The Principality has over 110 vigorous industries within its boundaries, representing 11% (some $3 billion) of the national economy. In addition, Monaco’s remarkably diverse economy includes construction, banking, finance and other service industries, international trade and shipping and even aquaculture. The Principality is particularly noted for its groundbreaking research and development activities in a variety of industries including biotechnology and environmental fields.
National Budget: $581,853,667* (1996 expenses)
$572,089,285* (1996 income)
Revenue of Monaco-Based Companies: $6,391,276,071* (1996)
Work force: 34,420 (98% employment in 1998)
Public Sector Revenues (1996): Taxes on business turnover (sales) 48.8%
State-operated monopolies 18.6%
Concessions (including SBM gaming) 4.2%
Fees for legal transactions 6.8%
Banking and finance 0.9%
Taxes on business profits 4.2%
Customs duties 4.9%
* All figures calculated on exchange rate of 1USD=5.6FF
Light Manufacturing Sector
Chemicals, pharmaceuticals and cosmetics
Together provide 41% of industrial output and employ 1,000.
11% of industrial output (precision high-tech, such as thermostats, switches, transformers for space industry).
Printing, binding and boarding
Silkscreening, advertising, packaging.
Transformation of plastics
Representing 25% of industrial output (automobile parts, food packaging, filters).
Services such as insurance, real estate, law, shipping, transport, freight and accountancy employ 45% of Monaco’s population.
With a network consisting of more than forty establishments, the very highest standards of confidentiality and security, Monaco offers one of the finest banking systems in the world. In addition to providing an extensive range of financial services for businesses, the Principality’s banking community prides itself on its wealth management services. There is no tax on Monégasque portfolios or capital and no duties levied on capital transfers or stock and share transactions.
Over 150 shipping companies based in Monaco generate 4% of the national economic turnover while remaining one of the Principality’s primary growth industries.
Monaco’s hotels, some of the most luxurious offering the best values in Europe, provide a total of 2,500 rooms. Tourism arrivals, based on the number of visitors who spend at least one night in one of the Principality’s hotels, exceed 200,000 per year. International meetings as well as special events for which the Principality is famous also play an important role in tourism. In July 2000, Monaco witnessed the opening of the Grimaldi Forum, a state of the art 80,000 square foot exhibition, convention and cultural center. The Forum opens new perspectives and growth to business tourism.
The Princesse Grace Hospital Center is equipped with one of the best medical investigative scanning and visualization services in Europe.Monaco Cardio Thoracic Center benefits from remarkable facilities and from the expertise of a Scientific Council made of 25 members. For more information: http://www.ccm.mc
High tech sector
With no rural area or agricultural land, Monaco has, nevertheless, established an international reputation for its thriving aquaculture industry, developing plant and animal species for industrial use and food.
With little land to develop, Monaco has had to rely on innovative techniques for reclaiming land from the Mediterranean. The civil engineering methods created through this process have become a highly visible and exportable technology.
With probably the most famous oceanographic institute in the world, Monaco has been a leader in marine environment research and study as well as marine biology development.
The creation of state-of-the-art Monaco Telecom has provided companies in Monaco with the very best international communication facilities and services, and has made telecommunications one of the Principality’s most important developing economic sectors.
More than 1,000 retail stores help make Monaco a major hub for trade in Southern Europe. Elegant boutiques selling everything from fashion and jewelry to antiques and art, shopping centers and markets span the entire range of retail commerce and attract an affluent international clientele.
The Monte-Carlo Casino world-renowned gaming represents 4% of Monaco’s yearly total revenues.
The Principality of Monaco encourages foreign investment in either existing companies doing business in Monaco or in the creation of new entities.
Five kinds of businesses may be established in Monaco: trade or activity in your own name, general partnership, limited partnership, partnership limited by shares (subject to prior authorization by the government) and specific structures (headquarters, agencies, trusts, brokers, lead-back businesses and independent professions).
Limited liability partnerships are not provided for. Foreign entities also may open headquarters or trading agencies in Monaco or administrative offices for companies headquartered elsewhere in the world.
Hiring a workforce
All companies intending to employ local staff must seek permission and register all employees with the Caisse de Compensation des Services Sociaux (CCSS) and the Caisse Autonome des Retraites (CAR), the Principality’s pension fund.
At current rates, employers pay 16.6% of gross salary of employees to social security (CCSS) and 7.23% to pension funds (CAR).
Employers also must secure work accident insurance with a private insurance company.
Non-French residents of Monaco pay no personal income, capital gains, housing or real estate tax.Companies generating at least 25% of turnover outside the Principality are taxed on revenues at a rate of 33.33% (administrative salaries are deducted from gross profit before taxes).Administrative offices are taxed at 2.66% of running costs.Sales in Monaco are taxed at 20.60% (Value Added Tax).Profits are tax exempt for the first two operating years of a company and partially exempt for the next three years.Companies engaged in technical and scientific research receive an additional tax credit.
In application of French-Monégasque agreements, customs regulations in the Principality of Monaco are the same as in France. The two states compose a Customs Union and the total freedom of capitals between them was established on January 1, 1990. The Principality is therefore part of the European Union customs zone, though it does not belong to the European Union.
Reasons for confidence:
- Political risks are eliminated because of the geographical position and institutional stability of Monaco.
- Reliability and discretion are the hallmarks of Monaco’s banking system. Confidential nature of transactions is guaranteed while taking part in international agreements against the laundering of money generated by criminal activities.
- Monaco’s banking activity follows strict European rules under the control of the Banque de France.
The attractiveness of Monaco as a financial center:
- The Principality hosts more than 40 establishments divided into four categories:
- Thirteen banks under Monégasque law;
- Three foreign banks with no establishment in France;
- Fourteen subsidiaries of French banks;
- Nine subsidiaries of French or other foreign banks under foreign control.
- The banking sector is the third largest employer of the Principality with nearly 1,500 people.
- Skilled banking experts offering services that range from asset management, trading in currencies and fixed income, to international trade credit operation.
- An ever expanding international vocation.
Monaco’s next challenge is to impose itself as an international financial center. Thus it is moving to new areas such as securizations, debt recognition for developing countries and contribution to loans for large-scale international organizations.