Accountant for nomads | Monaco

Monaco is the famous principality in French Riviera and is well known for its rich and famous residents. I agree with many people that the place itself is beautiful, clean and safe, which partly explains why so many people would like to move in there. However, there is one major financial reason why it is as appealing as it is: the lack of income tax.

There are some features about Monaco which are not so well known. The official population is around 38 000 inhabitants including original Monegasques and residents with a foreign background. The unemployment rate is practically zero and as a matter of fact Monaco employs over 50 000 people on a daily basis! Thus, companies located in Monaco employ a huge amount of people living in surrounding areas in France or Italy. These are “normal”, hard-working people who pay their taxes.

It is true though that there is no personal income taxation in Monaco. It concerns people who live in Monaco and have a status of residence which is the key for all the financial benefits in the town. It’s not exceptionally expensive to hang out and live in Monaco. If you avoid certain exclusive restaurants and bars you don’t really spend more money than in any European capital. Food and daily consumables are available in markets and the price level is reasonable. Wine, of course, is much cheaper than for example in the Nordic countries. What makes the difference is housing. If you ever visit Monaco I suggest you have a look at the real estate ads. The acquisition prices or rents of quite moderate apartments are phenomenal. You can find a studio with less than a million euro but that’s about it. So this is the real downside of the zero taxation. The moral question might be that are you willing to pay to your local government for maintaining the society or real estate investors in Monaco? Fortunately that is not my question to answer.

There are a lot of stories how difficult it is to get the residence permit and how super rich you need to be.  That is not exactly how it is. There are two main requirements for a residence permit: you need to have a place to live in Monaco and you must be able to prove you can afford to live in the principality. In order to do that, you need to work in Monaco or if you don’t work you must have that huge bank balance. Since it is very difficult to find a job in Monaco you can always work in your own local company as entrepreneurs do everywhere.

It is not too difficult to start a SARL company and run your business through that. You might be used to a little lower share capital requirements, but 15,000 euro in Monaco is not unbearable. There is local help available for registration, but it is not too difficult to do it yourself if you can cope with written French. All the modern business services like virtual office, co-working spaces etc. are at your reach. Please note that the income of a company is not tax free. As a matter of fact, the tax rate is quite high 30%. However, if you work for your company and are a resident, it might be a good idea to pay you enough salary (tax rate 0%) and avoid showing too much profit in the company.

In the end I need to emphasize one big downside of being within Monaco’s zero taxation. You need to cut the ties, at least to a certain extent, with your original home country. You probably don’t want to end up in the situation where you have to pay income tax to your home country AND high rents in Monaco. In practise this usually means that your near family needs to be able to live with you in Monaco, you are not spending too much time in your original home and you are not a part of the social security in your home country anymore.

Please acknowledge two things regarding this post update: First, the author is not, and will not be, a Monaco resident. Secondly, this is a blog update of personal observations, not a guideline or any piece of consultation advice. That would need to be much more detailed. There are also more practical tax efficient options than Monaco to register a company for a nomad. For example, utilising the e-Residency in Estonia.

Author Mikko Ilves is an entrepreneur and the Chairman of the Board of Digibalance Group. More blog updates: