The Spring Budget 2024 has introduced significant revisions to the resident non-dom tax regime, marking a pivotal shift in the UK's approach towards international residents and those considering the UK as their fiscal residence. These changes, subtly woven into the financial fabric of the country, signal a recalibration of the incentives that once made the UK an attractive destination for global wealth and talent. At the heart of these reforms is a nuanced message: the landscape for non-dom residents in the UK is transforming. This evolution may impact the desirability of the UK for individuals seeking tax-efficient environments and necessitates a thorough analysis for those already under this regime as well as for advisors assisting such clients. The broader implication is clear - the UK is adjusting its sails in the global fiscal waters, potentially affecting its allure as a haven for international individuals. This development beckons a reevaluation of fiscal strategies and invites stakeholders to consider alternative locales that align with their financial and lifestyle aspirations. In light of these changes, the conversation around fiscal planning and strategic relocation becomes ever more crucial. Monaco, with its favorable tax regime and lifestyle benefits, emerges as a compelling alternative worth exploring. GORDON S. BLAIR LAW OFFICES is at the forefront of guiding individuals through these complex transitions, offering expert insights into how the new UK tax changes compare and contrast with the opportunities available in Monaco. The current juncture is a call to action for those impacted by the non-dom regime changes to reassess their positions and strategies. It's an opportunity to delve into a dialogue on the implications of these reforms and to explore new avenues that secure fiscal efficiency and lifestyle preferences. GORDON S. BLAIR LAW OFFICES: Navigating Towards Favorable Shores. The time to engage in this critical conversation is now. With expertise in navigating the complexities of international tax planning, GORDON S. BLAIR LAW OFFICES is poised to provide tailored advice that anticipates and responds to the evolving landscape. Reach out to explore how these developments affect your situation and to chart a forward path that is both informed and strategic.

We are honoured to be recognized by The Legal 500 (Legalease) for our practices in Private Client – Tax, Estate Planning, Family Structures, and in M&A, Business Law. We thank our clients for their trust. Xavier de Sarrau David de Pariente Alexis Madier Edouard Mousny Corinne RICCIARDELLA

Par Edouard Mousny The Principality of Monaco strengthens its legal instruments to fight money laundering. On 30th November 2022, in the context of the fifth evaluation cycle of the Principality of Monaco carried out by the MONEYVAL Committee, the National Council adopted : - Law No. 1.535 on the seizure and confiscation of instrumentalities and proceeds of crime, which has two objectives: on the one hand, within the framework of the Monetary Agreement concluded by the Principality of Monaco with the European Union on 29th November 2011, it transposes into domestic law the provisions of Directive 2014/42/EU of the European Parliament and of the Council of 3rd April 2014 on the freezing and confiscation of instrumentalities and the proceeds of crime in the European Union; and on the other hand, it responds to the observations of the MONEYVAL Committee and the FATF recommendations, concerning the anti-money laundering and countering the financing of terrorism system implemented in Monaco. - Law No. 1.536 amending Title XI of Book IV of the Code of Criminal Procedure relating to international judicial assistance, which is intended to : to formalize the procedure for requesting international judicial assistance; to clarify the treatment of foreign requests issued for political purposes or that do not comply with the procedural principles laid down by the European Convention for the Protection of Human Rights and Fundamental Freedoms of 4 November 1950; and to regulate seizure measures taken pursuant to a request for international legal assistance. - Law No. 1.537 supplementing Law No. 1.362 of 3rd August 2009 on the fight against money laundering, terrorist financing and corruption, which specifies, on the recommendation of the MONEYVAL Committee, that professionals carrying out a domiciliation activity are subject to the legal provisions on the fight against money laundering, terrorist financing and corruption These new legal provisions, which came into force on 17th December 2022, represent a further step forward in the control of anti-money laundering and reflect the Principality of Monaco's desire to meet the highest international standards. GORDON S. BLAIR has proven expertise in the implementation of compliance monitoring procedures and is available to assist its clients in these matters.

