MONACO Law and Practice Contributed by: Donald Manasse, Donald Manasse Law Offices
While there is increased pressure generally on “tax havens”, Monaco legitimately does not consider itself a tax haven. Monaco businesses that gain more than 25% of their turnover from sources outside of Monaco are subject to a business profits tax of 25%, applied in the same manner as France taxes company profits. The banks of Monaco are subject to the regulation of the French ACPR ( Autorité de contrôle prudential et de resolution ). On top of having no national debt, Monaco regularly benefits from budgetary surpluses. Monaco will have to align itself with any French value- added tax or company profits tax adjustments in the future, but there is no expectation that there will be pressure to enact an income tax or to change the gift and estate tax rates. 1.7 Transparency and Increased Global Reporting Monaco has adhered to the Common Reporting Standard, and its banks comply strictly with the US Foreign Account Tax Compliance Act requirements. In fact, there are only a limited number of banks that will accept US citizens as clients. 2. Succession 2.1 Cultural Considerations in Succession Planning Monaco hosts some 145 different nationalities among its 39,000 residents, 10,000 of which are Monégasque citizens. A broad range of cultural factors play a role in succession planning, including: • the distinctions between civil and common law; • familiarity with trusts and fiduciary structures; and The Code of Private International Law (CDIP) adopted by Monaco in 2017 has provided more certainty and different tools with which to plan for wealth transfers to future generations. The CDIP codified the possibil - ity of adopting the national law of the testator (profes - sio juris) to govern their worldwide estate, and at the same time created an exception to forced heirship rules when the law of domicile is applied to a Mona - co-domiciled decedent whose national law does not • structuring for succession. 2.2 International Planning
recognise forced heirship, or imposes it in a different manner than Monaco. Currently, however, if a national law is chosen, the estate must first be probated in the country whose law was selected. A law recently pre - sented to Monaco’s national parliament may change this, but it has not yet been enacted. Monaco-based families create single-family offices to concentrate and professionalise the management of family assets and facilitate the transfer to the next generation, which will have had an opportunity to be trained in the methods and values instilled in the fam- ily office, and to know the professionals hired to run and advise them. Both the CDIP and EU Reg 650/2012 provide that a single law will apply to a succession, even where there are assets in multiple jurisdictions (with certain exceptions). In principle, this serves to streamline the succession plans, while the tax effect will always have to be examined on a state-by-state basis. 2.3 Forced Heirship Laws Under Monaco’s forced heirship laws, a parent may not disinherit a child, other than for indignity (which has to be very grave indeed). Where Monaco law applies (as is the case if a dying person is domiciled in Monaco and has a residence permit that creates a rebuttable presumption of domicile), the forced heir - ship is as follows: • 50% must go to the child, is there is one child; • two thirds must be shared if there are two children; and • 75% must go to three or more children. The testator is free to dispose of the remainder. A spouse is not a reserved heir. If there are no children, parents are reserved heirs in direct line, of 25% each. The CDIP provides that reserved heirship does not apply where the national law of the decedent does not require it (for example, with English decedents). It also provides that forced heirship created by the nationality of the decedent will apply even if it would not do so in Monaco (for example, with Italian surviving spouses and the legittima ).
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