VAT: transcription of new tax measures into Monegasque law (applicable from January 1, 2024 or 2025)

Sovereign Order no. 10.832 of 19 September 2024 and Ministerial Order no. 2024-516 of 23 September 2024 (JDM no. 8714 of 27 September 2024) respectively amend the Monegasque Sales Tax Code (Code des taxes sur le chiffre d'affaires "CTCA") and the Appendix to the Code.

They transcribe French tax measures arising from Finance Act 2023-1322 of 29 December 2024 (LF 2024) (JORF no. 0303 of 30 December 2023) [1], applicable when the chargeable event occurs on 1 January 2024 or 1 January 2025.

[1] Pursuant to Article 15 of the Franco-Monegasque Tax Convention of 18 May 1963 (Sovereign Enforcement Order n° 3.037 of 19 August 1963), turnover taxes are applied in the Principality on the same basis and at the same rates as in France.

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THE MAIN CHANGES:

→ Overhaul of the basic VAT exemption scheme

Taxable persons established in Monaco are exempt from having to declare and pay VAT on their supplies of goods and services if their turnover in Monaco does not exceed certain thresholds. In return, VAT cannot be deducted from their expenses. (article 87 CTCA)

• Modification of thresholds from 1 January 2025.
• Specific exemption thresholds for authors of intellectual works and performers who are taxable persons and established in Monaco.

When the turnover threshold for transactions in the current year is exceeded, the exemption ceases to apply to transactions taking place from the date on which the threshold is exceeded.

→ Territoriality of services relating to cultural, artistic, sporting, scientific, educational, entertainment or similar activities broadcast or made available virtually

It is added that (effective from 1 January 2025):

• by way of derogation, the supply of services relating to cultural, artistic, sporting, scientific, educational, entertainment or similar activities, such as fairs and exhibitions, including the supply of services by the organisers of such activities, as well as the supply of services ancillary to such activities, where these activities are broadcast or made available virtually for the benefit of a non-taxable person who is not established or does not have his permanent address or usually resides in Monaco, are not located in Monaco (new Article 11-0 A CTCA).
  a contrario, these services are located in Monaco when they are provided to a non-taxable person who is established, has his domicile or habitual residence in Monaco (new III of article 14 bis CTCA).

→ Electric vehicles and recharging infrastructure

• Taxable persons may deduct the VAT relating to the electricity consumed by land vehicles excluded from the right to deduct, when these vehicles are used for the purposes of transactions giving rise to the right to deduct and are operated exclusively by means of electrical energy; or when vehicles of this nature are leased and the tax relating to this lease is not deductible. (new article 46-00 bis CTCA)
• New provisions concerning the installation and maintenance of charging infrastructures for electric vehicles: technical requirements for the configuration of charging infrastructures for electric vehicles, qualification criteria for service providers (article A-130 sexies Appendix CTCA).

→ Transport of equidae, horse riding instruction and practice

• VAT relating to supplies, imports, intra-Community acquisitions and the provision of services is not subject to any exclusion or restriction of the right to deduct in respect of vehicles fitted out for the transport of equidae. (new Article 46-0 bis CTCA)
• VAT is levied at the reduced rate of 5.5% on the teaching and practice of horse riding, entertainment and demonstration activities for the purpose of discovering the equestrian environment and becoming familiar with it, as well as access to sports facilities intended for the use of equidae. (new O in article 52-0 CTCA)

→ Video game competitions

• VAT is levied at the reduced rate of 5.5% on spectator admission to video game competitions, with the exception of those containing pornographic or highly violent sequences. Any leisure software made available to the public on a physical medium or online, incorporating elements of artistic and technological creation, offering one or more users a series of interactions based on a storyline or simulated situations and taking the form of animated images, with or without sound, is deemed to be a video game (new 3° to F of Article 52-0 CTCA)

→ Renewable energy (electricity, gas) guarantees of origin, capacity and production certificates

• For transfers of the aforementioned guarantee certificates, the tax is paid by the taxable person benefiting from the transfer. (rewriting of the second paragraph of 4 quater of article 62 CTCA)
• Clarification of the guarantee certificate regime: energy sources subject to the VAT payment rule (above), establishment and maintenance by the administrative authority of registers of guarantees of origin for renewable gas and biogas injected into the natural gas network, etc. (new provisions of 4 quater of article 62 CTCA).

→ Representative(s) appointed by the taxable person who is neither established nor identified in Monaco or France to fulfil his obligations, in her/his name and on her/his behalf, in respect of certain transactions subject to VAT in Monaco

• List of transactions subject to VAT in Monaco for which, by way of derogation, a taxable person who is neither established nor identified in Monaco or France may appoint one or more representative(s) to fulfil, in the name and on behalf of that taxable person, the obligations of declaration, payment, deduction, refund and keeping of records or statements which are incumbent on him, when the transactions are subject to value added tax in Monaco only (I of new article 72 bis, I CTCA).
• Representative : obligations and conditions incumbent upon her/him. A ministerial order determines the methods and conditions for identifying the agent, those according to which he declares the transactions subject to an authorisation and pays and deducts the related tax, as well as those according to which he keeps, for the purposes of control by the administration, a register dedicated to the transactions subject to an authorisation. (II to V of new article 72 bis CTCA)

→ VAT on imports

• Clarification of who is liable for the tax when the good is the subject of a distance sale of imported goods, and in other situations. (amendment to Article 85 CTCA)
• Addition concerning distance sale of imported goods: any amount declared and paid to the customs and excise authorities in respect of the VAT to which an import is subject and which has not been deducted by the taxpayer is offset against the amounts that should have been declared in accordance with Article 70 CTCA and falling into one of the following categories: 1° Any additional VAT to which this import is subject, except where the import takes place as part of a distance sale of imported goods; 2° Any additional VAT to which a distance sale of imported goods is subject, where the import takes place as part of this distance sale. These provisions apply even when the person liable for the VAT to which the import is subject is not the person on whose behalf the VAT was declared and paid to the customs and excise administration. In this case, this other person is deemed to have paid the tax in the name and on behalf of the person liable for payment. (new article 86 quater CTCA)

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