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Monaco: E-Commerce

Offshore Activities

The natural bonding of the Internet and Offshore stems from the fact that both, of their nature, manage to avoid tax. Businesses which can operate on the Internet without, so to speak, touching ground in a high-tax jurisdiction will naturally migrate to offshore jurisdictions; while businesses that already have offshore existence will find it highly convenient to be able to use the Internet to trade with their high-tax customers without having to make a landing in their countries.

As a major low-tax jurisdiction with many thousands of enterprises already installed, including many trading companies, Monaco has an opportunity to become a centre of e-commerce activity. The Principality's geographical location (European time-zone), its' good telecommunications links and sophisticated business infrastructure are factors which will attract the sales, marketing and administrative departments of European retail operations.

By locating websites in Monaco to carry out functions previously based in high-tax jurisdictions such as sales and marketing, treasury management, supply of financial services, and most of all, the supply of digital goods such as music, video, training, software etc, businesses can take advantage of low rates of taxation for increasingly substantial parts of their operation. However, given Monaco's tax laws, it will be important that e-commerce transactions are deemed to have been executed in Monaco, otherwise business tax will be levied. If Monaco's tax laws deem a transaction to have taken place in the jurisdiction in which the goods are delivered then normal business profit tax rates of 33.33% will apply in the Principality with the consequence that it will not be an attractive location in which to locate an e-commerce retailing company. See Direct Corporate Taxation.

In many countries, the distribution of goods from a warehousing facility does not constitute the carrying on of a trade or business in that jurisdiction, so that even for physical goods, in many cases it will be possible to avoid a permanent establishment (taxable presence) altogether in many high-tax jurisdictions where trading activities currently take place.

For information about the impact of e-commerce on a number of the main offshore activities which take place in Monaco, click on a link below to go to our specialist E-commerce site Offshore-e-com.com

Sales and Distribution of Physical Products 
Sales and Distribution of Digital Products 
Banking and Financial Services (including Investment Funds) 
Corporate Support Functions

To see an analysis of the current state of legal and tax issues surrounding offshore e-commerce, click here.

 

 

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