Customs legislation and VAT in Monaco
The French and Monegasque territories, including their territorial waters, formed a customs union set up by the Franco-Monegasque customs convention on 18th May 1963. French customs legislation is directly applicable in the Principality of Monaco.
To ensure that this bilateral agreement is enforced, the Principality has been incorporated into the European customs territory (although it remains a non party State of the European Union) Access to the European single market for goods and services is therefore possible from Monaco.
Value Added Tax (V.A.T.) is paid on the same basis and at the same rates as in France.
The intra-community V.A.T system has been in force since 1st January 1993 and the rates that are most commonly applied are as follows :
- the normal rate of 19.6% is applicable to taxable transactions that are not expressly subject to another rate,
- the reduced rate of 5.5% applies to various services (passenger transport, travel agencies, shows…) and to certain products (water, foodstuffs, medicines, books…).
The main transactions subject to VAT are :
- transactions concerning an economic activity that are carried out against payment by a taxable person, i.e. by a person acting independently either on a regular or occasional basis, whatever his/her legal status;
- transactions expressly stipulated by law (deliveries to oneself of certain goods, purchases and imports…) ;
- transactions which are normally exempt from VAT but which become taxable if the person carrying them out chooses this option (certain bank transactions, rentals of bare buildings..) ;
- transactions involving the production and delivery of property.
However, VAT is not applicable to transactions concerning property that has been completed for over five years, except in the case of marketable goods.
