Concept
Monaco is a sovereign principality of barely two square kilometres on the Mediterranean, squeezed between France and the sea. Companies are formed here for a base close to Western Europe and its private banks, and for a tax system that leaves most locally-run business untaxed on profit. The everyday vehicle is the SARL; larger or regulated ventures use the SAM. For a private client a Monaco company usually does one of three jobs:
- obtainingMonaco residency permit(self-employment)
- registration and management of yachts under Monaco flag
- holding and managing international assets (real estate, shares, IP)
Where the tax system comes from
Monaco abolished personal income tax in 1869, and residents who are not French nationals still pay none. The corporate side arrived in 1963, when France pushed Monaco into a bilateral fiscal convention. That treaty made French citizens living in Monaco taxable in France, and it created a business-profits tax — the Impôt sur les Bénéfices, or ISB — aimed at companies that earn a large share of their turnover beyond the principality. The personal-tax regime that sits alongside it is set out in Monaco: tax regime for residents.
So Monaco is not a flat zero on corporate profit. A company serving local clients pays nothing; a company built to invoice foreign markets can land squarely in the 25% ISB. Drawing that line is the practical core of structuring here, and it explains why a company is so often set up together with a Monaco residence permit for the people who run it.
Structure
A Monaco company has the following structural characteristics:
- number of participants from 2 to 50
- at least 1 director who is a natural person
- participants bear risks only within the limits of their contributions
- economic presence in Monaco required, including physical office
SARL or SAM
Two forms cover almost everything. The SARL (Société à Responsabilité Limitée) needs at least €15,000 of capital, two or more partners and a manager — the gérant — who must be a natural person; it suits most trading and holding activity. The SAM (Société Anonyme Monégasque) is the joint-stock form, with €150,000 of capital, a board of at least three directors and incorporation by ministerial decree, used for banks, larger groups and regulated business. Both give limited liability and both can hold assets, a role Monaco shares with established European platforms such as Luxembourg.
The authorisation regime
Nothing operates in Monaco without prior government authorisation. Each permit is granted for a named activity and tied to real premises, so there is no nameplate option: a company needs a commercial lease, a working office and genuine local management, and an authorisation cannot be repurposed for an unrelated business. In practice this is Monaco's built-in substance requirement, and it puts the principality in the same frame as the broader economic substance rules that low-tax jurisdictions now apply.
Taxes
Monaco's low-tax reputation is real but specific. Individuals face no income tax, no capital-gains tax and no wealth tax, and the only corporate charge that matters is the ISB on business profits. Whether a company actually pays it comes down to one test — how much of its turnover is earned outside Monaco:
| Type of tax | Rate |
|---|---|
| Corporate income tax | 0% if at least 75% of turnover is Monaco-sourced 25% (ISB) if over 25% of turnover comes from outside Monaco, or on income from licensing IP |
| VAT | 20% (corresponds to the French system) |
| Payroll tax | 13–14% (paid by the employer) |
| Tax on dividends | 0% |
| Tax on capital gains | 0% |
Away from the ISB the burden is light. VAT follows the French system at a standard 20%, there is no withholding tax on dividends, and individuals owe nothing on income, capital gains or net wealth. A Monaco company therefore works best when its profits are genuinely local, or when it serves as a holding vehicle rather than a cross-border trading hub; the holding structures comparison shows where Monaco sits next to Dutch, Luxembourg and Cypriot alternatives.
A short comparison shows the split. A Monaco SARL running a restaurant or a local estate agency bills Monégasque customers, keeps its turnover inside the principality and pays no corporate tax — only VAT and payroll charges. A SARL set up to license software to clients across Europe earns most of its turnover abroad, so it falls into the 25% ISB and has to show real staff and premises to defend that base. Same vehicle, same town: the tax outcome turns entirely on where the customers are.
Compliance
Maintaining a Monaco company requires compliance with the following mandatory requirements:
- full accounting with preparation of annual financial statements
- audit for companies with turnover exceeding €2,000,000 or with more than 25 employees
- registration in the beneficial ownership register (RBE) and updating data upon changes
- annual filing of tax returns even when no taxes are due
Transparency and the FATF grey list
The secrecy image is dated. Monaco maintains a register of beneficial owners (RBE) and exchanges financial-account information automatically under the CRS. In June 2024 the FATF placed Monaco on its grey list of jurisdictions under increased monitoring; by late 2025 the principality reported that it met 39 of the 40 recommendations and was aiming for removal during 2026 (to be verified). For an owner this means tighter onboarding, source-of-funds questions and record-keeping, with no change to the headline tax rules. How these registers and automatic exchange work in practice is covered in UBO registers and the CRS overview.
Related: Monaco: tax regime for residents · Monaco residence permit · Holding structures · Economic substance · UBO registers · CRS overview · Company in Luxembourg