Thinking of buying in Monaco? Our step-by-step guide takes you through some of the key considerations.
Choosing a Notary
Whether you’re a buyer or seller it is recommended to seek a Notary’s opinion or independent legal advice before entering into any form of written agreement. Whilst the buying process is relatively straightforward, the assistance of a lawyer or Notary at the early stages of a deal is invaluable in ensuring a smooth and risk free transaction. There are three notarial offices in Monaco.
The Offer Letter (Offre d’Achat)
Having identified the right property, often the buyer will be asked to confirm the intention to purchase in writing. This may be in the form of an offer letter or ‘Offre d’Intention d’Achat’ describing the property, outlining the purchase price, as well as a lock out date by which the purchaser endeavours to move toward exchange.
Purchase Contract (Compromis/Promesse de Vente)
With everything agreed, the Notary prepares the purchase contract or ‘Compromis de Vente’. This will provide a completion date, typically in a week to a months’ time, to allow the Notary to complete the file and relevant searches. The property may be subject to pre-emptive rights to purchase by the government, in which case the sale cannot take place earlier than within a months’ time or when said rights are waived. Moreover, the ‘Compromis’ will refer to conditions precedent that, unless satisfied, will allow the buyer to withdraw within a fixed period. The conditions may concern obtaining financing, making physical modifications, or planning matters to name but a few, however, financing and planning permission are unusual conditions precedent in Monaco.
Completion (Acte de Vente)
Completion of the sale takes place at the Notary’s office with payment of the balance. Notary’s fees and transfer taxes are also all due at this stage and costs are borne by the buyer. Once the ‘Acte de Vente’ is signed, the Notary will transfer the funds that would have been already deposited into their account, and register the new owner at the registry of deeds, together with any mortgage.
Purchase and Ownership Costs
Property registration tax, title registration and notary fees together are 6% if the property is purchased by a person or a Monaco “Société Civile” owned by physical persons. If the property is purchased by other types of companies or by foreign companies, it is 9%. For new construction or new build properties, 20% VAT is due in lieu of registration tax. It is important when negotiating to buy a new construction that the price is understood to include VAT. Marginal additional costs may apply according to the number of pages in the ‘Acte de Vente’ and further costs may apply if there is financing involved. Agents fees payable by the seller are customarily 5% (plus 20% VAT) and those payable by the buyer 3% (plus 20% VAT). Shares transfers of companies owning properties in Monaco are subject to a 4.5% tax. If the company is a Monaco company, payment will be due when the transfer is registered at the tax office. If the company is a foreign company, payment of this tax is guaranteed by the foreign company’s Monaco tax representative. Anyone considering purchasing a company that owns Monaco property must verify that the company has complied with all regulations regarding the appointment of a tax representative.
Other Considerations
This note is meant to provide a very basic indication of the purchasing process. No liability is assumed as it is strongly recommended that interested parties should seek the appropriate local, independent legal and fiscal advice in order to structure a deal in the most efficient way.