Monaco Information
Joined: 17 Oct 2006
Posts: 17
Home Country: monaco
|
 Posted: Wed Oct 18, 2006 3:49 am Post subject: DOING BUSINESS IN MONACO |
 |
|
DOING BUSINESS IN MONACO
FORMING A COMPANY
I - Individual Business
Any individual may undertake commercial or industrial professional activity in his name or on an independent basis.
The person is then responsible for his/her own movable property and real estate as specified under articles 1928 and 1929 of the Civil Code on obligations ; personal status is important, since according to the matrimonial system and the activity of the spouse, his/her property may also be affected by the entrepreneur’s commitments.
All those who perform acts of commerce and make it their usual profession are merchants.
Laws 1002 of 26 December 1977 and 1121 of 22 December 1988 stipulate that the following acts are acts of commerce : all purchase of goods and material with the intention of selling them, either in kind or after transformation or even with the intention of hiring them for use by others ; all purchase of immovables for resale, unless purchased with a view to the transformation, reconstruction or rebuilding of one or several buildings and to sell them either as a unit or individually ; all operations of intermediaries for buying, subscription to or sale of immovables, businesses, or shares in real estate companies ; all enterprise related to the rental of movables ; all enterprise for manufacture, commission and carriage by land or by water ; all entreprise of supply, agency, business centers, all establishment in charge of auction sales and public shows ; all transactions relating to currency exchange, banking and brokerage ; all land construction enterprises if the entrepreneur supplies the materials thereto ; all public bank transactions ; all credit notes between dealers, merchants, bankers, and all persons, bills of exchange and remittances in cash from one market to another ; all enterprise for construction and all purchase, sale and resale of vessels ; all maritime shipping ; all purchases or sales of gear, rigging and stores ; all freight and chartering, pledge, borrowing or bottomry loan ; all insurance and other contracts concerning maritime commerce ; all agreements and contracts for salaries and the hiring of crews ; all engagement of service crews on merchant ships.
II - General Partnerships (S.N.C.)
General partnerships ( S.N.C. - société en nom collectif ) are established by two or more persons in the aim of doing business under a company name (Commercial Code - Section IV, art. 27 and following). This company name is composed of the names of the partners only.
The general partners are jointly responsible for all business commitments. The company act may, however, discern the only partners who are entitled to sign in the name of the company, their sole signature being considered as due commitment of the company.
This act may be drawn up privately or by authenticated document. The articles of association of the company must be registered with the Tax Department.
III - The Limited Partnership (S.C.S.)
The Limited partnership (S.C.S. - société en commandite simple) is established between one or several jointly responsible partners and one or several fund providers, known as sleeping partners or silent partners (Commercial Code, Section IV, Art. 30 and following). The company is run under a company name, which must be the name of one or several jointly responsible partners. The company name may not include the name of a silent partner.
The silent partner is only liable for company losses within the limits of the amount he has invested or had to invest in the company. Silent partners are in no case obliged to return any interest that they have been paid, as long as annual accounts established in good faith show that profits were sufficient to proceed with such payment.A silent partner may engage in no management activity, even in pursuance of power of attorney.
The articles of association of a Limited Partnership can be drawn up privately or by authentic document. The statutes of the company must be registered with the Tax Department.
IV - Monegasque Limited Company (S.A.M.) and Limited Partnership with shares (S.C.A.)
Limited companies (S.A.M. - société anonyme monégasque) and Limited Partnerships with shares (S.C.A. - société en commandite par actions) are governed by the Sovereign Order of the 5 March 1895, the Law-Decree n°152 of 13 February 1931 and Laws n°408 and 767, in addition to the Commercial Code. Companies may only be formed with government authorisation by ministerial decree and after approval of their articles of association, which must be established by notaries act.
The companies which enjoy a monopoly or a privilege are subject to control by a special auditor : in this case, the delivery of authorisation may be subject to the approval of the State Council. The government decision is notified to the solicitor’s office and the authorisation takes effect after deposit in the notary’s minutes and the complete publication of the articles of association in the Journal de Monaco.
