How to declare and pay corporate income tax

Scope

In accordance with Article 1 of the tax treaty between France and Monaco of 18 May 1963 corporate income tax was introduced in the Principality by the 

The following entities are subject to this tax:

• Companies of any legal status that carry out industrial or commercial activity, where at least 25% of the turnover is generated outside Monaco
• Companies whose income relates to the sale or licensing of patents, trademarks, processes or formulas and to the royalties from intellectual property rights

Administrative offices are subject to income tax. In view of their purpose, the tax is levied on a flat-rate basis equal to 40% of their annual operating expenses. It should also be noted that this tax regime would only apply if the taxable results calculated by applying the ordinary law regime were lower than those determined by applying the flat-rate tax method.

How taxable profit is calculated

Taxable profit is calculated according to the profits derived from activities of any nature carried out by the company. It is determined after deduction of all costs. However, specific rules mean that the salary of the owner or directors can only be deducted for individuals who carry out a real function within the company and at a total value that is reasonable for their role.

For small businesses (defined as companies with a turnover of less than €3.5 million for the provision of services or €7 million for other activities) a scale determines the maximum amount of deductible income per turnover bracket. For other companies the director’s salary can only be deducted from taxable profits if the amount is not excessive in comparison to recognised practices on an international level, particularly within the European Union.

Rate of taxation

The rate of taxation is:

• 33.33% for financial years commencing before 1 January 2019
• 31% for financial years commencing on or after 1 January 2019
• 28% for financial years commencing on or after 1 January 2020
• 26,5% for financial years commencing on or after 1 January 2021
• 25% for financial years commencing on or after 1 January 2022

To get the form you can either:

• Download it here
  Impôt sur les bénéfices - Déclaration des résultats (353-0018_01-2019)

  PDF223.8 kB

• Or collect it from the Department of Tax Services

• You must provide:

• The completed declaration of profits form
• Certified true copies of:

• • The income statement
  • The balance sheet
  • The profit and loss statement
  • The attendance register of the assembly where the results for the year were discussed, along with reports and extracts of the discussions of board meetings and of the shareholders’ assemblies

• A statement of depreciation and of provisions deductions applicable
• A statement of the main general and administrative expenses of the company

Where necessary, you should also provide :

• The completed form “Declaration of payments made during the year”
• A commitment to reinvest the capital gains of sales of parts of the fixed asset
• A carryback of loss option and a statement of determination of allocated profit and of the debt resulting from the carryback
• A detailed statement of the research tax credit calculation
• Evidence of taxes paid abroad

You must submit or send your application to the Department of Tax Services in the final three months of the accounting period (before 1 April of the following year if the period coincides with the calendar year).

Tax is calculated following a declaration of taxable income and the tax balance (with provisional instalments deducted) must be settled within the aforementioned three months by cheque or bank transfer or in cash.

Along with payment you must submit a “Bordereau de règlement de l’impôt sur les bénéfices”. To obtain this you can:

• Download it here:
  Impôt sur les bénéfices - Bordereau de règlement (353-0016_01-2012)

  PDF7.8 kB
• Or collect it from the Department of Tax Services

Corporate Income Tax requires the payment of provisional tax instalments. Payment of these instalments must be made in the months of February, May, August and November of each year. Every instalment is equal to 20% of the tax calculated on taxable profit on closing of accounts at the end of the previous financial year.

There are two categories of tax relief in the Principality of Monaco:

• Business start-up scheme
• Research tax credit