The building and public works (BTP) sector is very important for the economy of the Principality of Monaco, just as VAT is essential for its budget. The VAT regulations in the construction sector have changed a lot in the last few years and are very complex.We offer you a review of the main VAT and tax regulations applicable in the Principality in the construction sector.
What is a “BTP service” from a tax point of view?
- Any building or structure fixed to or in the ground, above or below sea level, which cannot be readily dismantled or moved;
- Any element installed and forming an integral part of a building or construction without which the building or construction is incomplete (doors, windows, roofs, stairs, elevators …);
- Any equipment or machinery, permanently installed in a building or structure which cannot be moved without destruction or alteration of the building or structure.
VAT rules and categories of services in the construction sector in Monaco
1 – Services attached to a building
- Example 1: a company established in Italy which carries out subcontracting services of masonry on a house located in Monaco carries out a taxable service in Monaco.
- Example 2: a company established in Great Britain which installs a video surveillance system in the Principality makes a taxable service in Monaco.
2 – Services on residential premises
- The reduced VAT rate of 5. 5% applies to energy improvement work on residential premises that have been completed for more than two years (Article 56 bis of Monaco’s Code des taxes sur le Chiffre d’Affaires).
- The reduced VAT rate of 10% applies to improvement, transformation, development and maintenance work on residential premises completed more than 2 years ago.
- The standard VAT rate of 20%, applicable in the Principality, concerns all services related to a building that do not fall within the scope of the two reduced rates.
3 – Subcontracting services
VAT & subcontracting in Monaco depending on the type of company:
1. Prime Contractor (or prime contractor):
3. The end customers (or project owner):
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