Tax Haven Monaco

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Tax havens like Monaco are first characterized as countries with sound economies, stable government and a favorable fiscal regime. Monaco as a tax has further boosted its image as an international center for investments due to its successful implementation of advanced investment facilities, creation of a propulsive business environment and provision of the necessary support system for stakeholders and potential investors.

Country Overview

Tax haven Monaco is one of the smallest sovereign countries on the northern coast of the Mediterranean on the south western part of Europe.

Monaco tax haven is formally known as the Principality of Monaco and is situated on the south western side of Europe. Monaco has been excellent as a tourist destination and international business hub because of its pleasant Mediterranean climate balanced with moderate winter and summer seasons. Monaco tax haven lies on the northern coast of the Mediterranean Sea and is often regarded as a tax haven and many of its inhabitants are wealthy and from countries making up a majority of the population, at around 84%. The main nationalities found in Monaco are Italian, Monegasque and French.

Monaco is a constitutional monarchy and principality, with Prince Albert ii as head of state. The Grimaldi family has ruled Monaco since 1297, and the state’s sovereignty was officially recognized by the Franco-Monegasque Treaty of 1861. Despite being independent, Monaco’s defense is the responsibility of France. Monaco is the world’s most densely populated sovereign country and smallest French speaking country. The main religions practiced in Monaco tax haven are Christianity, Judaism and Anglicanism.

Sports in Monaco tax haven are internationally recognised for events staged such as the Monaco Marathon, Monte Carlo Maters (a professional tennis tournament), Monaco Grand Prix, Monte Carlo Rally, Football, Golf Monte Carlo Open, Rugby and the Tour de France.

Monaco levies no income tax on individuals. The absence of a personal income tax in the principality has attracted to it a considerable number of wealthy ‘tax refugee’ residents from European countries who derive the majority of their income from activity outside Monaco; celebrities such as Formula One drivers attract most of the attention, but the vast majority of them are less well-known business people.

Monaco Fiscal Incentives and Advantages

Monaco is described as a tax haven because of its unique fiscal regime which is attractive for businesses and foreign residents who may wish to settle or do business in Monaco. Monaco’s fiscal system is based on zero direct taxation. However, if more than 25% of a company’s turnover originates from outside Monaco, it is liable to a tax rate of 33.33%. This rule is also applicable to any company engaged in artistic or literary property rights and patents in or outside the Principality, as well as any national of France who is incapable of providing proof of having lived in tax haven Monaco for five years preceding October 31, 1962.

  • International society
  • Highly trained, multilingual workforce
  • Economic and political stability
  • Two year tax holiday and tax credit of up to 40 million French francs for research and new Monaco companies

With the exception of French nationals and foreign residents who are incapable of showing evidence of having resided in Monaco prior to October 31, 1962, ordinary residents of Monaco are exempt from income tax and capital gains tax.

Inheritance tax is levied at a rate of 0% for an immediate descendant; 8% for inheritance between sisters and brothers; 10% for uncles and nephews ; 13% between relatives; and 16% between non-relatives Judicial and civil acts in tax haven Monaco require fiscal stamps. The price for a stamp is generally fixed but may be changed depending of the values and documents dealt with.

Duties are levied on the registration of real estate transfers or change of ownership. The rate for subscribing or transferring company shares, and leases, is 1%, for the sale of real estate is 6.5% and real estate, transfer of goodwill or clientele is 7.5%.

Monaco Offshore Legislative Framework

Monaco tax haven has taken a proactive approach to combating financial terrorism and freezing funds. A series of legislative measures were implemented to achieve this while other regulations deal with electronic transfers, ecommerce, corporate service providers and the use of Monegasque companies. A few of these laws include:

  • Sovereign Order 633 of August 10 2006 (to freeze funds and combat terrorism)
  • Ministerial Order 2003-503
  • Ministerial Order no. 2009-432
  • Ministerial Order 2004-222
  • Act of Law no. 1.349

Monaco Offshore Financial Services

In January 2009, it was recorded that Monaco tax haven has 39 credit institutions within the banking system. These included local banks (20), overseas branches (5), banks with special status (1) and French banks (13). In 2007, it was estimated that the financial sector of Monaco tax haven earned 2.102 million Euros while more than 2,900 jobs were created. International financial and offshore business services available in Monaco tax haven include:

  • International/offshore banking
  • Insurance business
  • Trust business
  • Company management
  • Portfolio management
  • Brokerage services

Financial Circuits Information and Control Department (SICCFIN)

In Monaco tax haven, the Financial Circuits Information and Control Department is administered by agents who are commissioned under oath. SICCFIN compiles, handles, distributes and searches for information regarding money laundering and submits it to the various financial sectors in tax haven Monaco.

SICCFIN has been an active member of the Egmont Group of Financial Intelligence Units since 1997 and is a regular participant of the Council of Europe (Moneyval) and the General Authority for Investment and Free Zones (GAFI). SICCFIN’s mission is based on three main areas which include international cooperation, the treatment of claims on suspicious transactions, and controlling the way in which the law is applied.

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