Setting up a civil company in Monaco implies that this is created for wealth management purposes, and the purpose of this company must be “civil”, i.e. non-trading. If this is not the case, it will be necessary to consider another type of company such as an SAM, SARL, or SNC.
To set up a civil company in Monaco, you need at least two partners who can be natural or legal persons (entity having legal personality in the second case).
The potential partners must establish the Articles of Association of the company. The Articles of Association of the company act as a contract between the partners wishing to form a partnership.
This contract must have a lawful purpose, and must be established in the interest of the parties (Article 1671 of the Monegasque Civil Code). Therefore if a Monegasque civil company is set up, and a standard partners’ agreement is established, or even if a clause in the Articles of Association (leonine clause type) specifies that only one of the partners can obtain all of the profits of this company, such clause or agreement will be deemed null and void (Article 1693 of the Monegasque Civil Code).
The contract between the partners (hereinafter referred to as the Articles of Association) must be subject to registration formality, within the time limits provided for in Article 2 of Law No. 797 dated 18 February 1966 relating to civil companies. To see the amount of the registration fees due, please consult Law No. 580 dated 29 July 1953 relating to the adjustment of registration and mortgage rights (amended by Law No. 1247 dated 21 December 2001, replacing the amounts in francs by amounts in euros as from 01/01/2002).
to the special directory of civil companies, kept by the Trade and Industry Register (RCI).
As already mentioned in the past (Immobilier en France – Creation d’une SCI): “following a judgment of the Court of Cassation dated 2 October 2015 (decision no. 14-14-256), a very interesting option is to create a Monegasque SCP “Société civile particulière” (non-trading civil company), which is assimilated to our French SCI, in order to acquire a property in France. If a Monegasque tax resident acquires French property through a Monegasque SCP and he or she dies, then the securities of the Monegasque company owning the property in France will fall under Monegasque inheritance law, and not French inheritance law. This can be very advantageous, since the rates applicable under Monegasque inheritance law can range from 0 to 16%.
As a reminder, inheritance or transfer taxes in Monaco apply to properties located in the Principality, and the applicable tax rates are as follows:
| The level of taxation according to the degree of kinship between the deceased and his or her heir | Rate of duty applicable |
| In direct filiation (parent-child and between spouses) | 0% |
| Between brothers and sisters | 8% |
| Between uncles, aunts, nephews and nieces | 10% |
| Between relatives other than brothers, sisters, uncles, aunts, nephews, and nieces | 13% |
| Between persons who are not relatives | 16% |
Setting up a Monegasque civil company to acquire a property in France in the context of wealth management will, however, imply compliance with certain declarative obligations in France. For example, it will be necessary each year to draw up declaration no. 2746 (French property tax), disclosing the information expressly required as set out in Article 990 E of the CGI (General Tax Code), in order to avoid being subject to the 3% tax relating to the market value of the buildings held directly or indirectly through the legal entity.
If your Monegasque civil company is not subject to Monegasque income tax, not applicable in Monaco, but it owns one or more properties located in France, and is not subject to income tax there, it must file annual declaration no. 2072 in France concerning the income received (bare rentals, for example, taxed in the category of property income), or, if no income is received, a blank declaration may be submitted.
Obviously, if your Monegasque property company owns a property in France whose market value is greater than 1.3 million euros, property wealth tax may be due in France, even if the physical person partners of the Monegasque civil company are non-French tax residents. For more details on property wealth tax in France (its scope, its base, etc., please refer to our previous articles: The wealth tax 2018 & New details on French property tax IFI).
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.
