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For US citizens & green card holders

US expat tax for Americans in Monaco

US federal tax, FBAR, and FATCA obligations for U.S. citizens and green-card holders living in Monaco. General information.

Americans in Monaco face a unique US tax situation. While Monaco famously levies no personal income tax, US citizens and green-card holders remain subject to US tax on their worldwide income. Without a tax treaty or social security agreement, double-taxation relief relies primarily on the Foreign Earned Income Exclusion, and self-employed individuals face full US self-employment tax.

US filing basics every American abroad must know

US citizens and green-card holders are taxed on worldwide income wherever they live, and usually must file Form 1040 once gross income exceeds the IRS threshold (roughly $15,000 to $30,000 depending on filing status for recent years), even when no tax is ultimately due. The tools that prevent double taxation are the Foreign Earned Income Exclusion (FEIE, up to $130,000 for 2025 under IRC §911) and the Foreign Tax Credit.

Two reporting rules catch most filers in Monaco: the FBAR (FinCEN Form 114), required when foreign financial accounts exceed $10,000 in aggregate at any point in the year, and Form 8938 (FATCA) for specified foreign assets above the applicable threshold. Both can carry penalties even when no tax is owed. If you are behind, the Streamlined Filing Compliance Procedures are the usual penalty-free path back for non-willful taxpayers.

US tax treaty with Monaco

There is no comprehensive income tax treaty between the United States and Monaco. Consequently, US citizens cannot use treaty provisions to reduce or eliminate US tax on their income. A Tax Information Exchange Agreement (TIEA) effective since 2009 facilitates the exchange of tax information between the two countries but does not provide tax relief. Double taxation is mitigated primarily through domestic US tax provisions like the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC), though the FTC offers little benefit for earned income as Monaco does not impose an income tax.

Monegasque Retirement Plans and US Tax

Monaco's state retirement system, managed by the Caisses Sociales de Monaco (including the Caisse Autonome des Retraites or CAR), is a pay-as-you-go social security system without individual investment accounts. However, private supplementary retirement plans are not considered qualified retirement plans for US tax purposes. This means contributions made by or for a US person to these private plans are generally not tax-deferred, and investment earnings within the plan may be currently taxable in the US.

A significant complication is that private supplementary plans often invest in European-domiciled funds (such as UCITS or SICAVs), which are almost always classified as Passive Foreign Investment Companies (PFICs) by the IRS. Holding PFICs requires complex annual reporting on Form 8621 for each fund and can lead to a punitive US tax outcome.

Furthermore, while state social security pensions like CAR do not have an individual account balance and are not reportable on FinCEN Form 114 (FBAR) or IRS Form 8938, an interest in a private foreign pension account must be reported on the FBAR if the aggregate value of all foreign financial accounts exceeds $10,000. It may also need to be reported on Form 8938. Depending on the structure, contributions and distributions to private plans could also trigger foreign trust reporting on Forms 3520 and 3520-A.

Investments, property, and capital gains in Monaco

Most pooled investment funds available to investors in Monaco, such as European mutual funds and ETFs, are considered Passive Foreign Investment Companies (PFICs). US investors holding PFICs face complex reporting on Form 8621 and a default tax regime with high rates and interest charges on gains and distributions.

While Monaco does not tax the capital gains of individuals, US citizens and green-card holders are liable for US tax on their worldwide capital gains. A profitable sale of stocks or real estate, whether in Monaco or elsewhere, must be reported on a US tax return.

For US persons owning a Monegasque business, the US Controlled Foreign Corporation (CFC) rules are a major consideration. Owning a significant portion of a local company (e.g., a Société Anonyme Monégasque, SAM) can trigger a filing requirement for Form 5471. This may also lead to current US taxation of the company's profits under the GILTI (Global Intangible Low-Taxed Income) or Subpart F regimes. While Monaco's 25% corporate tax rate may allow for a high-tax exception election to mitigate GILTI, the reporting obligations remain.

Self-employment and companies in Monaco

A critical point for self-employed Americans in Monaco is that there is no US-Monaco social security totalization agreement. This means a self-employed US citizen or green-card holder is fully liable for US self-employment taxes (Social Security and Medicare) on their net earnings. The tax is 15.3% on net self-employment income of $400 or more.