Cost of constitution
- registration duty and fiscal stamp :
1% of the capital,
0.5% of the nominal amount of shares and share certificates, whether they have been released or not
- notary’s fees :
approximately 0.9% of company capital
- official announcements :
the cost of publishing the articles of association in the Journal de Monaco (€ 8,07 exc. VAT per line) is approximately € 4.574.
Company capital
The minimum capital is 150,000 euros and it must be totally bought in the form of shares. Share-holding and payment of capital are consigned in a notaries act and this declaration by the company founders is submitted at the first general meeting of the company held within the three months following the ministerial decree. This first general meeting determines the head office, appoints the administrators and the auditors ; two of the auditors must be selected from the list of chartered accountants of the Principality of Monaco.
The shares and certificates can only be negotiated after the constitution of the company and these shares are nominative until they have been paid up in full. The founders’ shares and the shares representing contributions, which must be paid up in full when the company is formed, can only be negotiated two years after the establishment of the company.
Number of Associates
The minimum number of partners is two : furthermore, no-one is entitled to belong to more than 8 boards of directors of commercial companies whose registered offices are in Monaco.
Registration procedure
The company’s articles must be sent to the general registry within fifteen days of the creation of the company. A copy of the decision of the general meeting must be attached in the event of capital other than cash, or the stipulation of special advantages for certain shareholders, along with the list of names of shareholders (surname, first names, title, address and number of shares bought). Anyone is entitled to read the company act at the registry and, at his/her own expense, to receive a copy of it or an extract from the clerk of court or from the notary in possession of the minutes. He/she may also ask for a certified copy of the statutes from the registered office of the company. A commercial company must also be registered in the Commerce & Industry Register, and a non-trading company in the Non-Trading Company Register, within two months of start-up.
Administration procedure in a limited company (S.A.M.)
The annual general meeting must be composed of a number of shareholders representing at least a quarter of the capital. If not, another general meeting is called according to the articles. Half of the capital must be represented by the shareholders present when the meeting is to deliberate upon contributions or nominate its first administrators, to deliberate upon the sincerity of the declaration made by its founders, upon the subscription to and payment of the initial capital, upon any modification to the articles of association or upon the issue of debentures. The main purpose of the company cannot be modified.
Any decision made by the general meeting concerning the modification of articles of association or the issue of debentures, must be approved by the Government and can only come into effect after the official announcement in the Journal de Monaco, bearing mention of their approval.
Administrators are appointed for a maximum of six years and can be re-elected ; if the articles of association appoint administrators and stipulate that their nomination is not subject to the approval of the general meeting, they cannot be appointed for more than three years.
The limited company is administered by representatives on a revocable basis, who may be salaried or unpaid and are selected amongst the partners or owners of a fixed number of shares specified in the articles of association ; these shares are a guarantee of correct management and are nominative, non-transferable and deposited with company funds. However, the company administrators may, if all of them so agree and if the articles of association so permit, appoint their own representative who may be exterior to the company, but for whom they remain responsible as regards the company.
Withdrawal of authorisation
The authorisation for the creation of a company with shares can be withdrawn :
- if, without legitimate reason, the company has not performed reasonable activity in conformity with its articles of association for more than two years ;
- if the company has no premises or staff in Monegasque territory for the normal pursuit of its purpose ;
- if, after having been declared bankrupt or found to be profitable during liquidation, the company has not come to a legal settlement or if this agreement has been terminated or settled ;
- if the company has permitted the performance of unauthorised activities based in its premises.
The authorisation for creation can only be revoked after duly motivated consultation of a special commission doted with the broadest powers of judgement and investigation.
Companies whose authorisation is revoked must be dissolved and liquidated within two months of receipt of notification of the above-mentioned ruling, and the liquidation procedure must be terminated within six months of dissolution. The Register of Commerce and Industry must receive a certified copy of the minutes of the deliberation fixing the dissolution and liquidation of the company within ten days of the general meeting held for this purpose.
V - Specific structures
Administrative offices
Administrative offices, sometimes called headquarters, are fixed premises belonging to a firm or an international group, whose registered office is in another country. These offices carry out administrative and financial management and co-ordination or supervision tasks - for the group only - in a given geographic area. Administrative offices work only for the businesses belonging to the group.
