The setting up of any form of economic activity in Monaco (commercial, industrial, financial, professional, etc.) is conditional on receiving the prior authorisation of the Government of the Principality of Monaco.

The body responsible for processing all requests for permission to establish an economic activity in Monaco is the Direction de l’Expansion Economique, whose address is 9, rue du Gabian, MC 98000 Monaco.

Any authorisation granted will set out:

* The specific activity or activities authorised,
* The time for which they will be authorised,
* The address at which they may be exercised,
* And, if appropriate, the specific conditions under which they may be exercised.

Any authorisation is personal and non-transferrable. Any change in the person(s) to whom the initial authorisation was given, or in the place where exercised, or in the activity exercised, requires a new authorisation.

Economic activity may be carried out under the following legal forms:

* Activité en Nom Personnel (sole trader)
* La Société en Nom Collectif (SNC - ordinary partnership)
* La Société en Commandite Simple (SCS - limited partnership)
* La Société Anonyme Monégasque (SAM – Monaco Limited Company)
* La Société en Commandite par Actions (SCA – two classes of « associates », the ordinary shareholders – « commanditaires » with limited liability – and the « commandités » - responsible for management with unlimited liability.)

In addition, foreign companies may obtain permission to set up a branch (“agence”) or an administrative office (“bureau administratif” – see below).

It should be noted that certain activities are governed by specific regulations and permission will only be granted under specific conditions, i.e.:

* Financial and related activities (credit institutions, portfolio managers and brokers, corporate service providers, etc)
* Notaries
* Lawyers
* Architects
* Auditors and accountants
* Maritime brokers
* Pharmaceutical
* Insurance
* Weapons
* Alcohol
* Taxis
* Medical and paramedical

Setting up a business in Monaco is not as simple as it is in most countries, particularly in view of the fact that any economic activity requires prior government authorisation. Monaco is a small place and because of its favourable tax situation, the Monaco government is particularly careful both in overseeing who it allows to enter Monaco and carry on an economic activity, and in ensuring that only those activities which are of economic benefit to the country are authorised.

For an activity to be authorised, the applicant must be able to show that:

1. The “initiators” are of acceptable morality
2. The activity envisaged is of economic interest to Monaco
3. The business will have acceptable premises
4. That there will be employees

“Brass-plate” or inactive companies are not allowed. There is no such thing as a “standard off-the-shelf” Monaco company without its own office, and inactive companies will have their authorisation revoked and be dissolved.

In order to initiate the procedure of requesting permission to set up an activity in Monaco, one can of course go directly to the Direction de l’Expansion Economique oneself and ask for the necessary documents to make an application. However, in view of the procedural rigour involved in obtaining government approval, it is preferable to seek the assistance either of one of the Monaco notaries or “experts comptables”, or to consult one of the local specialist consulting companies, or of course one of the international audit or law firms.

Depending on the complexity and scale of the activity involved, the time required to obtain government authorisation may be anything from three to six months or more.

MONACO LIMITED COMPANY

There are no capital requirements for sole traders or partnerships, but the application must be able to show that the activity envisaged is adequately financed.

Monaco Limited Companies must have a minimum capital of  € 150.000.

For a Monaco Limited Company (SAM), in addition to the above mentioned capital requirement, a total cost which includes costs of constitution ((legal, notary and advisory, taxes, publication, etc.) and minimum annual running costs (employees and office rental) could be estimated as € 200.000,00 (excluding utilities, telephone, other administrative expenses, audit, tax returns etc.)

Consulting fees will vary depending on the complexity of the project, but as starting figure for assistance with setting up a partnership one should budget € 5.000,00 for consultant’s fee.

A Monaco company is not a low-cost option and it should only be envisaged if the economic activity involved justifies such an investment.

It should also be remembered that although there is no personal income or inheritance tax in Monaco, companies are taxed at 33 1/3 % on profits, unless 75% or more of their turnover takes place in Monaco. However substantial salaries and other remuneration can be paid to directors, which are deductible from company profits and not taxed in the hands of the recipient if Monaco resident.

A MONACO “BUREAU ADMINISTRATIF”

This is less expensive than setting up an SAM.

However, the company making the request must be able to present at least three years of audited accounts, and the Monaco authorities will want to be satisfied that the activity envisaged is of economic interest to Monaco. Application procedures are relatively simple but authorisations are increasingly difficult to obtain.

A local agent (“agent responsible”) who is a Monaco resident must be appointed. The agent will be responsible for making and following the application through.

The company will be required to rent office space, which can be smaller than in the case of a SAM, and at least one paid employee will be required.

The Bureau Administratif will be required tp prepare annual audited accounts and will generally be taxed at 33 1/3 % on 8,5% of total administrative costs (i.e. about 2,8% of total administrative costs).

The costs for applying for permission to open a Bureau Administratif will be around € 5.000,00.

THE INDEPENDENT MONACO MANAGEMENT COMPANY

There exist in Monaco a number of professional management companies authorised by the government to provide management, administrative and financial services to foreign (non-Monegasque and non-French) companies.

The foreign companies being incorporated overseas but administered in Monaco by a professional management company are not subject to Monaco taxation and have no formal legal status in Monaco. Nonetheless a foreign company can carry on a full range of activities (outside Monaco and France) through its Monaco administrative address and the profits from these activities will not be taxed in Monaco. If the foreign company is established in a low or zero tax jurisdiction, its overall tax burden will therefore be low or zero. In addition, such a low or zero tax foreign company can of course make payments to a resident of Monaco without tax consequences.

Monaco Double Taxation Agreements

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