Start to Set Up a Business in Monaco
Founded as a distinct and original nation in 1419, Monaco is a country located in the continent of Europe. Monaco is a tiny independent city-state on France’s Mediterranean coastline, which is also the 247th largest nation (in terms of land area). Well known for its upscale casinos, yacht-lined harbour and prestigious Grand Prix motor race, Monaco is the home of a population of 38,993 (that is equivalent to 0.00051% of the total world population).
Why Invest in Monaco
Bordering France on the Mediterranean coast, Monaco is renowned as a tax haven in the world economy. As a tiny territory with some natural resources, the Monegasque economy depends on tourism, modern manufacturing, finance, and commerce. In fact, the Monegasque government has played a very proactive role in encouraging economic growth.
1. Bilateral and Reciprocal Agreements between France and Monaco
Though Monaco is not an official member of the EU, there are bilateral and reciprocal agreements between France and Monaco – in exchange for the undertaking by France to defend the independence and sovereignty of the Principality, Monaco will exercise its rights in conformity with French interests. In other words, most European directives that apply in France apply indirectly in the Principality.
2. Tax Haven – Zero Income Tax and Low Business Taxes
Monaco has created a robust business environment for foreign investors, as evidenced by the simplified company incorporation procedures and extremely low tax rates. Monaco thrives as a tax haven as it imposes zero income tax and low business taxes both for individuals (who have established residence) and for foreign companies (that have set up businesses and offices). Both locals and foreigners staying and working in Monaco are not subject to income tax (with the exception of French citizen).
Having said that, Monaco is not a tax-free shelter where it charges nearly 20% value-added tax and collects stamp duties. Companies in Monaco will face a 33% tax on profits unless they can evidence that three-quarters of the profits are generated in Monaco. While there is the total absence of direct taxation on persons or on companies in Monaco’s fiscal system (i.e. no income tax, capital gains tax or wealth tax), the country generates income via its value-added tax (VAT in Monaco is 20%).
3. Robust Export/Import Sectors
In Monaco, tourism is one of the most important industries. Other important industries that underpin economic growth include transport, plastics, precision engineering, paper processing, rubber, textiles, ceramics, electrical and electronic construction, and clothing. As an important international trading centre, there are many import/export trade houses, agents and consultants in Monaco. In Monaco, the trade association, the Syndicat Monegasque des Etablissements de Nice International (SMENI) hosts the largest trading houses. As of now, the main exports of Monaco include pharmaceuticals, perfumes and clothing. In terms of imports, food and natural resources make the large bulk of its imports.
Long story short, Monaco has a diversified economy and it is growing rapidly. The country benefits from one of the best banking systems in the world offering a slew of advance financial services for business. Monaco boasts excellent infrastructure and political stability. It is a hugely attractive investment destination for businessmen internationally. 3E accounting can guide you to start a business in Monaco, contact us now.