Their installation is subject to prior administrative authorisation. Authorisation is granted for a limited duration after which the application must be renewed. Applications must be addressed to the Ministry of State and must be deposited with the Direction de l’Expansion Economique.
These offices pay tax at a rate of 2.66% (8% of 33.33%) of their operating expenses, as long as they have no activity outside their group and limit their activity to internal management.
Branches / Agencies
Foreign companies may set up offices in the Principality of Monaco in the form of branches - the word ÇbranchÈ or ÇagencyÈ is used to mean the same thing in Monaco - after obtaining prior authorisation. Branches must be registered in the Register of Commerce and Industry.
Trusts
This particular legal structure is governed by Law n°214 of 27 February 1936 : any person whose private status thus permits may create a trust in the Principality of Monaco. The trust must be created by an authenticated document in conformity with the prescription for funds applicable according to the foreign law under which it is placed. The only persons entitled to act as trustees are those mentioned on a special list established by the Presiding Judge of the Appeals Court. The creation, transfer and operation of a trust generate the payment of registration duties to the Tax Department.
For all specific information on trusts, contact :
Palais de Justice (The Court House)
5, rue Colonel Bellando de Castro
MC 98000 MONACO
Phone : (+ 377) 93.15.88.11
Fax : (+377) 93.50.01.68
Brokers
A broker, defined by Law n°1008 of 4 July 1978, is an agent, who by usual, independent profession, and without being bound by an employment contract, negotiates and makes deals for the purchase, sale, hire or performance of services in the name of producers, businesses or merchants. The agent and his representatives are committed for a limited or unlimited duration and may use exclusive rights, del credere, or goods consignment contracts with a view to delivery to their clients.
Brokers may represent several Clients with the approval of their first clients in the event of competitors, and may effect commercial transactions on their own account in fields which do not compete with their clients.
Specific registration with the Commerce and Industry Department is compulsory before the start of activity.
Lease-back businesses
Commercial establishments can be run either by their owner or by a manager, to whom a special authorisation must be granted for the duration of his management. The application must be submitted by the future manager, who must present the same documents as those required for merchants and attach the management contract, which may be either an authenticated document or a private document with due registration.
The lease-back arrangement must be published in the Journal de Monaco. The manager must post in his premises evidence for all to see that the business is run on a lease-back basis and he cannot sub-let or transfer his lease-back entitlement to a third party.
The lease-back agreement legally ends when the period fixed in the contract, which cannot stipulate tacit renewal, expires, or upon the death of the manager, upon declaration of bankruptcy of the same, or in the event of offence or delict leading to the closing of the commercial establishment. The end of the lease-back arrangement is published in the Journal de Monaco.
Independent professions
Self-employed work includes the independent professions. Applicants, other than citizens with Monegasque nationality, must previously request the authorisation from the Government of the Prince before setting up. Certain professions are regulated by a quota system : chartered accountants, notaries, solicitors, bailiffs, ship-brokers, taxis, the medical and paramedical professions, insurance activities...
In general, any authorised person who has an economic activity of any nature, must obtain an identification number from the Department of Statistics and of Economic Studies.
In addition, merchants must be registered in the Register of Commerce and Industry. These two procedures are possible in the offices of the Direction of Economic Expansion.
Persons wishing to conduct self-employed professional activity must accomplish the appropriate formalities for registration, belong to social benefit organisations, take out the necessary insurance policies and abide by the appropriate laws and regulations, in particular in the fields of security and hygiene, otherwise their authorisation or approval will be annulled. There is a specific set of social regulations to be observed.
The self-employed belong to the following social benefit organisations :
Caisse d’Assurance Maladie, Accident et Maternité des Travailleurs Indépendants (C.A.M.T.I.) - the sickness, accident and maternity benefit organisation for the self-employed
Teléphone : (+ 377) 93.15.44.06
Caisse Autonome des Retraites des Travailleurs Indépendants (C.A.R.T.I.) - the independent pension scheme fund for the self-employed
Teléphone : (+ 377) 93.15.49.59
For further details, contact :
Caisses Sociales Monégasques
(The Monegasque Social Benefit Funds)
11, rue Louis Notari
MC 98000 MONACO
Teléphone : (+ 377) 93.15.43.43
The business health office is also available to provide useful information :
Office de la Médecine du Travail (O.M.T.)
