Some Things to Consider Before You Move to The Sunny Tax Haven
There are many articles about the advantages of living in Monaco. And there are many. It’s the only real tax haven in Europe. It has an amazing climate. It has some of the best food and wine on offer in Europe. It’s an easy commute to London and other European cities. Life in Monaco has a lot to offer. But there are also some disadvantages of living in Monaco.
So, let’s take a closer look. Anyone thinking of moving to Monaco will want to know, what are the disadvantages of living in Monaco?
1. It’s Really Small
Like, miniscule. Monaco is the second smallest country in the world after Vatican City. It covers 2.1 square kilometers or 0.81 square miles. At 480 acres it’s bigger than London’s Hyde Park (350 acres) but smaller than New York’s Central Park (778 acres).
It’s one of the most densely populated countries in the world with 19,009 inhabitants per square km. Almost everybody lives in apartments, so it can be difficult to avoid your neighbours at times.
2. It Has Some of the Highest Property Prices in the World
Monaco has some of the highest property prices in the world. This is partly because of its status as Europe’s only tax haven. It’s also because there aren’t many properties available to buy.
Monaco has a handful of large property owners who prefer to rent their properties rather than sell them. It can be difficult to even find a property to rent. Rent on a 2 bedroom apartment will be upwards of €10,000 per month. Buying a similar property would be more than €10m.
3. A Monaco Bank Will Have to Confirm That You Can Live There Without Working
Unless you have a job offer to work in Monaco, you’ll have to get a bank to write what’s called an Attestation. This is a document that confirms that you can afford to live in Monaco without working. The amount that banks want to see deposited to write an attestation is discretionary. It can vary from as little as €200,000 to over €1m. The Monaco authorities won’t accept documents from banks outside Monaco for your residency application.
4. There’s Vat on All Purchases
Years ago, Monaco was able to sustain itself with income from the famous Monte Carlo Casino. Nowadays Monaco’s main source of funding is VAT. The French government forced Monaco to implement VAT decades ago so that it wasn’t cheaper for the French to shop in Monaco. Now VAT generates more than 90% of the Principality’s revenue. One of the disadvantages of living in Monaco is that it’s not a tax haven for shopping.
5. It’s Not a Tax Haven for Businesses
If you have a company in Monaco, you’ll have to pay corporation tax on all profits generated outside Monaco. This was at the insistence of the French government to avoid French companies moving to Monaco. In the modern world, another of the disadvantages of living in Monaco is that it’s not a business haven.
6. It Gets Too Busy in the Summer and around the Grand Prix
Monaco’s population is just under 40,000 people. For most of the year, it’ll feel quiet. Many residents only live in Monaco for 3-4 months per year. But in May and in July and August there can be over 100,000 people there. Restaurants, bars, and beaches are jam-packed. Many bars and restaurants increase their prices at peak times too.
7. You’ll Never Get a Monaco Passport
Here at Liberty Mundo, we’re keen on increasing our freedom by getting a new passport everywhere we have a residence. It’s never going to happen in Monaco. The rules say you can apply for a Monaco passport after 15 years of living there. The reality is that every passport application must be approved by the Prince. You will only be naturalised if you build the right political connections. This might involve making large donations to local charities.
Monaco offers glamour and it’s the only tax haven in Europe. Those kinds of advantages take a lot to beat. There are other tax-free options in Europe. There are other tax havens outside Europe, of course. Are the disadvantages of living in Monaco outweighed by the many advantages? That is a personal decision based on the lifestyle you’re seeking.
Would You Like to Live in Monaco?
Liberty Mundo helps clients to get legal residency in Monaco. If you’d like to live in a sunny climate and pay zero tax we can help you relocate to Monaco. We can deal with everything from helping find the right apartment, to detailed tax planning before you move and attending the interview with the immigration department. Get in touch with us by clicking here or start the process here.