To buy real estate in Monaco. Useful Adviсes.

When you have made a conceptual decision on investments in Monaco we will help you to understand the main points.

Points  related to the peculiarities of the purchase and taxation process in this country.

The right to purchase real estate for foreign citizens applies to all types of real estate. To start the process of buying property in Monaco you need to open an account with a local bank and put at least € 100,000 in it. This is necessary to obtain a residence permit in the country; however, the larger the amount in the account, the more trust you will have as a buyer.
What follows is the conclusion of a preliminary contract, which can be executed with the help of a French real estate agent or a local notary. Traditionally, the preliminary contract indicates the price of the property, transaction conditions, credit conditions, payment schedule, and data of the parties. Within 2-3 months of signing the preliminary contractthe notary collects all the necessary documents and researches the history and registration of the object.

A deposit of 10% of the value of the property is made to a separate notary account and is kept until full payment for the property is made or until the transaction is cancelled. The deposit can be returned within 7 days from the moment of receiving the money in the account, if a decision is made to cancel the transaction. Further, after the necessary checks the main contract is signed in the presence of a notary and payment of the remaining part of the value of the object (90%) is made. After full payment for the property the buyer is considered to be the owner of the property. The notary independently transfers the funds to the seller’s account and draws up ownership of the new owner. The process of registering a new property owner in the registration office takes place a few days after the transaction itself. Real estate purchased in Monaco must be insured.

There are no restrictions on the purchase of real estate in Monaco for foreigners. There are no income taxes for individuals in the country, but for legal entities the situation is completely different.

The country does not provide income tax for firms and companies, but those companies that receive more than 25% of the total turnover outside the country are taxed. All real estate purchase and sale transactions are only madewith the help of notaries, who areresponsible for the correct execution of all necessary documents and acts as its guarantor.

On average, the cost of registration of the sale of real estate in Monaco will be 13-17% of the cost. Thefollowing taxes and fees should be taken into accountwhen purchasing real estate in Monaco:

• 7.5% transfer tax or 19.6% value added tax (applies only to primary housing)
• 1.5-2.5% + VAT - notary services
• 3% + VAT - broker's commission

The services of mortgage lending in Monaco are often used by investors who purchase luxury real estate in France. The main goal of such a mortgage is to optimize taxation in transactions over €1,500,000.
To obtain a mortgage loan, you need to place at least half the value of the object in the country's bank. A loan can be issued in the amount of up to 100% of the value of the property, and the presence of a deposit at the Bank of Monaco can significantly reduce the loan rate.

Mortgage loans in Monaco are provided on the following conditions:
• age limits - 21-75 years
• loan amount - up to 80% of the cost
• minimum loan amount - €50,000
• loan repayment period - up to 25 years

Mortgage interest rates can be fixed, floating or combined. On average, the size of the fixed rate is 3.5-4.5% per annum, the size of the floating rate from 2.5%.
A fixed mortgage rate provides for penalties for early repayment. The floating or combined rate does not provide for penalties if you have notified the bank of your intention in at least 3 months.

To stay in the country for a period of more than 3 months foreign citizens must submit documents for obtaining a residence permit.
The acquisition of real estate in Monaco does not give the buyer the right to provide a residence permit. It is not necessary to purchase real estate for obtaining a residence permit; however, it can be obtained on the basis of the ownership of the property or its lease.

To obtain a residence permit in Monaco:
• you must have enough money to live in the country
• have a place to live
• the moral character of the applicant is also evaluated

In the case of a positive decision, the applicant receives the first residence permit, which must be updated annually. For EU citizens this process is much easier than for other foreign citizens. After 3 years of legal residence in the country EU citizens receive a residence permit; after 10 years of residence citizens receive a Preferred Resident Card.
Documents submitted for consideration for obtaining a residence permit are considered within 3-4 months after submission. Initially, a residence permit is issued for a period of one year, with repeated application for 2 years, then for 3 years.

A card of a privileged resident for a period of 10 years can be obtained after 3 years of residence in the country; it can be renewed an unlimited number of times.

There is no traditional permanent residence in Monaco. It has been replaced with a 10-year residence permit (the card of a privileged resident).

Having a residence permit for 10 years means you can apply for citizenship.

• residence in the country (unlimited period)
• free movement across the borders of the Schengen countries and Switzerland without a visa
• children can study in the Schengen countries

• possibility to register and buy companies
• receive tax benefits
• apply for citizenship in Monaco

To obtain citizenship of the Principality of Monaco it is necessary to have sufficient capital for comfortable living in a country with a high standard of living, as well as having your own real estate in the country.

Monaco does not support the dual citizenship standard, so if you obtain the citizenship of this country you will have to abandon the former.

• by marrying a citizen or citizen of Monaco (the person applying for citizenship must be at least 21 years old)
• marrying a citizen or citizen of a country after living at least 5 years together
• through naturalization (living in the country for at least 10 years)

• Obtaining citizenship as a gift from the Prince of Monaco (about 10 cases annually)
Each case is undoubtedly individual and we will be happy to accompany the transaction from monitoring the facilities suitable for a specific request to legal support of the transaction and post-sale support and maintenance.

* Material prepared in collaboration with a Mercury Group location agent.