The Impact of Real Estate on Monaco's Economy

UK property investors looking for the best return on investment should consider Monaco. The Principality on the Mediterranean boasts some of the most expensive real estate in the world. In the past year, transfer of Monaco property titles rose to a record high. Both value and number of transactions is escalating. Notable interest by foreign property buyers in new construction in Monaco, is said at least partly to be a response to larger and more luxurious accommodations offered by developers.

Economic Index

With the highest Gross Domestic Product (GDP) nominal per capital at USD $153,177 and Gross National Income (GNI) per capita at USD $183,150, Monaco is a safe and potentially lucrative environment for business development and commercial property purchase. In 2012, Monaco in 2012 ranked at the top of per square metre cost for real estate investment at USD $58,300. 

Tax Haven Incentives

The status of Monaco as a tax haven for the rich has long been an incentive for UK property investors. Prior to the Principality’s normalization process of 2010 under the mandate of OECD policy on non-cooperative tax havens, Monaco was exceptionally attractive for both individual and business taxpayers. 

The transition to a more transparent tax environment has had some impact on the nation’s lead position as a playground for the rich, yet investors are keen on maintaining residential status in spite of those changes. At present according to website icon-property.com, Monaco’s inhabitants continue to benefit from income tax and inheritance tax exemption. Exception to the rules on income and inheritance tax are those U.S. and French nationals obliged to fulfil national taxation requirements in those two countries.  

UK Investor Prospectus

For UK investors looking to buy into the Principality, it is important to note, that corporate tax, property transfer tax, and VAT sales tax sustain the country. Nevertheless, business incentives offered by the Monaco Government are attractive. Financial services derive the largest share of those benefits, with 39 international investment banks and an even larger number of trust corporations managing euro assets in the jurisdiction. 

Limits to the 2010 normalization in reporting of capital gains have been maintained where UK and Italian investors are concerned. UK investors continue to enjoy tax haven protections in Monaco, as Britain has not yet signed the TIEAs with the Principality. Investors will also find negotiated exemptions afforded as foreign nationals holding accounts in Monaco. UK account holders remain anonymous at will. For more information about Monaco's economy and real estate, consult the Principality’s annual Real-Estate Observatory publication.

 

Author's Note

UK property investors looking for the best return on investment should consider Monaco.