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MONACO: An Introduction

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The Principality of Monaco is an attractive small state adjoining the French Riviera. Monaco is headed by the Grimaldi family, a 700-year-old dynasty, currently represented by His Serene Highness Prince Albert II, who is recognised internationally for His commitment to sustainable development. The Principality joined the Council of Europe in 2004 but is neither a member of the European Union (“EU”) nor of the European Economic Area (“EEA”).

The Principality has attracted a cosmopolitan population with more than 38,000 inhabitants from 120 different nationalities, including around 9,500 Monegasque, 10,000 French, 5,000 Italian and 2,000 British. More than 53,000 people are employed in the Monegasque private sector. More than 87% of these workers have their domicile outside the Principality, mostly in neighbouring French cities.

In 2019 Monaco had a GDP of €6.63 billion with a growth of 7.5%. The 2019 GDP per worker was €114,600 with a growth of 4.6%. Three sectors create nearly half of the wealth produced in the Principality: (i) scientific and technical activities, administrative and support services (17.8%), (ii) financial and insurance activities (16.7%) and (iii) construction (9.9%).

In 2020, facing the economic impact of Covid-19 crisis, the Monegasque Government has committed a €75 billion recovery plan. This plan is based on four main aspects: (i) the “National Green Fund” with the aim of speeding up energy transition, (ii) the “Blue Fund” with the aim of encouraging the digital transition of Monegasque companies, (iii) the “White Fund” with the aim of supporting building and construction activity in the Principality and (iv) the “Red Fund” with the aim of strengthening local trade and purchasing power in Monaco. Throughout the Covid-19 crisis, the Principality of Monaco has adopted strong social and economic measures to help Monegasque companies and support employees and citizens.

Despite 2020 being an unprecedented year, opportunities remain in Monaco.

Monegasque authorities have launched several leading infrastructure projects in recent years that are gradually reshaping the Principality.

Monaco continues to roll out its programme of digitalisation and management of big data referred to as “Extended Monaco”. The main purpose of this programme is to enhance Monegasque living standards and public services (e.g. 100% 5G coverage, sovereign cloud, high performance and connected mobility, innovative medicine and educational coding programmes, cleantechs).

The Principality is also reshaping its topography as a new area is being reclaimed on the Mediterranean Sea with high-value real estate projects to be implemented in the coming years. With an average square metre generally worth €48,000, Monaco is one of the most expensive places in the world for real estate.


As a sovereign state, the Principality of Monaco has its own legal system including laws, regulations, court system and regulators.

Although the Principality is not a member of the EU,
- it shares a customs union with France and consequently is part of the EU customs territory;
- it belongs to the eurozone; and 
- it determines and collects VAT on the same basis and at the same rates as in France (generally a rate of 20%).

Business activities subject to prior authorisation from Monaco authorities

As a general rule, any business activity carried out in Monaco by non-Monegasque persons is subject to prior authorisation from the Monegasque authorities. Certain regulated activities such as banking, insurance and financial services are subject to specific requirements, notably regarding the type of legal entity, minimum capital, management qualifications, infrastructure, staff, etc.

Banking and financial activities 

The financial sector includes 35 banking institutions and 58 asset management companies employing a workforce of about 4,000 employees with total assets under management of nearly €120 billion.

We see the consolidation trend for banks and asset management companies continuing, with a number of banking M&A transactions.

The Monegasque banking and financial regulatory framework is complex. As Monaco is not a member of the EEA, European passporting principles do not apply for most banking and financial activities. However, pursuant to current treaties in force with the EU, a number of EU regulations and directives (e.g. CRR/CRD IV, PSD, EMIR, etc.) do apply in Monaco.

Pursuant to a Treaty dated 14 April 1945 between Monaco and France (as modified subsequently), provisions in French legislation concerning the regulation and organisation of banks are directly applicable to Monaco. Authorisations and banking licences are delivered and regulated by the French Autorité de Contrôle Prudentiel et de Résolution (“ACPR”) and in Monaco by the Direction du Budget et du Trésor which is a Department of the Monegasque Ministry of State.

Portfolio and asset management services can only be undertaken in Monaco, “habitually or professionally”, by entities duly authorised and regulated by the Monegasque Commission de Contrôle des Activités Financières (“CCAF”).

Protection of personal data 

The Principality has ratified the Council of Europe's Convention for the Protection of Individuals with regard to Automatic Processing of Personal Data and its additional protocol in 2008. Processing of personal data in Monaco, including data transfer abroad, is either subject to notification or to prior authorisation by the Monegasque Commission de Contrôle des Informations Nominatives (“CCIN”). The Principality is currently assessing its domestic data protection regime to reach the standard of protection granted under the EU GDPR.

Anti-money laundering (“AML”) and anti-corruption laws

Monaco has one of the strictest AML regimes in the world with strong administrative and criminal sanctions. The Principality is a member of MONEYVAL, which is the permanent monitoring AML body of the Council of Europe. Monaco implemented the EU 5th AML Directive on 23 December 2020.

Monaco has also enacted anti-bribery legislation dealing with gifts, presents and other types of commissions received for acts or omissions by recipients (such as civil servants, international or foreign public officials, employees in private sector and magistrates or jurors) in the course of their duty or employment. Such rules are being reassessed currently in respect of magistrates in accordance with GRECO recommendations.

E-commerce, e-signatures and digital projects

Monaco is connected to the Europe India Gateway and was one of the first countries in the world to be fully 5G covered, which, together with the 4G network, provides a high-quality internet connection from computers and mobile phones, as well as all other connected objects (e.g. connected cars, etc.).

The Monegasque authorities provide a supportive framework for the testing and rollout of Internet of Things (“IoT”) projects, as part of Extended Monaco.

In 2020, a new step in the Extended Monaco project has been taken with the adoption by the Monaco Council of a token offering regulation. The law and its implementing Sovereign Ordinances introduce a legal framework for token offering and renew the cycle of economic prosperity with a new funding system for Monegasque companies. This regulatory framework helps to confirm the position of Monaco as an attractive financial centre while protecting the interests of investors and the reputation of the Principality.

Since August 2011 and its first law dedicated to digital activities, the Principality has constantly updated its legal rules to support e-commerce, e-signatures and other innovative projects such as blockchain.

Other Monaco specificities 

Monegasque law has a number of specificities in many areas of business law, including corporate, employment and foreign investment, that an investor must be aware of when considering investing in a Monaco company or business.

For instance, sole shareholder companies are not allowed in Monaco; directors are required to hold company shares; share and business sales are subject to registration requirements and fees; companies' objects clauses are construed strictly regardless of the type of activity.

As for HR, a specific order of priorities must be followed in the hiring and firing of staff employed in Monaco.

Foreign investment rules in Monaco have been changing recently as a result of a modification under French law which may impact the regulatory filing practice for investments in certain sensitive industries.

All such specificities require specific planning for M&A projects.

1 February 2021