Organising one's succession guarantees, on the one hand, the efficient transmission of one's assets and, on the other hand, the preservation of the interests of one's relatives as desired by the testator.
However, in an international context, the settlement of an estate can be complex.
Whether in civil or tax matters, the planning of an estate requires a great deal of vigilance.
What is an international estate?
An international estate is one that includes at least one foreign element:
- The deceased is of foreign nationality and dies in Monaco.
- The deceased owned one or more movable and/or immovable assets in a country other than that of his or her domicile.
- The heirs are domiciled abroad.
All Monegasque residents, whatever their nationality, are therefore concerned by these issues.
What is the law applicable to an international estate?
On 28 June 2017, Act No 1.448 on private international law was promulgated in Monaco. This Act led to the creation of a Code of private international law.
The rules for determining the applicable law to an international estate were subsequently overturned so that several choices are now available to testators domiciled in the Principality.
Single law applicable to the entire estate
The Code introduces a new principle: that of the unity of the law applicable to the succession.
The principle is as follows: the law applicable to the estate of the deceased is that of his/her last domicile.
Possibility to choose the law of one's nationality
In order achieve greater legal security and predictability of international estates settlements, the Code of private international law offers the testator the possibility of choosing his/her domestic law by making a professio juris.
Thus, if you are a Monegasque resident of British citizenship, you may designate English law under the terms of your will. The latter will apply to your entire estate.
The limitations of the Code of private international law
The Code of private international law only governs the civil law applicable to the succession. It does not apply to any tax aspects.
The estate planning of a foreigner resident in Monaco must therefore be handled with vigilance. Some Monegasque instruments (donations between spouses, lasting power of attorney, etc.) are not recognised in all countries. Their full effectiveness is not guaranteed in case a foreign law were to apply to the estate.
What about taxation of international estates?
To date, there are no international treaties on the taxation of international successions. It is therefore necessary to refer to the domestic tax law of the countries involved in the succession. International tax treaties relating to successions may limit double taxation.
In the absence of a tax treaty on inheritance
In the absence of an international tax treaty, international successions are subjected to Monegasque taxation law.
Inheritance tax applies to property located in the territory of the Principality or which has its base there, regardless of the domicile, residence or nationality of the deceased or donor.
The level of taxation depends on the degree of kinship between the deceased and his/her heir:
|Direct filiation between parents and children or spouses||0 %|
|Between brothers and sisters||8 %|
|Between uncles, aunts, nephews and nieces||10 %|
|Between relatives other than brothers, sisters, uncles, aunts, nephews or nieces||13 %|
|Between persons who are not related||16 %|
In the presence of a tax treaty on inheritance
To date, only one international tax treaty has been concluded by Monaco: the Franco-Monegasque Convention on Inheritance Duty dated 1 April 1950.
This international treaty makes it possible to distribute taxation between France and Monaco and limits double taxation at the time of succession.
As civil and tax rules differ greatly from one country to another, a complete analysis of one's situation will allow to plan in the best possible way.