Set Up a Company in Monaco

Although its business laws do not make it a universally popular place in which to incorporate, investors who wish to set up a company in Monaco find a good opportunity to establish certain types of business. The following information will help you determine whether or not to set up a company in Monaco.

5.

i) 0% payable in the first 2 years;

ii) 8.33% payable in the third year;

iii) 16.67% payable in the fourth year;

iv) 25% payable in the fifth year and thereafter.

There are no withholding taxes in Monaco.

Monaco has no exchange controls.

A Monaco General Business Corporation (GBC) is permitted to conduct business both onshore in Monaco and offshore, making it a flexible solution for international entrepreneurs. Although a GBC conducting business offshore is subject to profits tax (see Disadvantages below), this entity is an excellent solution for entrepreneurs looking to conduct business and reside in Monaco because i) if a GBC makes more than 75% of its sales within Monaco, it is legally exempt from profits tax and ii) there is no personal income tax in Monaco, making it an attractive location in which to live.

As a principality of France, Monaco is part of the EU customs zone, even though as a Principality Monaco is not technically part of the EU. Thus, a Monaco GBC enjoys access to EU customs advantages.

The Monaco government closely vets prospective investors and companies. Under the terms of its license, each company must abide by stringent operating restrictions including i) the company must carry out only the narrow band of activities for which it is licensed ii) the company must have physical premises and staff in Monaco and iii) occasionally a company will be subject to performance targets set by the government. Failure to abide by the guidelines above may result in the operating license being revoked.

Monaco company formation is also expensive. For example, a GBC has a minimum capital requirement of 150,000 Euros (approximately US$225,000). A GBC also requires at least two shareholders and directors. Directors must be shareholders in the company.

Because of complex and lengthy government approval procedures, Monaco company formation takes up to six months. Companies being set up to conduct activities such as commercial banking, investment management, notary services, legal services, architects, certified public accountants and insurance companies are subject to additional approvals. Most entrepreneurs engage the services of Healy Consultants, who will efficiently handle all government approvals, as well as liaise with local Monaco notaries, who have the exclusive authority to legally register Monaco companies.

Although a Monaco company is free to operate both locally and offshore, it is taxed on offshore profits, and therefore Monaco is not considered a traditional 'tax haven'. A Monaco company which makes more than 25% of its annual sales outside Monaco pays annual profits tax of up to 33.33%, although the company is 100% exempt from profits tax for the first two years after incorporation.

Profits tax is also imposed on companies receiving royalties or income related to intellectual property rights e g copyrights, patents and trademarks licensing and sales; and companies incorporated in Monaco which hold a minimum 20% shareholding in a non-resident company.

Monaco's only double tax treaty is with France. An annual tax return must be submitted following Monaco company formation.