Summarising the biggest taxation benefit, the first two years the income and profit of your business activity can be completely tax free in the Principality of Monaco.
Despite the common belief Monaco is not an offshore jurisdiction. Having a business in the Principality involves various taxation obligations as well. Luckily Monaco’s tax regime is built on some extremely supportive pillars.
Summarising the biggest taxation benefit, the first two years the income and profit of your business activity can be completely tax free in the Principality of Monaco. However it does not mean that the activities are Value Added Tax (VAT) free.
In Monaco you have to make a difference between Value Added Tax and Business Profit Tax.
The Value Added Tax is levied on the same basis and at the same rate as in France. The intra-Community tax regime has been applicable since 1 January 1993.
Any business carrying out an industrial or commercial activity and generating for more than 25% of their turnover outside Monaco is subject to Business Profit Tax from the third years of its operation. This is also true for firms whose activities consist of earning revenues from patents or artistic property rights.
The Business Profits Tax is 33.33% on profit. It is a great model, which truly motivates the businesses to gain revenue. In case your company is not profitable you have no obligation to pay tax.
Interestingly it is a small gap for some privately owned companies, because many owners take out the profit as an annual bonus, compensation or benefit and leave the company with a very small line of profit before taxation. Probably this is also the answer to the question why Monaco has so many sole trader companies. It is a question of morality, but frankly the legislation allows you this possibility and it is part of the local business life.
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Living in Monaco
It is available for purchase in English at: http://amzn.com/1496107004
The author Zsolt Szemerszky intended to hunt down the myth around Monaco and to go beyond gossips. Zsolt is also know by releasing Monaco’s first gourmand book. The Signature Dishes of the Principality of Monaco was launch last December 2016 as the number one release in wine pairing at Amazon.com allows gastronomy lovers to discover the excellence of the Principality of Monaco thanks to recipes and interviews with Executive Chefs who hold together over 50 Michelin stars.
However Living in Monaco is significantly different from his other books. It is not a travel book, it is an ultimate guideline to those who are aiming to get a glimpse about the real Monaco and who have the desire to relocate their personal or business life to the Principality.
The book explains the benefits of the relocation (both for private and business reasons), the life quality in the Principality, and reveals how can one capitalise the unseen treasures and business potentials of Monaco. The “Relocation and what it takes” chapter also explains all the tiny details, traps, tips and best practices while it offers a detailed overview of the administrative mechanism of the Principality.
One of the interesting part of the book is the second part which focuses on the people, the opportunities, and the traps in Monaco. It offers a first hand guidance to avoid to fell for the catchy workings and the illusions of luxury. Understanding the real-life examples one can truly enjoy the Principality with all its safety and protective legal systems for families and businesses.
The book is available for purchase in English at: http://amzn.com/1496107004