A Monaco Limited Liability Company (SARL) offers foreigners limited liability protection. Foreigners can own all of the shares in a SARL.
The complete name of this type of company is “Societe a Responsabilite Limitee” (SARL). Basically, it can be translated into a “Society of Limited Responsibility”. SARL’s are established in order to engage in commercial activities. This means that holding companies and other passive business engagements are not permitted.
Background
Monaco is a sovereign city-state located in Western Europe on the French Riviera. It is officially called the “Principality of Monaco”. It is bordered by France on three sides with the other border on the Mediterranean Sea.
Its political system can be described as a “unitary parliamentary constitutional monarchy” with Prince Albert II its official monarch. It gained independence from the French
Empire in 1814. In 1861, its state sovereignty was officially recognized by the Franco-Monegasque Treaty. It enacted a constitution in 1911 and has a one house legislature. In 1993, it became a full voting member of the United Nations.
Monaco is famous for being a playground for the wealthy who enjoy the casinos, restaurants, and bars. The yacht harbor is filled with large expensive yachts. Crime is virtually nonexistent.
While the official language is French, English is very popular and spoken and understood by residents.
Since 2009, Monaco has been on the “white list” by the international watchdog Organization for Economic Cooperation and Development (OECD).
Benefits
A Monaco Limited Liability Company (SARL) offers these benefits:
• Foreign Shareholders: Foreigners can own all of the shares in a SARL.
• Limited Liability: Shareholders liabilities limited to their contributions to the share capital.
• Two Year Tax Exemption: The first two years are completely tax exempt. However, U.S. taxpayers and all other subject to world income taxation must report all income to their governments.
• Two Shareholders/Directors: Two shareholders required where both can become the required two directors.
• Low Minimum Share Capital: The minimum required share capital is 15,000 Euro.
Monaco Limited Liability Company (SARL) Name
Every SARL must avoid selecting a company name exactly alike or too similar to any other company or legal entity’s name in Monaco.
The end of every SARL’s company name must end either with the words “Societe a Responsabilite Limitee” or its suffix of “SARL”.
Limited Liability
A shareholder’s liability is limited to the amount of his or her investment in the SARL.
Registration
Register of Commerce and Industry handles all applications for establishing companies. The government of Monaco requires that the following documents be filed along with an application to become a SARL:
• Applicant’s birth certificate;
• Applicant’s police record prepared within the past three months;
• Copy of applicant’s national identity card (passport, driver’s license, or national ID card);
• Curriculum Vitae (CV) of the applicant;
• Two copies of the Articles of Association;
• Three copies of a special form containing personal information of each shareholder;
• Summary of the types of business activities and an estimated first three year turnover;
• Formal application detailing the proposed business activities in Monaco; and
• Copy of office lease agreement.
Corporate shareholders must provide the following documents:
• Certificate of Incorporation issued by the commercial registry of the country the corporation was formed; and
• Board of Directors resolution subscribing at least the required minimum capital for the SARL.
Upon approval, the Register of Commerce and Industry office issues a Certificate of Incorporation with a unique identification number so the SARL can begin conducting business.
Shareholders
A minimum of two shareholders is required in order to form a SARL. Shareholders are not restricted from residing in other countries or being citizens of any country.
Shareholders can be natural persons or corporate bodies.
Shares are not freely transferable. In order to transfer shares, all of the shareholders must approve.
Bearer shares are prohibited.
Directors
A minimum of two directors are required for a SARL. Directors can reside anywhere and be citizens of any country. Directors may be individuals or legal entities.
Officers
A company secretary is not required. The SARL does not have to appoint company officers.
Registered Office and Agent
SARL’s need to establish a registered office address and appoint a local registered agent whose office can become the registered office.
Minimum Share Capital
The required authorized minimum share capital is 15,000 Euro. The share capital must be divided into equal full subscribed shares amongst the shareholders.
Taxes
Companies earning over 75% of their sales within Monaco are exempt from paying corporate taxes. New companies receive a two year “holiday” (exemption) from paying corporate taxes. After the first two years, the rates gradually rise starting with 8.5% in the 3rd year rising to 16.5% in the 4th year and settling in at 25% for the 5th year and beyond.
While Monaco is not a member of the European Union (EU), it is part of the EU Customs Zone where exporting services and products to EU members are exempt from customs duties.
There are no withholding taxes and no foreign currency exchange controls.
Monaco residents do not pay personal income taxes, gift tax, or inheritance taxes.
Note: U.S. taxpayers must report all global income to their IRS. In addition, everyone else paying taxes on worldwide income must declare all income to their tax authorities.
Time for Formation
Expect the entire formation process to take up to one week.
Shelf Companies
Shelf companies are not available to purchase in Monaco.
Conclusion
A Monaco Limited Liability Company (SARL) has these types of benefits: only foreign shareholders, limited liability, first two years tax exemption, low minimum share capital, and the two shareholders can be the two directors.
