Monaco: Country and Foreign Investment
This page was last updated on 27 February 2021.
Although not an EU member, Monaco is part of the Eurozone. Monaco and France are in full customs union, which also means that Monaco is part of the broader EU customs zone. Exports from Monaco to countries within the EU are not taxed.
While attractive to individuals as a low-tax residence, a number of factors indicate that the Principality is not an offshore financial centre in the traditional sense:
- All economic activity in Monaco must be licensed. Business entities will only be granted a licence if they have a real purpose and engage employees, have premises at their disposal and are engaged in activity deemed beneficial to the Principality's economy. Full disclosure of a corporate plan is a prerequisite of licensing. There are no brass plate, holding or shelf companies.
- In terms of tax, the Principality discriminates in favour of companies trading locally - if more than 25% of a business entity's income arises outside the Principality, business profit tax is payable;
- The confidentiality and banking secrecy which is central to the existence of 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, regardless of the nature of the activity. An applicant must submit 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. Licences are granted for a period of 3 years.