Executive Summary
The Principality of Monaco is a sovereign city-state situated in South-Western Europe on the Mediterranean Sea. It covers approximately 2 sq km. Due to its favourable tax regime people from different countries of the world choose Monaco as their state of residence. It is a constitutional monarchy, but France is responsible for the defense of Monaco. It is the world’s smallest country with French as a state language, but Italian, Monegasque and English are widely used as well. Monaco is its capital and it has adapted Euro as a national currency.

Formula One Grand Prix competition is organized in Monaco every year since 1929, which together with the Monte-Carlo Casino contribute to popularizing Monaco in the whole world. Tourism plays an important role in the economy of Monaco, where state conserves a monopoly for tobacco and postal business.

Monaco is located between France and Mediterranean Sea. Its landscape is hilly and rocky, and its highest point reaches 140 m above the sea level. It is divided in 5 zones, of which Monte-Carlo is the most famous one. Monaco has a mild climate that lets the state enjoy around 300 days of sunshine per year; the average temperature in July is calculated around +25 C degrees, and in January it is usually around +9 C degrees.

Map, Flag and Coat of Arm

Types of Company

Every business in Monaco needs to obtain a government license, which are issued only to those companies which are considered to be beneficial to the state economy. The corporate plans and aims should be fully disclosed to the government. Holding companies and shelf companies do not exist in Monaco.

General Business Corporation (GBC) or Societe Anonyme Monagesque (SAM)
This is a widely used type of company that is established for purposes of conducting business both in Monaco and abroad.

Branch of a Foreign Company
Foreign companies that choose Monaco to be the jurisdiction of their main office, which does not trade and has no profits, are not liable to taxes. Moreover, it usually takes less time to obtain the government approval for this type of company than for GBC (SAM). Monaco is perceived as a high standing jurisdiction on the international level, and the choice of this particular structure may help an international company improve its reputation and strengthen its positions on the international arena.



Income tax is levied only on French nationals (with several exceptions), while all other state representatives are not liable for income tax. All employees are, however, liable to pay social insurance contributions. In average an employer must pay 35% of the gross salary as a social security contribution, and an employee in average pays 13%. Monaco has signed agreements with France and Italy for retirement and medical expenses arrangements.

Stamp Duty, Registration Fees and Capital Transfer Tax are applied on several transactions at different rates, depending on each particular situation, evidenced by the registration of related documents.

Only residents are liable to pay Gift and Inheritance Taxes and only on assets located within the jurisdiction.

Monaco follows the rules of the EU on charging the VAT, the standard rate of which is 19.6%, and the reduced rate of 5.5% is applied on water, food, medicine, hotels, entertainment and some other spheres.

The tax year coincides with the calendar year in Monaco. Tax returns must be submitted within three months after the end of the year and the taxes are payable immediately. No withholding taxes are applicable in the jurisdiction.

A company is not liable to business profits tax in case 75% of its profits is generated within the jurisdiction. Companies that have 25% or more of their income generated from assets located outside Monaco are taxed at a standard rate of 33.33%, with some deductions available in particular cases.

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