The Principality of Monaco is an independent state which has been ruled by the Grimaldi family, and now Prince Albert II, since 1297. The Principality is a hereditary and constitutional monarchy which gives the Prince the highest authority. It is located in the South of France between Nice and the Italian border in some 201 hectares. The total residential population according to the last estimate taken in 2008 was 35,000 of which only 7,600 were Monégasque subjects. There are nearly 125 nationalities represented of which approximately 10,000 are French, 6,500 Italians and 2,600 British.
Monaco was admitted as the 183rd full member of the United Nations in May 1993. This membership has forcefully underlined Monaco’s stability both politically and economically, which together with its security, commercial flexibility, sophisticated infrastructure and geographic location has provided the background on which the reputation of the Principality has been built and is maintained.
Monaco has its own legal system, Law Courts and Appeal Court, and while its law is largely but not entirely based on the French Code Civil, the legal system in Monaco is distinct from that in France and more welcoming to foreigners.
The tax system relies on indirect taxes. VAT is imposed on the same bases and rates (5.5% reduced rate and 19.6% standard rate) as in France. There is no personal income tax, however, French nationals who transferred their domicile to Monaco after 13 October, 1957 are subject to French income Tax.
Monégasque businesses engaged in industrial or commercial activity and deriving more than 25 % of their turnover outside Monaco are subject to corporate profits tax at 33.33 %. Inheritance and transfer taxes are levied on goods located within Monaco irrespective of the domicile, residence or nationality of the deceased or the donor. The rate of tax, which is charged on the market value of the assets, varies between 0 % and 16 % depending on the closeness of the relationship between the deceased and the heir.
There is a complete customs and monetary union with France by convention since 1963. Through its treaties with France, Monaco indirectly obtains most of the benefits of EU membership whilst remaining outside of the EU. At the same time, the Bank of France continues to regulate the Monaco banking system further reinforcing its security. There are no exchange controls. The Euro is the legal tender of the Principality.
Monaco is active in the international fight against money laundering and terrorism and the Government agency S.I.C.C.F.I.N., (Service d’ Information et de ContrÃ´le sur les Circuits Financiers), was set up in August 1993 to monitor the activities of financial companies in the Principality. S.I.C.C.F.I.N.’s role is in tune with the traditional approach in Monaco of providing a secure and stable environment for investment while not compromising confidentiality. A number of laws have been passed to combat money-laundering and the financing of terrorism.
Monaco’s long history and legal system has always protected the discretion and confidentiality of business interests in the Principality including advisory services and management companies. Located in mainland Europe, Monaco enjoys easy access to and from all parts of the world through the international airport of Nice, a 6 minute helicopter ride away. Foreign offshore companies, when managed and administered by a fully authorised Monégasque management company, are not subject to Monégasque corporation Tax.
- Secure and politically stable.
- Confidentiality of the banking system.
- No central registry of foreign offshore companies.
- Five double Taxation agreements.
- No concept of “mind and management” dictating residency for Tax purposes.
- No income Tax, capital gains Tax, or Wealth Tax for non-French resident individuals.
Administration of Foreign Trusts and Companies in Monaco
In the context of the offshore world, Monaco is something of an anomaly, a tax haven for private individuals with the majority of its residents living in the Principality on a tax-free basis, but not an “offshore” jurisdiction in the usual sense since most companies incorporated in the Principality are subject to local corporation tax. Monaco is, however, an ideal business centre from which to administer foreign offshore trusts and companies.