The French Government has refused to reconsider tax rules.
In September 2009 the Marseille Court of Appeal ruled that Sebastien Boffa, a Franco-Italian worker at Monte Carlo SBM, was exempt from paying French income tax. Boffa is domiciled in Monaco, but it took a 7 year legal battle to escape the application of article 7-1 of the 1963 Franco-Monegasque tax convention.
Article 7-1 concerns French residents who transferred their domicile to Monaco at least 5 years before the 1963 tax convention. As far as the French administrators are concerned, there is no exemption for anyone other than citizens who have lived in the Principality since 1957.
However following the decision in Boffa's favour, hundreds of French residents were hoping things would change. They gathered at the Maison de France in Monaco for a public meeting on 12th April. The 1136 French households were hoping that they too would soon be exempt from paying income tax in France. In a letter to Francois Baroin, the new French Finance Minister, Christophe-Andre Frassa, representing the French in Monaco wrote that he hoped around a quarter of the tax households of Monaco might benefit from the ruling in Marseille.
Just 3 days later, an entry in the French Government's Bulletin Officiel des Impots dashed any hope of further exceptions to the rule. The law recognizes the rights those born in Monaco before the 29 Dec 1995 and possessing dual nationality since their birth. However they must have been permanently residing in Monaco since birth and retained their second foreign nationality. Only a handful of residents fit this description, not enough to reverse the trend of French leaving the Principality.
17 Mar 2010: Monaco income tax : the French weave their web
22 Dec 2009: Are enfants du pays now exempt from French taxes?