Companies found to have committed tax fraud in Monaco will face substantially lower financial surcharges under new rules published in the Journal de Monaco, while businesses that miss their tax filing deadlines will face significantly higher fines.
Sovereign Ordinance No. 12.211, signed by Prince Albert II on 23rd October and published on 30th October, reforms the penalty system attached to Monaco’s business profits tax, with the changes applying to financial years beginning on or after 1st January 2026.
The changes reduce the maximum fraud surcharge from four times the unpaid tax to 80% of it, while increasing the standard fine for late declarations from a maximum of €75 to €700.
Monaco’s business profits tax generally applies to companies deriving at least 25% of their turnover from activities outside the Principality, as well as certain other businesses covered by the legislation.
Fraud penalties fall sharply
Under the previous system, companies found to have acted in bad faith or committed fraud could face a penalty equivalent to four times the tax involved.
The revised rules introduce two levels of surcharge: 40% of the tax avoided or put at risk in cases of bad faith, and 80% in cases of fraudulent conduct.
The financial difference is substantial. A company that concealed €100,000 in taxable profits, avoiding €25,000 in tax at Monaco’s standard 25% rate, for example, would previously have faced a €100,000 fraud penalty on top of the unpaid tax. Under the new rules, the fraud surcharge would fall to €20,000, bringing the combined tax and surcharge to €45,000, before interest or any other applicable sanctions.
That represents an €80,000 reduction in the financial penalty for the same amount of unpaid tax.
Late declarations become more expensive
While fraud surcharges are being reduced, the cost of failing to submit a tax declaration on time is increasing. The previous fine, ranging from €15 to €75, is replaced by a fixed penalty of €700.
Businesses that fail to file also face an additional surcharge calculated on the tax due. This is set at 10% when a declaration is submitted before formal notice or within 30 days of receiving one, rising to 40% if the deadline is missed.
For a company owing €40,000 in business profits tax, for example, submitting its declaration within 30 days of formal notice would result in a €4,000 surcharge, in addition to the €700 fine.
Failing to meet that deadline would increase the surcharge to €16,000.
The ordinance also strengthens the authorities’ ability to request information from businesses that may be liable for the tax. Failure to respond to a qualifying request within 30 days can trigger the €700 fine and, where tax is due, have consequences for the formal notice procedure.
Lower interest charges for late payments
Businesses that pay their tax bills late will benefit from a significant reduction in the charges applied to outstanding amounts. The previous system imposed a 3% charge for the first month of delay, followed by an additional 1% for each subsequent month.
This is replaced by late-payment interest of 0.2% per month. For example, a company with an outstanding tax bill of €25,000 would incur €300 in interest over six months under the new monthly rate, excluding any other applicable penalties.
The reform also gives companies more time to respond when the tax authorities propose an adjustment to their declarations. The response period increases from 20 to 30 days.
Taken together, the changes mark a substantial restructuring of Monaco’s business tax enforcement system: lower financial surcharges for fraudulent declarations and overdue payments, but tougher penalties for businesses that fail to submit the information required by the tax authorities.
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Photo credit: Cassandra Tanti, Monaco Life