The Principality of Monaco is located on the French Riviera and is bordered by France on three sides. Monaco is a city-state with a population of less than 50,000, of which only 22% are Monegasque natives.
Monaco is probably the most expensive country in the world. It’s a haven for the uber-rich, having a high percentage of millionaires. Boasting the highest per capita income, the economy relies completely on high-end luxury tourism and banking. In 2012, the CIA factbook stated that Monaco has the most expensive real estate on the planet; nearly $58,000 per sq.ft.!
Owing to the absence of personal income tax and gain tax, investors are drawn towards Monaco to explore and expand their business. To call Monaco a tax-free country is not justified, as the country taxes 33% on the profits unless the companies can prove that the profits were generated within the country for at least 3 consecutive quarters.
Types of business structures in Monaco
Below table charts the types of businesses that can be incorporated and the minimum required capital.
| Type of company | Local name | Min. paid-up capital req. | |
| 1. | Sole trader | Commerçant unique | No minimum requirement |
| 2. | Monegasque Limited Company | Societe d’Affaires Monegasque (SAM) | €150,000 |
| 3. | Limited Liability Company (LLC) | Societe a Responsabilite Limitee (SARL) | €15,000 |
| 4. | Foreign Administrative Office | Bureau administratif Monegasque | No minimum requirement |
| 5. | Foundation | Foundation de droit Monegasque | No minimum requirement |
Sole trader
A sole trader is a business format where a single person owns, manages, and controls every aspect of the business. The law of Monaco allows foreigners to set up sole proprietary business as long as it is legal, satisfies the documentation requirements of the state, and doesn’t harm the interest of others.
There are 4 steps to register a sole proprietor business in Monaco
- Obtaining and completing the forms: The forms can be downloaded here. Note that the official language of Monaco is French and the applicants would probably require the help of a translator to ensure that the form is duly filled.
- Collating the documents: There is a range of documents that the authorities require for registration; passport, birth certificate, application to conduct business, police record, etc. A complete list of documents can be seen here.
- Applying for a business permit: An application to obtain a permit to carry out business in Monaco must be submitted to the Business Development Agency. The average waiting time is three months generally.
- Registration and other Formalities: Once the applicant is given permission to conduct business activities in the country, the next step is to register with the “Trade and Industry Registry”.
- Fees & other costs: Fees include the state fees for registration and entry into the trade registry. Sundry costs include legal services, notary, stamp duty, translation, etc.
Monegasque Limited Company
A Monegasque Company (SAM) can only be registered and operated with the prior approval of the Monaco government, in case of foreigners. A SAM is formed to reap the benefits of large-scale economies, or where the initial capital requirements are too high for the owners alone.
Shares of SAM are available to the public, whereby the initial capital generated is used against the paid-up capital by the company and the remaining is paid back to the guarantor bank. The minimum paid-up capital required is €150,000.
Other formalities and registration may cost approximately between €5,000 – €7,000.
SARL
SARL is the Monegasque version of a limited liability company. Just as in LLC, the liability of the partners in a SARL is limited to the extent of their contribution to the company. The minimum paid-up capital required for SARL is €15,000 and other costs may mount up to approximately €7,000 to set up.
Foreign administrative office
A foreign administrative office is an ongoing business in a foreign country that wishes to have an administrative office in Monaco. As the name suggests, the purpose of such an office is to manage and control the business interests of the company instead of actually conducting the business. The usual costs involved are:
- Registration fee
- Stamp duty
- Notarization
- Translation
- Office premises
- Legal fees
Foundation
A foundation is a ‘not-for-profit entity that is constituted to serve the society at large, or a part thereof. It may also be created to provide benefit to a certain family lineage, diaspora in a foreign country, a cause, certain victims of a disaster, physically challenged, etc.
The cost involved in setting up a foundation remains the same as any other company formation; however, the fees and other expenses may vary.
Business basics in Monaco
Monaco may be viewed as the tax haven for the uber-rich, but commencing and operating a business here requires undergoing a detailed procedure. To start with, companies and individuals require a business license to engage in any kind of business in the state.
A detailed business plan must be submitted at the Monaco Welcome Office to initiate setup. The department will carefully vet the application and usually return back with an answer in 30 to 35 days. Whether approved or disproved, this period remains the same.
Many factors will determine the success of the license application; as many businesses are regulated by the government, such as real estate. Certain legal requirements imposed by the government also create a barrier to entry in many businesses, such as pharmaceuticals, chemists, and medical practice, which are few professions that are required to fulfill legal requirements before they can be permitted to operate.
One other area that is highly regulated is the construction sector. Land in Monaco is scarce, the entire state is spread over 202 ha (hectares). Hence, any construction permitted needs to comply with a rigid set of rules; from ground-breaking through to delivery.
One must be aware of these and other factors before applying for a business license, as non-compliance may lead to disapproval.
Daily wages and working hours
Surprisingly, the otherwise very regulated state doesn’t regulate the daily wages of the employees. Employers can hire staff at any wage they mutually agree; however, the prevailing trend does dictate the wages to an extent. As of 2022, the minimum prevailing wage per hour is 10.15 approximately subject to a 5% inflation rate.
Similarly, the minimum monthly salary an employee can draw, regardless of his/her position, is €2,200 on average. Note that the minimum wage is in correspondence with the standard 39 hours work week.
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