Monaco is an anomaly – a tax haven for private individuals, but not an “offshore” jurisdiction in the usual sense, since most companies incorporated here are subject to local corporation tax. The most popular types of companies incorporated in Monaco by international entrepreneurs and foreign companies are: i) the General Business Corporation (GBC), also called the Societe Anomyme Monagesque (SAM); and ii) the Branch Company.
Advantages of Monaco company registration
- 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 profit tax (see Disadvantages below), this type of 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;
- In addition to resident Monaco GBCs, foreign companies choose Monaco company registration as a tax-efficient base for operations which make no sales (for example, an administrative or management base). A Monaco company which makes less than 25% of its sales outside Monaco is legally exempt from profits tax, making it an ideal jurisdiction for a Monaco Branch Company;
- As principality of France, Monaco is part of the EU customs zone, even though Monaco is not technically part of the EU. Thus, a Monaco GBC enjoys access to EU customs advantages;
- Even if a Monaco company is liable to pay profits tax, it can legitimately mitigate these obligations by paying out all profits as salaries or management fees;
- Monaco is a regulated, stable jurisdiction within an established judiciary, giving international investors long-term security. Despite being a private jurisdiction, Monaco has made a transparency pledge to the Organisation for Economic Cooperation and Development (OECD), and in late 2009 was added to the OECD white list after forming nine tax information exchange agreements (TIEAs) with nations such as the United States, Argentina and Belgium;
- Monaco is an ideal location for an international administrative centre. Located in France and close to Italy, Monaco is in direct contact with many leading European markets such as france, Italy, Spain;
- Monaco is a cauldron of international entrepreneurs mainly in the financial luxury and tourism industry, where 80% of the population is foreign, the perfect ingredients for creativity and exchange of skills across industries and cultures, stoked by a liberal, entrepreneurial free market;
- English is spoken by 80% of the people and is the primary business language. Foreign investors will easily communicate with employees, customers and suppliers;
- Monaco boasts high skilled labour with a literacy rate of 99% making Monaco employees efficient and productive;
- In Monaco, 82% of the population is computer literate 60% of the population is English proficient, thus able to communicate with foreign clients, suppliers or employers, thus more productive employees.
Disadvantages of Monaco company registration
- Monaco’s 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 expensive. For example, a GBC has a minimum capital requirement of €150,000 (US$216,900). 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 for its 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, 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;
- A foreign owned company cannot invest in every business sector.
Limited Liability Company (Société à Responsabilité Limitée, SARL)
This is the most commonly used business entity in Monaco subject to commercial registration at the Minister of State. LLC must appoint at least one director and two shareholders, who can be of any nationality. The minimum paid up share capital is €15,000. This entity is used for incorporating an SME.
Incorporation costs in Year 1 amounts to €16,900 and annual company costs in Year 2 and thereafter amount to €6,200. The average total fees per engagement amounts to €41,000, which include: i) Monaco company incorporation; ii) registered Monaco office premises; iii) estimate of government fees and iv) a corporate bank account.
Foreign administrative office
|1.||Average Estimated Cost||41,100||45,200||41,100||41,100|
The average Monaco Company registration period is 21 weeks as outlined below:
|1.||Engagement planning||2 weeks||2 weeks||2 weeks||2 weeks|
|2.||Monaco company incorporation||16 weeks||16 weeks||16 weeks||14 weeks|
|3.||Corporate bank account approval||3 weeks||3 weeks||3 weeks||3 weeks|
|Total engagement period||21 weeks||21 weeks||21 weeks||19 weeks|
- According to the Companies code, a Monaco company must have at least two director and two shareholder of any nationality. Directors must also be shareholders;
- The minimum share capital of a Monaco GBC company is €150,000;
- Monaco companies must conduct the activity that was declared in the incorporation forms;
- The Memorandum of Association is a contract between the shareholders and comprises i) company activities ii) registered office address iii) shareholder and director details iv) share capital v) profit distribution method;
- Monaco companies are must lodge annual return and tax return;
- A private Monaco company is required to maintain both a local registered address and a local resident company secretary;
- Each time a change occurs in the particulars of the company or to its officers, the change must be lodged with the Monaco companies registry;
- The profile of a Monaco company, including names of directors and shareholders, are publicly available on the Government website;
- The process of deregistering a company is dictated by the Government. This process will take a minimum of 6 months. Healy Consultants fee to project manage company de-registration is US$1450. During this 6 months period it is mandatory to maintain a resident company secretary and a legal registered office.
Recruitment in Monaco
- Recruitment of foreign labour requires the employer to justify the hiring of the foreign worker in place of a EU national. The foreign employee is expected to have professional and educational qualifications relevant to the position.
Did you know about Monaco?
- Monaco is the second smallest country in the world, at just 1.98 square kilometers. It is also the most densely populated, with 36,371 residents;
- Monaco is a constitutional monarchy led by Prince Albert II. His family, the House of Grimaldi, have ruled Monaco for over seven centuries;
- Monaco is unusual in that native Monegasques are a minority in their own country, comprising 21.6% of the population. French nationals are the largest group at 28.4%, with Italians coming in at 18.7%. Residents of Monaco come from over 125 different countries;
- Monaco has the worlds highest GDP per capita at $153,177. It also boasts the lowest poverty rate, and the highest number of millionaires and billionaires per capita;
- The unemployment rate in Monaco is 0%, and over 48,000 workers commute from France and Italy everyday;
- Monaco is not a member of the EU, though it is linked via customs union with France. It has used the Euro as its main currency and has the right to mint Euro coins with Monegasque designs;
- One of Monaco’s main sources of income is tourism, with most attracted by its casino and pleasant climate. Its pier was extended in 2001 to accommodate more tourists arriving via cruise ships;
- Monaco has the largest police force per capita and per area, with 515 police officers for its 36,371 residents. It has the world’s third-smallest military force of 255 soldiers, though France is in charge of the principality’s defense;
- Monaco gained international attention when Prince Rainier III married Hollywood actress Grace Kelly in 1956. The event was widely televised and covered in the press;
- The Monte Carlo Rally has been held in the principality since 1911, while the Monaco Grand Prix has been held since 1929. The Grand Prix is considered to be the most demanding race due of the Formula One World Championship due to the narrow and twisting nature of the track. It is also considered one of the most important and prestigious races in the world, along with the Indianapolis 500 and the 24 Hours of Le Mans.
- Moving to Monaco
- A Guide to Doing Business in Monaco
- Monaco Taxation – KPMG
- Constitution of the Principality of Monaco
- The Monaco Financial Centre
- International Relocation