Monaco is a tiny independent city-state on France’s Mediterranean
coastline known for its upscale casinos, yacht-lined harbor and
prestigious Grand Prix motor race, which runs through Monaco’s streets
once a year. Monte-Carlo, its major district, is home to an elegant
belle-époque casino complex and ornate Salle Garnier opera house. It
also has many luxe hotels, boutiques, nightclubs and restaurants.
The big draw is tax. The principality scrapped income taxes back in
1869, and other tax rates for companies and individuals are
exceptionally low. The prospect of keeping hold of most of their wealth
has attracted people from over 100 nations.
Monaco imposes no personal income tax, making it extremely attractive to wealthy individuals from European countries whose income is mainly from activities outside Monaco. Exceptions apply to French citizens, who must still pay French income tax.
Monaco was added to the OECD’s list of tax haven territories in 2004 due to its lack of co-operation regarding financial information disclosure.
Monaco's name comes from the nearby 6th-century BC Greek colony. Referred to by the Ligurians as Monoikos, , "single house", which bears the sense of a people either settled in a "single habitation" or of "living apart" from others.
According to an ancient myth, Hercules passed through the Monaco area and turned away the previous gods. As a result, a temple was constructed there, the temple of Hercules Monoikos. Because the only temple of this area was the "House" of Hercules, the city was called Monoikos.
It ended up in the hands of the Holy Roman Empire, which gave it to the Genoese. An ousted branch of a Genoese family, the Grimaldi, contested it for a hundred years before actually gaining control.
Though the Republic of Genoa would last until the 19th century, they allowed the Grimaldi family to keep Monaco, and, likewise, both France and Spain left it alone for hundreds of years.
France did not annex it until the French Revolution, but after the defeat of Napoleon it was put under the care of the Kingdom of Sardinia.
In the 19th century, when Sardinia became a part of Italy, the region came under French influence again but France allowed it to remain independent. Like France, Monaco was over-run by the Axis powers during the Second World War and for a short time was administered by Italy, then the Third Reich, before finally being liberated.
Although the occupation lasted for just a short time, it meant the deportation of the Jewish population and execution of several resistance members from Monaco.
Since then Monaco has been independent. It has taken some steps towards integration with the European Union.
A 1962 amendment to the constitution abolished capital punishment, provided for women's suffrage, and established a Supreme Court of Monaco to guarantee fundamental liberties.
In 1963, a crisis developed when Charles de Gaulle blockaded Monaco, angered by its status as a tax haven for wealthy French. The 2014 film Grace of Monaco is loosely based on this crisis.
In 1993, the Principality of Monaco became a member of the United Nations, with full voting rights.
In 2002, a new treaty between France and Monaco specified that, should there be no heirs to carry on the Grimaldi dynasty, the principality would still remain an independent nation rather than revert to France. Monaco's military defense, however, is still the responsibility of France.
Monaco is the second smallest country by area in the world; only Vatican City is smaller. Monaco is also the world's second smallest monarchy,and is the most densely populated country in the world. The state consists of only one municipality (commune). There is no geographical distinction between the State and City of Monaco, although responsibilities of the government (state-level) and of the municipality (city-level) are different. According to the constitution of 1911, the principality was subdivided into three municipalities:
The wider defence of the nation is provided by France. Monaco has no navy or air force, but on both a per-capita and per-area basis, Monaco has one of the largest police forces (515 police officers for about 36,000 people) and police presences in the world. Its police includes a special unit which operates patrol and surveillance boats.
Since 1929, the Monaco Grand Prix has been held annually in the streets of Monaco. It is widely considered to be one of the most prestigious automobile races in the world. The erection of the Circuit de Monaco takes six weeks to complete and the removal after the race takes another three weeks.
The circuit is incredibly narrow and tight and its tunnel, tight corners and many elevation changes make it perhaps the most demanding Formula One track.Driver Nelson Piquet compared driving the circuit to "riding a bicycle around your living room".
Monaco has an opera house, a symphony orchestra and a classical ballet company.
In addition, unlike those jurisdictions justly labelled offshore tax havens, Monaco does not offer so called "offshore financial services", nor does Monegasque law permit or facilitate the registration of offshore corporations looking to operate in such a way as to avoid paying tax in other jurisdictions.
Lastly, and perhaps most importantly, Monaco recently proved to the world that it was ready to increase its co-operation in the fight against tax fraud in accordance with international criteria.
This led to our country being removed from OECD's "grey list" of unco-operative jurisdictions. Not content with that, Monaco went on to strive for a place on the "white list", alongside countries like the UK and US, before the end of 2009. This feat was managed ahead of time in October, following the signing of information exchange treaties with 12 fully compliant jurisdictions.
The mini country on France's sun-kissed
Mediterranean coast is home to about 38,000 people, and one in three are
millionaires, according to WealthInsight. It has the highest per capita GDP in the world.
So how did this happen?
Monaco imposes no personal income tax, making it extremely attractive to wealthy individuals from European countries whose income is mainly from activities outside Monaco. Exceptions apply to French citizens, who must still pay French income tax.
Monaco was added to the OECD’s list of tax haven territories in 2004 due to its lack of co-operation regarding financial information disclosure.
