In a significant development for French nationals working in Monaco, the year 2024 brings about noteworthy changes in their tax obligations. As of this year, the French income tax scale has undergone an adjustment, with a 4.8% increase. This increase is a response to align the tax brackets with current inflation rates, affecting French employees in the Principality due to the enduring impact of the Franco-Monegasque treaty established in 1963.
This treaty dictates that French workers in Monaco are subject to French tax rules, regardless of whether they are domiciled in France or Monaco. Consequently, they cannot avail themselves of Monaco's distinctive tax benefits, which famously include exemption from personal income tax. The updated tax brackets are as follows: a 0% rate for annual incomes up to €11,294, escalating progressively to a top rate of 45% for incomes exceeding €177,106. The adjustment marks a significant shift from the previous brackets, where the income threshold for the highest tax rate was the same but the lower brackets had lower income thresholds.
Monaco's tax regime remains unchanged for its residents. The Principality is renowned for its lenient tax policies, characterized by the absence of personal income tax, wealth tax, and property tax. This policy, in place since an ordinance by Prince Charles III in 1869, continues to be one of Monaco's most attractive features, particularly for high-net-worth individuals. However, for the over 44,000 French nationals employed in Monaco's private sector and the more than 2,000 civil servants, the new tax brackets present a shift in their financial planning for the year ahead