(Office de la Medecine du Travail)
Teléphone : (+ 377) 92.05.35.01
SOCIAL SECURITY & ACCOUNTING OBLIGATIONS
A. Social security obligations
Anyone with a business licence is required to :
- Register with the health and pension organizations
La Caisse d'Assurance Maladie, Accident et Maternité des Travailleurs Indépendants (CAMTI)
11, Rue Louis Notari
Phone : (+377) 93.15.44.06.
Site internet : www.caisses-sociales.mc
La Caisse Autonomes des Retraites des Travailleurs Indépendants (CARTI)
11, Rue Louis Notari
Phone : (+377) 93.15.49.59.
Site internet : www.caisses-sociales.mc
- Register with the Labour Department (Direction du Travai) if planning to hire staff.
All prospective employers are required to :
- Send the job offer to the Employment Office (Service de l'Emploi), which then as four clear days to propose candidates. After that, if there are no priority applicants, the employer may propose the candidate of his choice.
- Apply for a work permit for the future employee by completing an employment authorization form.
The employee may start work only after approval from the Occupational Health Department (Office de la Médecine du Travail).
B. Accounting obligations
Only limited companies and partnerships limited by shares are legally required to prepare a balance sheet and profit and loss statement.
These financial statements must be filed with the Trade Registry (Répertoire du Commerce et de l'Industrie) no later than nine months after the annual general meeting, which itself must be held no later than six months after the fiscal year end. They must be accompanied by an auditor's certificate, notably indicating whether the financial statements were approved or rejected at the shareholders' meeting and whether the company's business activity complies with the terms of its licence.
Other businesses are not required to file financial statements at the Trade Registry (Répertoire du Commerce et de l'Industrie). They are simply required to keep accounting records (ledgers and inventories) that must be reviewed and initialled each year either by the Mayor or by a judge of the Court of First Instance (see chapter II of the Code de Commerce).
Generally speaking, anyone engaged in a business activity, whether self-employed or through a company, must comply with social security legislation as well as health and safety regulations.
COMPANY TAX
I - Value Added Tax
The existence of the French-Monegasque Customs Union means that V.A.T. is applicable at the same rate as in France. European community tax is applicable since 1 January 1993.
The following are subject to V.A.T. :
- on the one hand, the operations due to economic activity carried out for a fee by a tax-payer, i.e. by a person acting on an independent basis as of custom or occasionally, whatever his legal status ;
- on the other hand, the operations expressly named by law as being subject to V.A.T. (delivery of goods to oneself, certain purchases, imports...) ;
- and lastly, operations which would normally be exempt, but which become eligible for the application of V.A.T. according to a choice made by the person carrying them out (operations carried out by persons performing exempted commercial activities, banking and financial establishment operations, empty property rentals for industrial, commercial or professional use).
The most frequently applicable rates are as follows :
- normal rate : 19.6%
- reduced rate : 5.5%
The normal rate, 19.6%, is used when there is no reason to apply the reduced rate.
The reduce rate, 5.5%, is applicable as follows :
- on various services : transport of travellers, hotel or furnished accommodation, certain shows (cinema, theatre, concerts...), entrance fees for certain attractions (museums, monuments, cultural exhibitions...), private television subscriptions, provision of meals in works cafeterias, services related to the supply and evacuation of water ;
- on certain products : water, food products (except alcoholic beverages and certain solid food products), medicines (except medicines which are reimbursed to social security contributors belonging to the 2.10% category), products with agricultural origins, books, special apparatus and equipment for the handicapped, certain products for animal feed.
II - Property Added Value Tax
VAT is applicable on operations contributing to the production and commissioning of real estate.
It is based on :
- the sales price, the amount of compensation or the value of the social rights corresponding to the gain, plus the additional charges ;
- the real market value of the property, if the market value is higher than the sales price, the amount of compensation or the value of the social rights, plus the additional charges.
