Monaco has submitted a draft law to its National Council that would implement the OECD's Pillar Two framework through what is known as a Qualified Domestic Minimum Top up Tax, applying a 15 percent minimum effective tax rate to multinational enterprise groups with annual consolidated revenues above 750 million euros. The move brings the principality in line with a tax standard that dozens of countries have already adopted or are in the process of adopting.
The logic behind the law is less about raising Monaco's own tax burden and more about defending it. Under the OECD's framework, if a jurisdiction where a multinational group operates does not collect the top up tax itself, other participating countries where that same group has subsidiaries or a parent company are entitled to claim the difference instead. Without its own domestic version of the tax, Monaco would in effect be handing revenue generated by economic activity inside the principality to foreign tax authorities rather than keeping it.
The OECD's own recent economic assessment of Pillar Two, drawing on updated modelling and the first real data from fiscal year 2024, found that effective tax rates among affected multinationals have risen, profit shifting between jurisdictions has decreased, and corporate tax revenues broadly have increased since the framework began rolling out. Monaco's own draft law positions the principality as adapting to that shift rather than resisting it.
For a jurisdiction whose reputation was built partly on having no income tax at all for residents, a corporate minimum tax aimed squarely at the largest multinational groups is a fairly narrow measure, it does not touch the personal tax status that draws most of Monaco's wealthy residents in the first place. What it does do is protect a slice of corporate tax revenue that would otherwise simply flow to whichever larger neighbour got there first.