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Monaco: Country and Foreign Investment

Business Environment

Although attractive to individuals as a low-tax residence, a number of factors suggest that the Principality is not an offshore financial center in the traditional sense:

  • All economic activity in Monaco must be licensed. Business entities will only obtain a license if they have a real purpose and engage employees, have a premises at their disposal and are engaged in activity which the Monegasque authorities consider beneficial to the Principality's economy. Full disclosure of a corporate plan is a prerequisite of licensing. Brass plate and holding companies do not exist; shelf companies are not available.
  • From a tax point of view the Principality discriminates in favor of companies trading locally - if more than 25% of a business entity's income arises outside the Principality then business profits tax is payable;
  • The confidentiality and banking secrecy which is central to the existence of and applies in most common law offshore jurisdictions does not apply in Monaco.

All businesses in Monaco, including branches of foreign corporations, require preliminary authorization from the Government irrespective of the nature of the activity. The procedure is for the applicant to deliver a complete dossier to the local Department of Trade setting out the activity envisaged, details of investors, expected levels of staffing, evidence of the availability of suitable premises for the type of economic activity proposed and guarantees for the payment of any taxes arising.

The Government must be satisfied that the planned activity fits in with its economic policies and is very selective. It may require an audited, successful 3-year track record, and the deposit of sufficient sums to show that the entity is properly financed. The granting of permission may take several months. Licenses when granted are granted for a period of 3 years.

 

 

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