Monaco: A General Business Law: Law Firms - Avocats-Défenseurs Overview
Introduction
The Principality of Monaco, a sovereign microstate with about 38,000 inhabitants (of whom 9,500 are Monegasque nationals), is a strategic location for business at the heart of Europe and the Mediterranean basin, at the gateway to the French and Italian Riviera.
Monaco is a hereditary and constitutional monarchy, headed by His Serene Highness Prince Albert II (part of the 700-year-old Grimaldi dynasty), which enshrines the separation of executive, legislative and judicial powers, and asserts the rule of law over all institutions.
Monaco is a member state of the United Nations and the Council of Europe.
Although it is a third State to the EU, given its privileged relations with France, Monaco belongs to the European customs territory, the eurozone and is included in the Schengen area.
Monaco is an attractive place for investors thanks to its political stability, the safety for people and their property, a multicultural community (141 different nationalities) where the English language is commonly spoken (with French being the official language), an administration of proximity, an original economic and social model without budgetary deficit, an adapted tax system, and dynamic employment and consumption pools.
The leading sectors in Monaco are real estate and construction, wealth management, luxury, yachting, sport and business tourism. The digital sector is booming (+41.1% increase in sales over the decade).
Monaco’s GDP for 2024 was EUR10.3 billion (average annual growth rate of 4.8% over the decade), GDP per capita was EUR107.213 (+6.2% increase compared to 2023), and GDP per employee was EUR156.500 (+5.2% increase).
Authorisation Prior to Business
Non-Monegasque nationals wishing to carry out any economic activity must first be authorised by the Minister of State.
Specific rules apply to regulated activities such as banking, financial, insurance, real estate and construction activities (experience, corporate structure, amount of capital, etc).
Business Forms and Opening of a Bank Account
Persons wishing to set up a business in Monaco may apply individually or create a company, in the form of a Monegasque Limited Company (SAM), Limited Partnership (SCS) or Private Company (SNC), Limited Liability Company (SARL) and Single-Member Limited Liability Company (SURL) since the 2025 company law reform.
Since 2020, companies have been obliged to open an account with a credit institution in Monaco.
Flexibility and contractual freedom characterise Monaco corporate law.
Taxation and International Tax Compliance
Businesses carrying out a commercial or industrial activity and generating over 25% of their turnover outside Monaco, as well as any income received from patents and copyright by a company, are subject to Corporate Income Tax (rate of 25%).
As the French and Monegasque territories form a customs union, French customs regulations apply directly in Monaco, and VAT is levied on the same basis and at the same rate as in France (usual rate of 20%).
Sales of building land and buildings occurring within five years of their completion are subject to VAT on property transactions (rate of 20%). Other transactions on real estate are subject to registration duties (rate of 4.75% when the acquisition is made by an individual or a transparent vehicle and 10% failing that).
There is no tax on capital gain.
Monaco complies with OECD standards. It is a party to the Convention on Mutual Administrative Assistance in Tax Matters, the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information, and the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting.
Private Sector Employment
In 2024, Monaco had 60.454 employees in the private sector (+3.6% increase compared to 2023), including 85.6% in the service sector and 14.1% in the manufacturing sector.
More than 140 nationalities are represented (1.7% Monegasque, 60.3% French, 15.4% Italians, 7.1% Portuguese, 1.1% British). Nearly 90% of employees live outside Monaco, mostly in the French neighbouring cities.
Labour law in Monaco is very specific. Work permit requirements and the hiring priority system, but also flexibility, are important characteristics that apply to Monegasque employment contracts. Monaco has legislation on teleworking (6.773 teleworkers).
Real Estate and Construction Activities
With a mean price per square metre of EUR51,967 in 2024 (+1% compared to 2023), Monaco has one of the most expensive real estate markets in the world. It is a reliable source of rental income and capital gains on resale.
New constructions and evolving infrastructures are integrated into the government’s policy of sustainable development, such as the eco-district, the offshore extension Mareterra that houses 60,000 square metres of highly luxurious accommodation.
The profession of property trader was reformed in 2024 to be more regulated.
Banking and Financial Activities
In 2024, Monaco had 24 banking institutions and 68 asset management companies whose resources amounted to EUR176 billion. EUR100.1 billion of assets are managed and/or advised from Monaco (+17%).
Asset management companies are authorised by the Commission de Contrôle des Activités Financières (CCAF), which is an ordinary member of the International Organization of Securities Commissions (IOSCO). Their discretionary management and advisory services for foreign funds and portfolios have seen a strong increase in activity.
Banking institutions are authorised by the French Autorité de Contrôle Prudentiel et de Résolution (ACPR) and the Monaco CCAF as regards their financial activities. Their asset management activities are increasing.
The regulatory and prudential organisation of banks is governed by the French Monetary and Financial Code in accordance with treaties that were entered into with France, and a monetary treaty that was entered into with the EU. By contrast, relations between the banks and their clients are governed by Monegasque law.
E-Commerce and Digital Activities
Monegasque legislation relating to e-commerce, online service platforms (such as search engines, price comparators, marketplaces, classified ad sites and social networks), providers of online advice from consumers and technical service providers (such as trust services like e-signature, hosting, cryptology) has been reshaped in light of EU standards to ensure interconnectivity.
Blockchain is legally recognised, and Monaco has adopted a legal framework regulating the activities of digital asset and crypto-asset service providers, fundraising using this technology (initial coin offerings (ICOs), security token offerings (STOs) to attract innovative and ethical companies.
Monaco is fully 5G and fibre covered and focuses on the internet of things (IoT), the technologies of the future such as metaverse (which is legally recognised) with leading sectors (real estate, wealth management, luxury, yachting, sport and business tourism) via the creation of financing structures or the setting up of dedicated start-ups through the “Monaco Tech” business incubator.
The “Extended Monaco” programme is dedicated to the digital transformation of Monaco (e-government, smart city, health, etc).
Anti-Money Laundering/Counter Financing of Terrorism (AML/CFT) and Anti-Corruption Laws
AML/CFT legal provisions follow the FATF/MONEYVAL recommendations and are equivalent to those of the EU (Monaco implements the AML/CFT Directives in accordance with its obligations under the monetary treaty with the EU).
According to the standards of the Council of Europe, Monaco penalises corruption (bribery or trading in influence) by civil servants, members of government and parliament, international and foreign public officials, employees in the private sector, magistrates, arbitrators and jurors.
Personal Data Protection Law
Monaco complies with the standards of the Council of Europe (Convention 108+) and reformed its legislation in 2024, adopting EU standards (GDPR) to facilitate cross-border flows of personal data.