It is not possible to use contributions to Monaco's social security system to offset this US tax, nor is it possible to obtain a Certificate of Coverage to claim an exemption. This tax liability exists even if the income is excluded from US income tax by the Foreign Earned Income Exclusion (FEIE), as the FEIE does not reduce or eliminate self-employment tax.

Worked examples

Salaried employee at a consulting firm in Monaco (2025)

An American citizen works for a Monegasque employer and earns a salary of €180,000 (approximately $198,000). For US tax purposes, they can use the Foreign Earned Income Exclusion (FEIE) to exclude up to $130,000 of this income (using an illustrative 2025 amount). This leaves $68,000 of taxable income, on which US income tax would be due. Because Monaco has no income tax, no Foreign Tax Credits are generated from the salary to offset this US tax. The individual must also report their foreign bank accounts on an FBAR, as their balances will certainly exceed the $10,000 threshold.

Self-employed graphic designer in Monaco (2025)

A US citizen works as a self-employed designer in Monaco, with net earnings of $150,000. They can use the Foreign Earned Income Exclusion (FEIE) to exclude their income from US income tax. However, because there is no totalization agreement, they owe full US self-employment tax. The calculation is as follows: Net earnings of $150,000 are multiplied by 92.35% to find the base for SE tax, which is $138,525. The SE tax is 15.3% of this base, resulting in a US tax liability of approximately $21,200. This tax is due even though no US income tax is owed on the same earnings.

Retiree living in Monaco with investments (2025)

A US retiree lives in Monaco and has a portfolio containing US stocks and a European-domiciled mutual fund (a SICAV). By providing Form W-9 to the US payor, the retiree avoids 30% non-resident withholding on dividends from the US stocks, instead reporting them on their Form 1040 and paying standard US tax rates. The European fund is a PFIC, requiring the retiree to file Form 8621. When the retiree sells shares of the PFIC at a gain, the gain is taxed at high US rates plus an interest charge under the default rules. Even though Monaco does not tax capital gains, the retiree must report and pay US capital gains tax on the sale of any investment at a profit. All foreign accounts, including the account holding the SICAV, must be reported on an FBAR.

Common mistakes for Americans in Monaco

Monaco tax FAQ

Do US citizens living in Monaco have to file US taxes?

Yes. US citizens and green-card holders are required to file a US tax return every year to report their worldwide income, regardless of where they live. Living in a country with no income tax does not remove this obligation.

Is there a tax treaty between the US and Monaco?

No, there is no comprehensive income tax treaty. There is a Tax Information Exchange Agreement (TIEA) that allows the two countries to share tax information, but it does not offer any tax reductions or benefits to individuals.

How do I avoid being taxed by both the US and Monaco?

Since Monaco does not have a personal income tax, the primary issue is not double taxation but ensuring compliance with US tax law. The Foreign Earned Income Exclusion (FEIE) can be used to exclude a significant portion of your earned income from US income tax. The Foreign Tax Credit (FTC) is generally not applicable to earned income as no foreign tax is paid.

I am self-employed in Monaco. Do I owe US Social Security and Medicare taxes?

Yes. Because there is no social security totalization agreement between the US and Monaco, you are fully liable for US self-employment tax (15.3%) on your net self-employment earnings. This is true even if you also contribute to Monaco's social security system.

What is a PFIC and why should I be concerned in Monaco?

A PFIC, or Passive Foreign Investment Company, is a type of foreign corporation (often a mutual fund or ETF) with mostly passive income or assets. Most non-US investment funds available in Monaco are PFICs. US owners of PFICs face very complex and often unfavorable tax rules, requiring annual reporting on Form 8621.

If I sell my Monaco apartment for a profit, is that gain taxable?

Yes, it is taxable in the United States. Monaco does not have a capital gains tax for individuals, but the US taxes its citizens on worldwide capital gains. You must report the sale on your US tax return and pay any applicable US capital gains tax.

Are my contributions to a Monegasque pension plan tax-deductible in the US?

No. Monaco's state social security system (CAR) is a pay-as-you-go system, and private supplementary retirement plans are not considered 'qualified' by the IRS. Therefore, your contributions to private plans are not deductible on your US tax return, and the plan's earnings may be subject to current US taxation.

I own a small business in Monaco. Are there special US filing requirements?

Yes. If you are a US person who owns a significant stake in a Monegasque company, you may have a Controlled Foreign Corporation (CFC). This triggers a requirement to file Form 5471 annually and could result in some of the company's income being taxed to you directly in the US under the GILTI or Subpart F rules.

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