Monaco Inheritance Tax for UK Expats: What You Need to Know

For UK expats, this territorial approach does not mean that relocating to Monaco automatically removes UK inheritance tax (IHT) exposure. The UK’s long-term residence rules can bring worldwide assets within the UK IHT net for a period after departure, while UK-situated assets may remain within scope independently of long-term residence status.

This article explains how Monaco inheritance tax works, how it interacts with the UK’s long-term residence regime and what UK expatriates should consider when coordinating their estate and succession planning across both jurisdictions.

Does Monaco Have Inheritance Tax?

Yes, Monaco imposes inheritance tax, although its IHT system is primarily territorial. This means that the location of an asset is central to determining whether Monaco IHT applies, rather than the nationality or residency of the deceased or beneficiary.

Meanwhile, the relationship between the deceased and the beneficiary determines possible exemptions and the rates of Monaco IHT.

Which Assets Are Subject to Inheritance Tax in Monaco?

Monaco inheritance tax applies to assets situated in the Principality at the time of death, regardless of the deceased’s domicile, residence, or nationality and regardless of where the beneficiary lives.

Monaco real estate is a clear example of an asset within the territorial scope of the tax. Bank accounts, securities, company interests and other financial assets can require a more detailed assessment of where the asset is legally situated for inheritance tax purposes.

Assets situated outside Monaco are generally outside the scope of Monaco IHT. However, the location of financial assets should not be determined simply by where an investment portfolio is managed or held in custody.

This does not necessarily mean expats are free from IHT on foreign assets altogether, as another jurisdiction may have taxing rights based on the asset’s location, the deceased’s residence history, or other factors.

For this reason, UK expats must understand that moving to Monaco does not automatically eliminate UK IHT exposure, so an estate containing both Monaco and UK assets must be considered under both jurisdictions’ rules.

What Are the Inheritance Tax Rates in Monaco?

Monaco’s IHT rates increase with the degree of relationship to the deceased. Spouses and relatives in the direct line are exempt, while unrelated beneficiaries face the highest rate:

The same relationship-based rates can also apply to taxable lifetime gifts of assets within Monaco’s territorial scope. This means that lifetime transfers are not necessarily a way to avoid Monaco IHT.

How Does Monaco Inheritance Tax Compare With UK Inheritance Tax?

Monaco and the UK have fundamentally different inheritance tax systems, and understanding the distinction is the starting point of any estate plan involving both jurisdictions.

Although the UK levy is referred to as inheritance tax, the liability on death is generally calculated by reference to the deceased’s estate rather than imposed directly on individual beneficiaries. By contrast, Monaco’s applicable IHT rate depends on the relationship between the beneficiary and the deceased.

Refer to the table below for a summary of the key differences between the UK and Monaco IHT:

The same asset, for instance, a Monaco apartment left to a child, can be entirely free of Monegasque IHT while still forming part of a UK LTR’s estate for UK IHT purposes, potentially attracting UK IHT.

Relocating to Monaco does not necessarily remove a UK expat’s UK IHT exposure, which depends on their long-term residence status, their residence history and which assets, if any, remain within the UK IHT net.

Why Asset Location and UK Residence History Both Matter

Monaco’s inheritance tax regime starts with the location of the asset. An asset situated in Monaco can fall within the Monegasque inheritance tax regime, while an asset situated outside Monaco will generally fall outside it.

The UK applies a different test. An individual’s residence history can bring worldwide assets within the scope of UK IHT, while UK-situated assets can remain within scope even where the individual is no longer a long-term UK resident.

For UK expats moving to Monaco, both factors therefore need to be considered. Changing residence does not necessarily change where an asset is situated or immediately remove worldwide assets from the UK IHT net.

How Does the UK’s Long-Term Residence Regime Affect UK Expats in Monaco?

From 6 April 2025, the UK replaced its domicile-based approach to the IHT treatment of foreign assets with a residence-based regime. For UK expats in Monaco, this can determine whether their worldwide assets remain within the scope of UK IHT and for how long that exposure continues after they relocate abroad.

An individual is generally considered a long-term resident (LTR) for UK IHT purposes if they have been UK tax resident for at least 10 of the previous 20 tax years.

