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Why consider Monaco?

Contributed by EBC Corporation SAM
04 March, 2013


  • It is within mainland Europe and remains secure and politically stable with a strong and well supported banking and financial services community.
  • The government is actively encouraging individuals and their families and corporations to relocate to Monaco.
  • For resident individuals Monaco has a number of advantages over other jurisdictions. For example, there is.no income tax and no requirement to prepare and submit tax returns or disclose worldwide income or assets.
  • For companies, although the corporate tax rate is 33.33%, after various allowable deductions, this results in an effective corporate tax rate of under 6%.Directors fees if taken by resident directors are free of income tax to the recipient.
  • Although French is the official language many of the official documents are available in English. English is widely spoken and understood.

We believe that Monaco should be considered not just by high net worth individuals but also by companies looking to relocate and reward their senior management teams without the effects of personal income tax. 

This article aims to help individuals and their families, and companies together with their advisors to place Monaco on the ‘to consider’ list when selecting a jurisdiction.

In summary:

From an individuals’ point of view consider Monaco because ….

  • For most private individuals there is no personal income tax. French nationals pay tax as per the Franco-Monégasque bilateral convention of 1963.
  • For most individuals there are lower compliance costs as there is no requirement to prepare and submit yearly tax returns.
  • As there is no income, capital gains or wealth tax there is a greater ability to preserve and accumulate one’s wealth.
  • There is increased confidentiality of one’s wealth as there is no reporting of worldwide income or assets to outside agencies.
  • It is the ideal business centre from which to administer foreign offshore trusts and companies where for example they are administered for or by a family office.
  • There is no capital gains tax, or wealth tax for non-French resident individuals
  • There are no inheritance taxes on Monaco based assets between husband and wife or children. A sliding scale of rates applies between 8% and 16% for more distant inheritors.
  • There is a variety of accommodation readily available to rent or buy.
  • The residency application procedures for most individuals and their families is relatively straightforward.
  • There are over 50 banks located in Monaco which offer investment advice and banking services for individuals.
  • It is on the OECD list of compliant jurisdictions.

From a corporations’ point of view consider Monaco because…..

  • Although business entities incorporated and operating in Monaco are taxed on profits at 33.33% where over 75% of their turnover is outside Monaco this is after deducting director's remuneration from pre-tax profits which in effect, depending on the size on the remuneration, produces an effective corporate tax rate of under 6%.
  • The directors remuneration will be received gross and will not be liable to tax this should assist in the negotiation of suitable remuneration packages for senior staff.
  • As there is a variety of accommodation readily available to rent or buy this should ease the relocation of suitable staff.
  • There is a variety of business accommodation readily available to rent or buy.
  • The company formation application procedures are relatively straightforward.
  • Where a company is not being formed but a group wishes to operate an Administrative office ( “Bureau administratif”) these are usually taxed at the rate of 33.33% on 8% of their expenses or effectively at 2.6%.
  • Value Added Tax is at 19.6%
  • It has five double taxation agreements (France, Luxembourg, Qatar, St Kitts and Nevis and The Seychelles).
  • There are over 50 banks located in Monaco which offer worldwide corporate banking services.
  • It is on the OECD list of compliant jurisdictions.

The social benefits for employees of Monaco companies include….

  • If you are employed in Monaco then you and your family members are covered by the state medical cover (medical illness, dental and eyesight) meaning you can obtain medical treatment in Monaco or France. Under the existing system you have to pay the doctor for the treatment and then apply to the state body for reimbursement depending on your salary classification of up to 80% of the costs. A separate medical insurance can be obtained to cover for the 20% shortfall.(As part of the employment process you will have to attend a medical examination)
  • If you have children then your spouse is entitled tochild benefit of Euros 133.2 per month per child under 3 years old rising to Euros 279.7 per month for each child over 10 years old.
  • You will be entitled to a Monaco pension after 10 years working in Monaco

Want to consider Monaco more?

We at EBC have been based in Monaco for over 35 years advising and guiding private individuals and corporations to thrive financially and manage their assets effectively.

EBC is able to provide clients with a range of services that include:

  • Assistance with relocation and the establishment of private individuals and families in Monaco.
  • Advice in connection with the relevant tax and legal matters
  • Handling the practical and compliance aspects of obtaining residency visas, setting up a business in Monaco
  • Advice on tax, legal and associated considerations in the purchase, sale, rental or mortgaging of property in Monaco
  • Assisting in the creation of legal structures - personal or through corporate vehicles - to facilitate the efficient acquisition and holding of property in Monaco
  • Advice Monaco resident clients on the establishment and uses of a Monaco Law 214 Will Trust as a useful way of dealing with the forced heirship rules which apply on death in Monaco, which is a civil law jurisdiction.
  • Formation of companies from other jurisdictions.
  • Establishment of offshore trusts and foundations




 

 


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