Monaco
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| Monaco – Eden on the French Riviera
If it was not for its size (2 square kilometers), Monaco might someday evolve into a Goliath of a tax haven like Luxembourg or the Bahamas. Extending only four blocks from the sea, Monaco’s three casinos, the old fortress like Palace of Prince Rainier (“the Rock”), and the high-rise apartments for the rich and famous along “Avenue Princess Grace”, leave little room for construction of 20th century style bank and office buildings. Monaco’s attraction is her magnificent medieval buildings, interspersed among splendid restaurants, gardens and small stores, and a harbor chock full of luxury yachts from all corners of the Mediterranean. Very simply, there just isn’t much room left for high-rise office buildings in pint size Monaco.
The Principality of Monaco is the official name for the country. Monte-Carlo (the city) is the name most people associate with the area around Monaco’s famous gambling “Casino”, a Gothic structure architecturally similar to the Paris Opera House. Across the street at the Loew’s Hotel is yet another casino where high-rollers from Las Vegas, Atlantic City, Beverly Hills, and Palm Beach meet to gamble and socialize. The streets and parking lots outside are replete with Rolls Royces, Maseratis, Ferraris, Cadillacs, Lamborghinies, Porsches, antique Deusenbergs, and Mercedes. If you see a license plate with “Monte-Carlo 1”, it means Prince Rainer or Princess Stephanie is somewhere close-by chaperoned.
Aside from the very rich and famous, the aristocrats and multi-millionaires, Monaco’s 30,000 permanent residents are just middle and upper-middle-class folks sharing in the good life. While French is the official language, English, Italian and German are spoken by almost everyone. About 1,000,000 tourists pass through Monaco each year, with approximately 25,000 Americans and Englishmen among them in any given month. A friendlier more lovable place you will never find.
The Grimaldi family has presided over Monaco’s constitutional monarchy for over 500 years even while France was being torn by war and revolution. For a brief period between 1793 and 1813 Monaco did become part of France, but independence was later reinstated. In 1918 France and Monaco signed a treaty providing that should the Grimaldi dynasty die out Monaco would revert to the French.
After WWII Monaco developed into a favorite tax haven for French industrialist looking to escape France’s rising tax rates. This loss of tax revenue from French coffers prompted former President Charles de Gaulle to declare Monaco’s tax haven status dangerous to France, and a new treaty was forced upon Monaco’s rulers and signed in 1963.
Under the new treaty French citizens who take up residence in Monaco after 1957 would have to pay income taxes. Luckily, the treaty provides that Monegasques and foreigners could stay exempt from French income taxes.
Today, companies doing more than 25% of their business outside Monaco are subject to tax. Monaco’s corporate tax rate is a flat 35%, but this can be circumvented with a little planning. Typically, to avoid taxation on one’s foreign profits, a Monaco base company will keep only its administrative offices in Monaco while organizing subsidiaries in other tax havens. Under such a set-up the base company would pay a 35% Monegasques tax on 8% of its office expenses. If office expenses amount to US$50,000 a year the tax would amount to US$1,400.
Artists, consultants, authors, script writers and others without permanent staff can do business from one’s own apartment provided the business is neither labor intensive nor a nuisance. The Government encourages such enterprises, not even calling for such operations to be registered.
The rock-bottom cheapest room available in Monaco would cost you about $75/month, but unless you’re hiding from the IRS or KGB you probably wouldn’t want to live there. A pleasant studio with a decent view, marble floors and good appliances can be rented for as little as $450. Those with means seeking the best accommodations should checkout the apartments on “Avenue Princess Grace Boulevard”. Here rents begin at US$2,000 per month and move upward. Almost all the apartments buildings in this area of town are owned by the wealthiest family in Monaco – the Pastores.
Assets situated within Monaco are subject to estate taxes. For those in direct-line (wife, parents, or children) to the deceased the tax is zero regardless of the amount.
Gifts or inheritances to brothers and sisters are taxed at 8%; uncles, aunts, nephews, nieces at 10%; other blood relatives at 13%; unrelated parties and foreign charities at 16%. Securities held by a Monaco bank are subject to inheritance taxes. To avoid Monaco’s estate, inheritance and gift taxes, an offshore trust or holding company located in a no-tax haven is recommended.
Real estate taxes in Monaco, France, Italy and Spain are more or less nonexistent. This however, is not a windfall or loophole the investor can exploit because transfer taxes on the sale of a real estate property situated in Monaco can amount to 16% or more.
Monaco requires all transfers of real estate to be registered, with a 7.5% fee going to the State. More fees of 3% to a Notaire, and 3% to 6% to the real estate agencies can be expected. Turning-over a real estate property for a quick profit is not possible with expenses these high, but there are some steps you can take to duck these transfer taxes.
Acquiring your Monaco apartment or condominium with an offshore holding company will allow you to avoid the transfer taxes. Use of bearer shares is sometimes recommended. Later, when you want to sell the Monaco property, you simply sell the shares in the company to the buyer in the offshore tax haven. The State of Monaco recognizes that such transactions happen frequently, but there is no change of ownership as far as the Monaco tax authorities are concerned.
Also visit I love Monte-Carlo! Gives you guidance to Monaco’s taxation policy, real estate activity, offshore banking systems, legislation as well as a review of the grand events in the world of art and sports, tourist attractions and accommodation services.
And visit Stars ‘N’ Bars Monaco’s first Cyber Café; celebrity memorabilia collection; game rooms, video, billiards, pinball, race car & ski speed machines, basketball shoot; supervised children’s playroom and activities/parties; 24 televisions, giant screen; live music, DJ, dancing; big name concerts; private banquet facilities.
Find the contact names, addresses, numbers and information for local government offices, banks, accountants, company formation services, investment and management companies, advisors, experts, maildrops, real estate agents and other useful local contacts in the THE OFFSHORE MANUAL & DIRECTORY. |