Split years, where an individual arrives in or leaves the UK partway through a tax year and qualifies for split-year treatment under the Statutory Residence Test, are treated as full years of residence for the LTR test. A UK expat therefore cannot reduce their residence count simply by timing their departure partway through a tax year.

If the LTR test determines a person is an LTR, their foreign assets can fall within the scope of UK IHT, including assets held in Monaco. If a person is not an LTR, UK-situated assets can still remain within scope, subject to the excluded-property provisions and specific rules applying to certain assets and structures.

Transitional Rules for Recent UK Leavers

The move to the LTR regime included transitional provisions that are particularly important for people who left the UK around the time the new rules took effect.

For individuals who were not UK domiciled or deemed domiciled on 30 October 2024 and who became non-UK resident in the 2025/26 tax year, the transitional provisions can mean they are not treated as long-term UK residents, provided they remain non-UK resident.

Different transitional treatment applies to individuals who were deemed UK domiciled on 30 October 2024 and became non-UK resident in 2025/26.

As a result, someone who moved from the UK to Monaco around 6 April 2025 should not assume that the standard 10-out-of-20 test and tail period, considered in isolation, establish their UK IHT position. Their residence history and their domicile or deemed-domicile position immediately before the new regime can also be relevant.

How Long Can UK IHT Continue After Leaving the UK?

Your LTR status does not necessarily end immediately after you leave the UK. There is a “tail” period during which your foreign assets can remain within the UK IHT scope after departure. The length of that tail depends on how many years you were a UK resident prior to relocating abroad:

Once you have been a non-UK resident for 10 consecutive years, the previous UK residence years cease to count for the LTR test if you subsequently return, so the test effectively starts again from the year of return. The transitional provisions discussed above can produce a different result for certain people who left around the introduction of the new regime.

Can You Be Exposed to Monaco and UK IHT on the Same Asset?

Monaco and the UK apply their IHT rules independently. As a result, the same estate, and potentially the same asset, can fall within the scope of both taxes at the same time.

Monaco taxes Monaco-situated assets according to the beneficiary’s relationship to the deceased, regardless of where the deceased was resident. UK IHT can apply to the same assets if the deceased was a UK LTR and those foreign assets remained within the UK IHT net.

There is no UK–Monaco double taxation agreement covering inheritance or estate taxes. However, relief from double taxation may be available when the same property is subject to comparable taxes in both jurisdictions. UK expats may be able to claim unilateral relief under section 159 of the Inheritance Tax Act 1984.

Where the property is situated in Monaco under UK situs rules, qualifying Monaco tax can generally be credited against the UK IHT attributable to that property, with the credit limited where the Monaco tax exceeds the corresponding UK IHT. Different, proportionate credit rules can apply where the UK and Monaco treat the same property as situated in different places.

In practice:

1. Both UK IHT and the foreign tax must relate to the same event and be attributable to the value of the same property.
2. The foreign credit cannot exceed the relevant UK liability.
3. Situs differences can affect how the credit is calculated.
4. The availability and amount of relief depend on the asset involved, the Monaco tax paid, and the estate’s circumstances at the time of death.

Succession Planning and Practical Considerations for UK Expats in Monaco

Inheritance tax determines what tax may be owed. Succession law determines who inherits and under which legal rules. A UK expat in Monaco needs to consider both when structuring their estate.

Three areas are particularly important when coordinating succession between the UK and Monaco:

1. Monaco succession law and forced heirship
2. Wills and governing-law elections
3. Asset ownership structures

Monaco Succession Law and Forced Heirship

Monaco domestic succession law includes forced heirship rules, under which a portion of an estate can be reserved by law for children. Under Monaco’s domestic rules, the reserved share depends on the number of children:

For UK expatriates, however, the domestic forced-heirship rules are only part of the picture. Monaco’s Private International Law determines which law governs an international succession.

Under those rules, succession is generally governed by the law of the state in which the deceased was domiciled at the time of death. A person can also expressly choose the law of a state of which they are a national to govern their succession, provided the choice is made in the required form.

