Agreement eliminates source-state withholding tax on dividends, interest and royalties while aiming to prevent double taxation, tax evasion and fraud.
The income tax treaty between Monaco and the UAE entered into force on 12 June 2026.
Signed in Dubai on 13 November 2021, the agreement is intended to eliminate double taxation between the two jurisdictions while strengthening measures to prevent tax evasion and fraud.
The treaty applies to taxes on income and, in certain cases, taxes on fortune, as provided under Article 2. In the UAE, the covered taxes are income tax and corporate tax. In Monaco, the agreement applies to the tax on profits from commercial activities of individuals and the tax on company profits.
The convention also covers any identical or substantially similar taxes introduced after the date of signature, whether they are imposed in addition to or in place of the existing taxes.
A key feature of the treaty is the elimination of withholding tax on several categories of cross-border income. Dividends paid by a company resident in one contracting state to a resident of the other contracting state are subject to a 0% withholding tax rate and are taxable only in the recipient’s state of residence, provided the recipient is the beneficial owner of the income.
The same treatment applies to interest. Interest arising in one contracting state and paid to a resident of the other contracting state is subject to a 0% withholding tax rate and is taxable only in the recipient’s state of residence, provided the recipient is the beneficial owner.
Royalties are also subject to a 0% withholding tax rate under the treaty. Royalties arising in one contracting state and paid to a resident of the other contracting state are taxable only in the recipient’s state of residence where the recipient is the beneficial owner of the income.