Monaco's name comes from the nearby 6th-century BC Greek colony. Referred to by the Ligurians as Monoikos, , "single house", which bears the sense of a people either settled in a "single habitation" or of "living apart" from others.
According to an ancient myth, Hercules passed through the Monaco area and turned away the previous gods. As a result, a temple was constructed there, the temple of Hercules Monoikos. Because the only temple of this area was the "House" of Hercules, the city was called Monoikos.
It ended up in the hands of the Holy Roman Empire, which gave it to the Genoese. An ousted branch of a Genoese family, the Grimaldi, contested it for a hundred years before actually gaining control.
Though the Republic of Genoa would last until the 19th century, they allowed the Grimaldi family to keep Monaco, and, likewise, both France and Spain left it alone for hundreds of years.
France did not annex it until the French Revolution, but after the defeat of Napoleon it was put under the care of the Kingdom of Sardinia.
In the 19th century, when Sardinia became a part of Italy, the region came under French influence again but France allowed it to remain independent. Like France, Monaco was over-run by the Axis powers during the Second World War and for a short time was administered by Italy, then the Third Reich, before finally being liberated.
Although the occupation lasted for just a short time, it meant the deportation of the Jewish population and execution of several resistance members from Monaco.
Since then Monaco has been independent. It has taken some steps towards integration with the European Union.
A 1962 amendment to the constitution abolished capital punishment, provided for women's suffrage, and established a Supreme Court of Monaco to guarantee fundamental liberties.
In 1963, a crisis developed when Charles de Gaulle blockaded Monaco, angered by its status as a tax haven for wealthy French. The 2014 film Grace of Monaco is loosely based on this crisis.
In 1993, the Principality of Monaco became a member of the United Nations, with full voting rights.
In 2002, a new treaty between France and Monaco specified that, should there be no heirs to carry on the Grimaldi dynasty, the principality would still remain an independent nation rather than revert to France. Monaco's military defense, however, is still the responsibility of France.
Monaco is the second smallest country by area in the world; only Vatican City is smaller. Monaco is also the world's second smallest monarchy,and is the most densely populated country in the world. The state consists of only one municipality (commune). There is no geographical distinction between the State and City of Monaco, although responsibilities of the government (state-level) and of the municipality (city-level) are different. According to the constitution of 1911, the principality was subdivided into three municipalities:
- Monaco-Ville, the old city on a rocky promontory extending into the Mediterranean, known as the Rock of Monaco, or simply "The Rock";
- Monte Carlo, the principal residential and resort area with the Monte Carlo Casino in the east and northeast;
- La Condamine, the southwestern section including the port area, Port Hercules.
- Fontvieille was added as a fourth ward, a newly constructed area claimed from the sea in the 1970s;
- Moneghetti became the fifth ward, created from part of La Condamine;
- Larvotto became the sixth ward, created from part of Monte Carlo;
- La Rousse/Saint Roman (including Le Ténao) became the seventh ward, also created from part of Monte Carlo.
- Saint Michel, created from part of Monte Carlo;
- La Colle, created from part of La Condamine;
- Les Révoires, also created from part of La Condamine.
The wider defence of the nation is provided by France. Monaco has no navy or air force, but on both a per-capita and per-area basis, Monaco has one of the largest police forces (515 police officers for about 36,000 people) and police presences in the world. Its police includes a special unit which operates patrol and surveillance boats.
Since 1929, the Monaco Grand Prix has been held annually in the streets of Monaco. It is widely considered to be one of the most prestigious automobile races in the world. The erection of the Circuit de Monaco takes six weeks to complete and the removal after the race takes another three weeks.
The circuit is incredibly narrow and tight and its tunnel, tight corners and many elevation changes make it perhaps the most demanding Formula One track.Driver Nelson Piquet compared driving the circuit to "riding a bicycle around your living room".
Monaco has an opera house, a symphony orchestra and a classical ballet company.
This absence of income tax has fostered the
common belief that Monaco is an offshore tax haven, which is a great
misconception. Such misconception must be due, to a large extent, to a
lack of clear communication on our part. So, as an Ambassador for my
country, I feel it my duty to attempt to demystify the workings of the
Monegasque economy.
Firstly, the
Principality is not a "tax-free" territory. All residents pay tax in the
form of 19.6pc VAT on all goods and services. Indeed, as the Monegasque
VAT system is shared with France, it could even be said that Monaco's
residents pay some French tax. Furthermore, corporations face a 33pc tax
on profits – unless they can demonstrate that three-quarters of company
turnover is generated within the confines of the principality.In addition, unlike those jurisdictions justly labelled offshore tax havens, Monaco does not offer so called "offshore financial services", nor does Monegasque law permit or facilitate the registration of offshore corporations looking to operate in such a way as to avoid paying tax in other jurisdictions.
Lastly, and perhaps most importantly, Monaco recently proved to the world that it was ready to increase its co-operation in the fight against tax fraud in accordance with international criteria.
This led to our country being removed from OECD's "grey list" of unco-operative jurisdictions. Not content with that, Monaco went on to strive for a place on the "white list", alongside countries like the UK and US, before the end of 2009. This feat was managed ahead of time in October, following the signing of information exchange treaties with 12 fully compliant jurisdictions.