Monaco’s private international law also contains specific rules concerning reserved inheritance rights, including the relationship between the applicable succession law and rights arising under the deceased’s national law.

For British nationals, this requires further care because there is no single substantive UK succession system. England and Wales generally permit broad testamentary freedom, subject to potential family-provision claims, while Scotland retains legal rights for certain family members over moveable property. The relevant UK legal system therefore needs to be identified before drawing conclusions about the effect of a nationality-based governing-law choice.

Whether Monaco’s forced heirship rules apply to a UK national’s estate consequently depends on the law governing the succession, the deceased’s nationality and domicile, the relevant UK legal system and the specific circumstances involved.

Monaco recognises certain trusts governed by foreign law, including under its domestic trust legislation and international framework. However, trust law and succession law need to be considered separately. Placing assets into a trust does not, by itself, prevent the succession law identified under Monaco’s conflict-of-laws rules from applying.

Wills and Governing-Law Elections

UK expats with assets in Monaco and the UK may use separate wills for each jurisdiction, drafted to satisfy the relevant formalities and structured so that one will does not inadvertently revoke the other. Whether separate wills are appropriate will depend on the assets involved and the wider succession plan.

Where legally appropriate, a governing-law election can allow a British national to choose the law of a state of which they are a national to govern their succession, rather than relying on the default rule based on domicile. Under Monaco law, that choice must be express and contained in a disposition upon death.

For British nationals, the relevant UK succession system must also be identified. A governing-law election should therefore be coordinated with the wills and other estate-planning arrangements rather than considered in isolation.

Asset Ownership Structures

When an estate includes companies, trusts, jointly held assets, or other arrangements in which legal and beneficial ownership do not coincide, the ownership structure can affect how assets are treated for IHT and succession purposes.

For instance, a UK expat living in Monaco might:

• Personally own a Monaco property
• Hold investment assets through a company
• Have an interest in a trust
• Own a bank account jointly with a spouse

Each arrangement raises different questions about what forms part of the estate, who is entitled to the underlying value, and which tax and succession rules apply.

Trusts, for instance, can be particularly complex because the person who established the trust, the trustees who legally hold the assets, and the beneficiaries who benefit from them can all be different individuals. The relevant tax and succession treatment therefore depends not only on the location of the asset but also on:

1. The type of trust (discretionary, gift trust, or discounted gift trust)
2. The rights retained by the settlor
3. The beneficiary’s interest

Monaco has specific registration and transfer-tax rules for trusts. Certain acts constituting or transferring trusts in Monaco can be subject to proportional registration duty, while Monaco-situated assets held within foreign-law trusts can also fall within rules taxing lifetime or death transfers to beneficiaries according to the relationship between the settlor and beneficiary.

The treatment therefore depends on the way the trust was established, the assets involved and the nature of the transfer. UK IHT treatment must also be considered separately, particularly because trusts are subject to their own rules under the UK regime.

What Should UK Expats Review Before Moving to Monaco?

Before relocating to Monaco, review how your residence history, assets and existing estate arrangements may be treated across both jurisdictions. The principal areas to consider are:

• Residence history: Establish how many UK tax years fall within the relevant 20-year period and whether an IHT tail applies to your foreign assets. If you left around the introduction of the new regime, the transitional provisions may also need to be considered.
• Asset location: Identify where your assets are situated and how they are owned. This includes Monaco and UK property, investment portfolios, bank accounts, business interests, pensions, life policies, trusts and other overseas assets.
• Pension arrangements: Review pensions separately from personally owned investments, as their IHT treatment depends on the type of arrangement and the UK rules applying at the relevant time.
• Ownership structures: Establish whether assets are held personally, jointly, through companies or within trusts, as the ownership structure can affect both IHT and succession treatment.
• Existing estate planning: Review wills, trusts, lifetime gifts and beneficiary arrangements. Existing wills should also be checked against any new Monaco will or governing-law election.
• Family and succession objectives: Consider who you intend to benefit from your estate and how those objectives interact with Monaco inheritance tax rates and the law governing succession.

A professional estate planning service can help clarify how IHT rules and succession laws across multiple jurisdictions interact and offer valuable advice aligned with your financial and succession objectives.