Monaco: Country and Foreign Investment
Economy and Currency
The Euro is the official currency of the Principality, which operates a monetary union with France. The French franc ceased to be legal tender on February 17, 2002.
In 2006 the government launched a large scale statistical survey with the aim of determining the Principality's Gross Domestic Product as well as the Gross National Income. In April 2007, the government announced a GDP figure for Monaco of EUR3.4 billion, with average per capita income at EUR50,000. Unemployment is very low.
Government Counsellor for Economy and Finance, Franck Biancheri, explained that the statisitical initiative was being undertaken to follow through on a commitment by Prince Albert II to contribute 0.7% of the Principality's GDP to the United Nations' Millennium for Development project.
Biancheri explained that the survey will also enable Monaco to calculate its compulsory contributions to international organizations, while giving the Principality economic evaluation and indication tools comparable to those of other countries.
The lack of a structure for the collection of income declarations or national accounts statistics, in addition to economic boundaries that are hard to define has meant the Principality had hitherto not been able to calculate its own GDP.
"Often asked about this, all the more striking given Monaco's image as being prosperous, the Principality has decided to make up for this lack of information," the government said in a statement at the time.
The survey was sent out to nearly 6,500 companies and professionals.
Biancheri stressed that the information would not be used for fiscal purposes, and he assured that all information would remain confidential.
The economic base of the Principality includes casinos, financial services, capital-intensive, environmentally friendly light industries and tourism. Value added tax levied on services offered by hotels, banks and the commercial sector accounts for 55% of the Government revenue with a further 25% coming from tourism and another 16% coming from state monopolies such as the tobacco industry, telecommunications and the post office.
Since 1950 Government policy has been to encourage green industries with a high capital yield with the consequence that a number of companies involved in reprocessing, packaging, printing and the manufacture of cosmetics, pharmaceuticals and clothing have located to the Principality. Monaco is also famous for its laboratories. Given the shortage of land many industrial enterprises are housed in buildings which rise to 13 floors.
In recent years financial services have shown the most spectacular growth, and even in 1993 were considered to account for about 50% of gross domestic product. Nonetheless the Government actively discourages the perception of Monaco as a tax haven with the result that Monaco could be said to have only limited offshore center characteristics.
In 2004, Monaco was forced to join the EU's Savings Tax Directive regime, and agreed to impose a withholding tax on the interest income of EU residents at the same rate as Austria, Belgium and Luxembourg (initially 15%, rising to 20% from July 1, 2008, and to 35% from 1 July 2011) and to hand over 75% of such revenues to the Member State of the EU resident concerned. Monaco also agreed to exchange information on request in criminal or civil cases of tax fraud or similar misbehaviour.
Monaco has about 3,000 hotel bedrooms, mostly 4- or 5-star.