MONACO: E-COMMERCE

Monaco Introduction

The infrastructure for large bandwith which is a precondition for successful e-commerce is being developed in Monaco. E-commerce is an industry of the future and the type of economic activity that Monaco encourages being high value and environmentally friendly.

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.

There are already a number of Internet Service Providers in Monaco with clear interest being shown in offshore e-commerce development. The main monopolistic operator is Monaco Telecom and one of the major ISPs is Monte-Carlo Multimedia (Monte Carlo Online). A B2B trading site based in Monte Carlo likely to be of interest is PlanetEuro.com.

In October 2007, the Monaco Government and Monaco Telecom announced that they had come to an agreement to offer local clients, particularly companies, a wider and more attractively priced range of internet and telecommunications services.

The three year agreement was designed to enhance Monaco's competitiveness and stimulate the local economy. EUR4.5 million is to be invested by the Monaco government under the agreement.

The Monaco government also said that it would forge ahead with the implementation of new communications technologies, and is planning to develop video on demand and DSL television by 2008.

See below for specific information on e-commerce in Monaco, or go to Offshore-e-com.com for an extensive analysis of the commercial possibilities and the legal background.

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Monaco 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 the a transaction to have taken place in the jurisdiction in which the goods are delivered then normal business profit tax rates of 35% 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 case 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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Monaco Case Studies

This section will contain case studies of e-commerce solutions applied to offshore business activities carried out from Monaco. The case studies will be developed in association with partners. Contact us to learn more.

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