V.A.T. is generated by the act which defines the transaction, or if no such act exists, the transfer of ownership. However, V.A.T. is not applicable to operations involving buildings or parts of buildings of over five years of age or, which, during the five years following completion, have already been sold to a person other than an estate or property agent. Such operations are normally subject to transfer dues.
The V.A.T. rate applicable on property transactions, whatever their nature, is 19.6%.
III - Tax on Profits
This is the only direct tax levied in the Principality of Monaco, which makes the tax system attractive, thus drawing in diverse businesses.
The company’s legal form does not have any bearing on the imposition of this tax. It is the nature of the business and the location of its operations that determine liability.
Companies of an industrial or commercial nature that make more than 25% of their turnover outside of Monaco are liable.
Moreover, money made from patents and royalties is subject to tax on profits (ISB) if it goes to a company, but is not liable for taxation if received by a natural person.
The taxable profit is established after deduction of all costs, in particular remuneration of the holder or owner, and the directors or managers carrying out a real function within the company. The scale of these deductions is established annually and allows the tax base to be reduced.
The tax rate (33.33 %) is then applied to the reduced profits.
Two categories of tax aid have been established in the Principality:
- Company start-up aid.
Companies, created in the Principality, which are liable for tax on profits, but which develop a completely new business are exempt from this tax for a period of two years and benefit from preferential treatment for the following three years.
Starting up a company:
- 1st and 2nd year no tax on profits
- 3rd year: the tax is calculated on 25 % of the reduced profits
- 4th year: the tax is calculated on 50 % of the reduced profits
- 5th year: the tax is calculated on 75 % of the reduced profits
- 6th year: the tax is calculated on 100 % of the reduced profits.
- A research and development tax credit has been established in the Principality of Monaco.
Administrative offices are not liable for tax on profits as they are not of a commercial nature, but for a tax of 2.66% on the running costs of the office.
IV - Other Taxes
Registration duty, fiscal stamps and various taxes and levies :
Registration duty is levied on formalities to register transfers or civil or legal acts. It is either proportionate or a fixed amount.
Some of the most frequently used rates of taxation are as follows :
Proportionate rates :
- 1% on leases,
- 2% on judgements with conviction,
- 3% on acts containing mortgage commitments for the engrossed document,
- 5% on movable property sales, duty is reduced to 2% in the case of certain public sales and auctions,
- 6.5% on the sale of real estate,
- 7.5% on property transfers entailing the sale of commercial establishments,
- 1% transaction fees on real estate transfers,
- 0.65% mortgage subscription fee.
Fixed duty : 10 € (Loi n°1.225 du 28/12/1999).
Fiscal stamps are placed on all documents for civil or legal acts and inscriptions which can be produced as evidence before a court of justice. The cost is either fixed or depends on the format of the document established. Fiscal stamps are also a form of duty for the accomplishment of administrative formalities (certificate of residence, work permit, Livret de famille, passport...). (Loi n°1.221 du 9/12/1999 et OS n°14.290 du 9/12/1999).
Registration of the following documents is compulsory and must be accomplished within the appropriate time limits :
- public acts drawn up by notaries or bailiffs,
- private acts for leases, sales of commercial establishments, wills,
- real estate transfers concerning living persons when the real estate is located in the Principality of Monaco,
- certain company acts.
It is not compulsory to register the following types of document :
- public administration and general interest documents,
- civil status documents and the issue of certified copies of the same,
- passports,
- mortgage registration statements, mortgage transcripts, certificates of non-registration as a mortgage delivered by the Registrar.
Other acts may also be subject to registration, but it is not compulsory unless the said document is to be produced before justice or the authorities.
Other taxes and duties are also levied :
- excise duties on the manufacture, circulation and consumption of alcohol,
- duties on alcoholic beverages,
- warranty tax on precious metal goods.
In the Principality of Monaco, these taxes and duties are subject to the same regulations as in France. They are established on the same basis and applied at the same rates. Since 1 January 1993, the general conditions for the exchange of products subject to excise within the European Community are also applicable in Monaco. |
|
Register
Log in
FAQ
Search
Memberlist
