From the geographical point of view both sublime and inauspicious conditions join in Monaco.

On the one hand, there is the inconvenience of a very restrained area and that of inexistent natural resources. On the other hand, there are the benefits deriving from the geographical position of the Principality: a very sunny location throughout the year, a pleasant climate together with the favorable setting at the crossroads of the Southern Mediterranean markets, very close to major European cities.

All these together with a strategic guidance turned Monaco into the ideal place for business particularly in the touristic field, services and banking. The industries that developed were therefore small, non-polluting ones.

In its main lines and particularly in fiscal matters, the Principality's policy is to favor local businesses' flourishing and especially to attract rich people. To optimize this process, the enhanced safety background was a compulsory requirement. Hence the strong development of a high-performing and reliable banking system and luxury tourism. The state is also renowned for its political and social stability conferring a favorable and attractive environment for businesspeople.

Setting up a company in Monaco

Obtaining authorization from the Government

The first step in creating any economic activity in Monaco is obtaining authorization from the Government.

Necessary papers

• A request on stamped paper addressed to the Minister of State. The requests are processed by the Department of Economic Growth (address: 9, rue du Gabian).
• A recently issued judicial record;
• Applicant's personal data;
• Description of the office premises;
• References, diplomas;
• Completed form from the Economic Expansion Department

Apply to the Minister of State

When establishing the administrative office or an agency you must apply to the Minister of State with the following documents:

• Certified copies of the articles of association of the company — 2 copies;
• Company's registration certificate;
• The directive for opening an office in Monaco;
• Copy of annual accounts for 3 preceding years;
• Description of the office premises;
• Data on the appointment of the representative in Monaco;
• A report on the statute of the company: main activities, date of setting up, personnel etc.

Judicial forms of a company

• Private person activity/sole proprietorship
• Company with private general partnership (SNC)
• Company with limited partnership/sleeping partnership (SCS)
• Company with limited partnership with shares(SCA)
• Company with public limited liability(SAM)
• Administrative offices of foreign companies only
• Branches and agencies of foreign companies only
• “Leasing” of an entire business — the prospective manager submits an application to manage a business. The same documents are required as for setting up a business.

Subsidies from the Government

Exemption from company tax

All companies that engage a person registered at the Employment Department are reimbursed the amount corresponding to their employers contributions.

Profits tax facilities

The profits tax applies differently, varying with the type of company and its time of founding.

Maintenance subsidy

A bonus is given to industrial firms to alleviate their maintenance charges.

Tax credit for Research

Firms that invest in research are eligible for a tax credit. Its value is half the difference between the total amount spent on research in the year and the average of the past 2 years.

Guarantee fund

The Government holds a guarantee fund that can be used by the applying firms that have insufficient security for a loan.

Special interest rates

Any firm in the Principality can apply for special interest rates on bank loans.

Offshore Businesses

Advantages

Setting up a company in Monaco offers a number of advantages:

• Safety for your wealth
• Save on tax: in some cases federal taxes may be legally delayed or even avoided;
• Financial and business strategy privacy. IBCs are not centralized in Monaco, so, there is no legal basis to seek offshore companies information.
• Estate planning conveniences: efficient way to transfer assets to the next generation
• Facilitation of transfer of property titled into an offshore company (such as cars, boats etc.) by transferring or selling stock instead of re-titling property when sold.

Disadvantages

There are also some disadvantages for the usual types of offshore financial institution: banks, insurance companies, mutual funds.

• strict authorization requirements and high rentals
• the unfavorable fiscal policy for the companies with more than 25% of their benefit earned from outside the Principality. Exception makes individual private investment banking, handling assets for Monaco resident individuals.

International Business Companies

Monaco's offshore sector permits the formation of IBCs.

Types of IBCs allowed in Monaco

• sole proprietorships;
• limited liability companies;
• partnerships with limited liability;
• partnerships with unlimited liability;
• branches or agencies of foreign companies;
• administrative offices of foreign companies.

Ready-made/“shelf companies” are not permitted.
Generally, the incorporation process takes up to nine months (but not less than 4 months).