We recall that, to date, the concept of Trust remains an unknown institution in French civil law, as recalled by the administrative doctrine: BOFIP (official fiscal journal), in section 1 (BOI-DJC-TRUST-20190502). The concept of Trust was however clearly defined in the Hague Convention of 1 July 1985.
Certain countries (apart from Common Law countries, needless to say) have decided to take an interest in this concept, and to give it some recognition in their domestic law.
This is the case with the Principality of Monaco, which was already familiar with this institution as early as 1935 (see below), and has already acknowledged this convention. Sovereign Ordinance No. 1,755, dated 1 August 2008, thus gave legal enforceability to the Hague Convention of 1 July 1985, relating to the law applicable to Trusts and their recognition.
As mentioned above, the Principality of Monaco was already receptive to this concept of Trust, for which Law No. 207, dated 12 July 1935 and relating to Trusts was passed. This law was modified by Law No. 214, dated 27 February 1936.
Article 1 of this legislation allows the constitution of a Trust Intervivos (Trust set up during the Settlor’s lifetime), or a Testamentary Trust (which, in contrast to a Trust Intervivos, is not set up during the Settlor’s lifetime), to enable people to plan the future of their estate, during their lifetime or after their death.
One of the main benefits of setting up a Trust in Monaco is that it enables you to anticipate your future succession, in the same way, for example, as creating a Monegasque civil company (SCI) to acquire a property in France if you are resident in Monaco. On this point, we refer you to our recently posted article on incorporating a civil company in Monaco.
The advantage with Monaco is that this State allows the creation of a Trust in Monaco (subject to compliance with the formalities set out during its creation, and on this point we refer you to Article 2 et seq. of Law No. 214, dated 27 February 1936), and also and above all allows the transfer of a foreign Trust to Monaco in application of Article 4 of the aforementioned law.
Therefore, if in the past you have set up a Trust in an Anglo-Saxon country (for example, in Jersey), and wish to transfer it to Monaco, this will be allowed, and you will only have to comply with the formalities provided for by Law No. 214. For your information, the formalities to comply with are exactly the same as those provided for the creation of a Trust in Monaco.
If you wish to set up a Trust in Monaco, and you already have a Trust in Jersey, the Trust set up in Monaco can replace the Trust previously set up in Jersey, and this will therefore involve a transfer rather than the creation of a new Trust.
What fees do you have to pay in Monaco when creating or transferring a Trust there? You will have to pay a registration fee. The amount of this registration fee is proportional, and depends on the number of beneficiaries in the Trust.
|
Applicable rate No. of beneficiaries |
For assets placed in the Trust other than Monegasque securities | For assets placed in the Trust composed entirely of Monegasque securities |
| Number of beneficiaries: 1 | 1.30% | 0.05% |
| Number of beneficiaries: 2 | 1.50% | 0.25% |
| More than 2 beneficiaries | 1.70% | 0.45% |
An operating fee for the Trust will also be due, as recalled in Article 6 of Law No. 214, modified by Law No. 1216, dated 7 July 1999.
Creating a Trust in Monaco or transferring a Trust under foreign law to Monaco can be particularly advantageous, especially if you have Monegasque securities placed in the Trust, as the registration fees are relatively low, as indicated (see above).
If you have a Trust in an Anglo-Saxon country, and for whatever reason wish to transfer it to a French-speaking State with a global reach, you may wish to consider Monaco.
This type of operation must however be evaluated beforehand so that you can benefit from the best advice in order to take full advantage: customised estate planning guaranteeing a certain flexibility, but above all allowing the protection of your property, tax advantages, etc. (to be defined according to the individual’s personal situation).
Contact Maître Benjamin A. Kergueno, Attorney at Law today if you are dealing with issues related to real estate law in France and on the French Riviera.
Maître Benjamin A. Kergueno, LL.M will provide you with a full set of informations and with the adequate counsels for sorting it out.
For more information or to schedule an appointment with an experienced lawyer regarding real estate law in France, please contact us.
