaty requires French citizens living in Monaco to pay French income tax as if they lived in France. This prevents wealthy French from escaping taxes by moving 20 km down the coast.
Who This Affects
- French citizens (by nationality, not just birth)
- French citizens who became Monegasque after 1957
- Certain individuals who were French residents for extended periods
This does NOT apply to Americans. You're subject to US taxes, not French taxes, regardless of the French treaty.
US Tax Obligations from Monaco
Annual Filing Requirements
- Form 1040: US income tax return (worldwide income)
- FBAR (FinCEN 114): If Monaco accounts exceed $10,000 aggregate
- Form 8938 (FATCA): If foreign assets exceed thresholds
- Form 5471: If you own 10%+ of a Monaco company
- Form 3520: For foreign gifts/inheritances over thresholds
No Foreign Tax Credit
Since Monaco charges 0% tax, you have no foreign taxes to credit against your US liability. This is actually disadvantageous compared to high-tax jurisdictions:
Comparison Example
Living in France (45% top rate): Pay French tax, claim credit on US return, often owe little additional US tax.
Living in Monaco (0% rate): Pay no Monaco tax, no credit available, owe full US tax (up to 37%+ federal, plus state if applicable).
Foreign Earned Income Exclusion
Americans in Monaco can potentially exclude up to ~$130,000 (2026) of foreign earned income using the FEIE if they meet the requirements:
Requirements
- Tax home: Must be in Monaco (or other foreign country)
- Physical presence test: 330 days outside US in 12-month period, OR
- Bona fide residence test: Established resident of Monaco
Limitations
- Only applies to earned income (salary, self-employment)
- Does NOT apply to investment income, dividends, capital gains
- Does NOT apply to US-source income
- Still must file returns and report all income
For ultra-HNW individuals whose income is primarily from investments, the FEIE provides minimal benefit.
Corporate Tax in Monaco
While individuals pay no income tax, Monaco does tax corporations:
| Situation |
Tax Rate |
| Companies with 75%+ revenue from Monaco |
0% |
| Companies with significant foreign revenue |
25% |
| Holding companies (on foreign income) |
25% |
US CFC Rules Still Apply
American owners of Monaco companies face US tax on corporate profits through CFC (Controlled Foreign Corporation), GILTI, and Subpart F rules—regardless of Monaco's treatment.
Estate and Inheritance Tax
Monaco Rules
Monaco has no inheritance tax for direct-line heirs (children, spouses) who are not French citizens. More distant relatives may face some tax.
US Rules Override
As a US citizen, your worldwide estate is subject to US estate tax upon death:
- Federal estate tax exemption: ~$13.99 million (2026)
- Rate: Up to 40% on amounts over exemption
- Includes all Monaco property, bank accounts, investments
- No credit for zero Monaco tax paid
Estate Planning Opportunity: While Monaco residence doesn't reduce US taxes during life, it can simplify estate planning by avoiding foreign inheritance taxes that would apply in other jurisdictions. Sophisticated planning with US and Monaco counsel is essential.
Who Benefits from Monaco?
Despite no US tax savings, Monaco residence can benefit Americans who:
- Value lifestyle: Security, climate, social environment worth the premium
- Have investment income: Already paying US tax on investments regardless of location
- Plan for heirs: Non-US citizen family members benefit from Monaco's lack of inheritance tax
- Want privacy: Discreet environment with culture of discretion
- Plan to renounce: Future renunciation of US citizenship (complex, significant consequences)
State Tax Considerations
Some US states continue to tax former residents:
- California: May assert "source" taxation on California-source income
- New York: Complex domicile rules, aggressive audits
- Other states: Vary in treatment of departing residents
Properly establishing non-residency before moving to Monaco is essential. Consult state tax specialists.
Disclaimer: Tax laws are complex and change frequently. This is educational information only, not tax advice. US taxation of citizens abroad involves intricate rules. Consult qualified US tax attorneys and Monaco advisors before making decisions. Information current as of January 2026.