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Offshore companies such as Monaco are primarily characterized by a strong economy, stable government and favorable tax regime. Due to the successful application of modern investment instruments, the creation of a self-regulating business environment and a support system for stakeholders and potential investors, the Monaco offshore zone has improved its own image of an international investment center.
Country Overview
Monaco is one of the smallest sovereign states on the northern Mediterranean coast in southwestern Europe.
The official name of the country is the Principality of Monaco. Monaco is located in the southwestern part of Europe. Monaco is a leading tourist destination as well as a center for international business, because this country has a pleasant Mediterranean climate, where the winter and summer seasons are well balanced. Monaco is located on the northern coast of the Mediterranean Sea and carries out offshore activities. The majority of the population of this country are very rich people (about 84%). Mostly Italians, Monegasques and French live in Monaco.
Monaco is a constitutional monarchy and principality, the head of state is Prince Albert II. The Grimaldi family has ruled Monaco since 1297, and the sovereignty of this state was officially recognized by the Franco-Monegasque treaty of 1861. Despite the fact that the state is independent, France is responsible for the defense of Monaco. Monaco is the most populous sovereign country in the world and at the same time the smallest French-speaking country. The main religions professed by the population of Monaco are Christianity, Judaism and Anglicanism.
Monaco hosts many international sporting events such as: the Monaco Marathon, the Monte Carlo Maters (professional tennis tournament), the Monaco Grand Prix, the Monte Carlo rally, football matches, the Monte Carlo Open golf tournament, rugby competitions and Tour de France.
Monaco does not levy personal income tax. The absence of personal income tax attracts a large number of wealthy people to the principality - the so-called "tax refugees" from European countries, who receive most of their income from activities outside Monaco. Celebrities such as Formula One drivers are also attracting large numbers of people to the country. However, the vast majority of "tax refugees" are little-known business people.
Monaco Tax Incentives and Benefits
Monaco is considered an offshore because of its unique financial regime, which attracts both businesses and non-resident individuals wishing to settle in the country or do business in Monaco. There are no direct taxes in the Monaco tax system. However, if the company receives more than 25% of its income outside Monaco, then it is taxed at a rate of 33.33%. This rule also applies to any company engaged in artistic, literary or patenting operations within or outside the Principality, as well as to any French citizen who is unable to provide proof of residence in Monaco for the five years preceding October 31. 1962.
Zone advantages:
- Plurinational Society
- Well trained, multilingual workforce
- Economic and political stability
- Two years of "tax holidays" and tax credits of up to 40 million French francs for research and development for newly formed companies
With the exception of French citizens and foreigners who are unable to provide proof that they lived in Monaco before October 31, 1962, Monaco citizens are exempt from income tax and capital gains tax.
Inheritance tax is levied at a rate of 0% in case of inheritance by a direct descendant, at a rate of 8% in case of inheritance from siblings, at a rate of 10% in case of inheritance from uncles and nephews, at a rate of 13% in case of inheritance from other relatives, and rate of 16% if inherited not by relatives.
For the execution of judicial and civil actions in Monaco, it is necessary to purchase revenue stamps. Prices for revenue stamps are usually fixed, but their value may vary depending on the value and content of the document with which the transaction is carried out.
When registering changes in rights to real estate or when entering data on changes in the owner of real estate, fees are charged. The duty rate for the subscription or transfer of rights to shares, as well as for leasing, is 1%, for the sale of real estate - 6.5%, for the sale of goodwill or customer base - 7.5%.
Monaco Offshore Legislation
Monaco offshore takes an active position in the fight against terrorist financing and freezing of funds. To achieve this goal, a number of legislative measures have been implemented, as well as other measures taken to strengthen the regulation of electronic transfers, e-commerce, corporate services and companies founded by the Montegasques. Some of these pieces of legislation include:
- Order of Sovereignty of 10 August 2006 (Freezing Funds and Combating Terrorism)
- Ministry Order 2003-503
- Ministry Order 2009-432
- Ministry Order 2004-222
- Law No. 1349
Offshore financial services provided in Monaco
As of January 2009, 39 credit institutions were registered in the banking system of Monaco. These include: local banks (20), foreign branches (5), banks with special status (1) and French banks (13). In 2007, Monaco's offshore financial sector reported revenues of € 2,102,000 and more than 2,900 jobs were created. International financial and offshore business services that are provided in Monaco include:
- International / Offshore Banking
- Business insurance
- Doing Trust Business
- Organization Management
- Portfolio Management
- Broker services
Financial Control and Information Reporting Department (SICCFIN)
The Department of Financial Control and Information on Financial Turnover is managed by agents who take the oath. SICCFIN collects, processes, distributes and searches for information related to money laundering and then transmits it to the various financial sectors of Monaco.
SICCFIN has been an active member of the International Organization of Financial Intelligence Institutions "Egmont" since 1997, as well as a permanent member of the Council of Europe (Moneyval) and the General Directorate for Investments and Free Zones (GAFI). SICCFIN's mission consists of work in three main areas: international cooperation, searching for information on suspicious transactions and monitoring the implementation of legislation.