The Principality of Monaco: a little-known attractive tax framework for the deployment of an international business activity Monaco’s attractive tax system is commonly known for the total absence of income tax and wealth tax applicable to individuals residing in Monaco (other than French nationals), as well as the full exemption of gift and inheritance tax between spouses and in direct lines, giving rise to wealth planning opportunities for high-net-worth individuals. Yet, the Principality of Monaco is also a destination of choice for the deployment of an international business activity by multinationals or foreign entrepreneurs. Indeed, the Principality is an international onshore economic and financial centre that benefits from a central location within Europe, offering considerable operating advantages for the deployment of an international business activity on a day-to-day basis. In addition to its ‘qualitative’ benefits, among which its sophisticated eco-system and rather low operating costs compared to London or other European economic hubs, the Principality provides for a stable and favourable business tax framework where corporate income tax applies only to certain business activities meeting a territorial criterion, including a five year progressive corporate income tax exemption for qualifying new businesses. This article provides a high level overview of the main advantages offered by Monaco’s business tax framework. A dynamic economic hub that meets international requirements for tax transparency and exchange of information Although the Principality is neither a member state of the European Union nor the OECD, it offers the advantages of an independent state, while complying with the current international tax environment where transparency and exchange of information have become key. Indeed, Monaco is a fully whitelisted jurisdiction for tax purposes per the Council of the European Union held on the 5 December 2017 where the Principality was withdrawn from any grey lists of non-cooperative states for tax purposes. The Convention on Mutual Administrative Assistance in Tax Matters developed by the Council of Europe and the OECD is fully applicable in Monaco and 35 tax information exchange agreements are currently into force. Furthermore, the Principality is a participating country to the inclusive ‘BEPS’ framework (‘base erosion and profit shifting’) developed by the OECD, thereby committing to comply its tax legislation with OECD anti-abuse recommendations. As a result of the above, Monaco generally does not fall under domestic tax anti-abuse mechanisms (CFC’s provisions, high taxation of transactions with blacklisted jurisdictions, etc) refraining multinationals and entrepreneurs from establishing a business in a tainted jurisdiction. A stable and attractive business tax framework Monaco does not provide for any direct tax on business profits other than corporate income tax (‘Impôt sur les bénéfices’) (‘CIT’) for certain business activities. The scope of Monaco CIT is limited to commercial or industrial business activities which derive more than 25% of revenue outside of Monaco. Conversely, non-commercial business activity, such as strategic, intellectual or R&D consulting activities, are fully exempt from Monaco CIT. In other words, CIT only applies when the two following cumulative criteria are met: A qualitative criteria, pertaining to the nature of the business activity: CIT applies only to profits derived from business activities of a commercial (eg sale of goods) or industrial (eg production of raw materials) nature; and A territorial criteria: CIT applies only if more than 25% of the revenue incurred upon the commercial or industrial activity is generated outside of Monaco. Conversely, if 75% of the revenue is generated in Monaco, no CIT applies (eg retail store activity). By exception to the above criteria, CIT applies to companies whose business activity consists of earning revenue from patents, literary or artistic property rights. When applicable, the rate of CIT is aligned with French CIT, ie its nominal rate is 25%. However, rules governing the computation of the taxable basis are rather flexible, allowing in practice reducing significantly the effective tax rate. In this regard, the cap mechanism applicable to the tax deduction of qualifying director fees is rather generous compared to that applicable in most EU jurisdictions. This gives rise to relocation opportunities to Monaco for individual directors – although it is not compulsory for a Monaco joint stock company (‘Société Anonyme Monegasque’) to have Monaco-based directors: director fees are not taxable in the hands of the beneficiary directors in Monaco while allowing reducing the taxable basis of the Monaco paying entity – we also note that director fees do not bear any social charges and the possibility for individual directors of obtaining advantageous Monaco social security insurance under competitive conditions. A number of corporate tax incentive regimes apply Qualifying new businesses set up in Monaco can benefit from a progressive five-year tax exemption: a full CIT exemption applies during the first two fiscal years, then CIT is progressively applied, ie CIT is based on 25% of the tax profits of the third fiscal year, increased to 50% the fourth year and 75% the fifth year. The incentive ‘headquarter’ tax regime makes the Principality of Monaco a preferred jurisdiction to locate foreign companies’ administrative offices. Indeed, qualifying headquarters, which, for the sole benefit of their group, carry out management, coordination or control tasks benefit from a reduced effective CIT rate of circa 2%, calculated on a flat-rate basis of their operating costs. R&D tax incentives also apply: qualifying R&D businesses based in Monaco are supported through the benefit of R&D tax credits that can net off CIT due by the company, as the case may be. Absence of ‘exit costs’ There is no ‘tax barrier’ to cross-border financial flows: no withholding tax applies in Monaco to dividend, interest or royalty paid by a Monaco-based entity to non-Monaco beneficiaries. Besides, shareholders are not taxable on capital gains incurred upon the sale of shares in a Monaco company. At a glance At the level of the Monaco company subject to CIT: CIT tax base may be significantly reduced through the payment of director fees to Monacobased or foreign directors (whether individuals or companies) At the level of the UK parent company: No withholding tax will apply in Monaco on director fees and/or dividends paid by the Monaco company; Dividend should be exempt under the parent-subsidiary tax regime; Capital gains incurred upon the sale of share in the Monaco company will not be taxable in Monaco and should be exempt in the UK under the substantial shareholding exemption (SSE). VAT – Monaco is part of the European Union VAT systemMonaco forms a customs union with France and is thus part of the European VAT system (Directive 2006/112/CE dated 28 November 2006 on the common system of value added tax ) – the Monaco standard VAT rate is 20%. As a result of the above, in addition to multinationals expanding in Monaco, we note an increasing number of foreign entrepreneurs relocating to Monaco, thus benefiting from a full income tax exemption, and deploying their business from Monaco, either through consulting services rendered to their foreign-based business – with literally no risk of attracting any tax basis in Monaco based on a deem effective management of the foreign business from Monaco, or through the setting up of a new operating company in Monaco. /

We are pleased to announce that Corinne Ricciardella and Alexis Madier, partners at Gordon S. Blair Law Offices, are once again the exclusive authors to " The Legal 500 Country Comparative Guides" in tax in Monaco. Contributor : Gordon S. Blair Law Offices Corinne Ricciardella, Partner | corinne.ricciardella@gordonblair.com Alexis Madier, Partner | alexis.madier@gordonblair.com 1. How often is tax law amended and what are the processes for such amendments? Monegasque tax law is very stable and is amended from time to time – Monaco legal provisions ruling Monaco corporate income tax (i.e. “impôt sur les bénéfices”) (“CIT”) are amended from time to time to be in line with French corporate income tax rules and BEPs provisions. The Principality of Monaco (hereafter “Monaco”) is a hereditary constitutional monarchy with a Prince (executive body), a single chamber legislature (National Council) and an independent judicial system. Legislation must be either proposed by the Government (draft law – “projet de loi”) or the National Council (proposed law – “proposition de loi”). The laws initiated by the Government must be approved by the Prince before National Council’s vote. The laws initiated by a member of the National Council must be passed by the National Council and then approved by the Minister of State (the Minister of State shall render its reasoned decision within six months). Once approved, the text is enacted by the Prince and becomes a law on the day following its publication in the Official Gazette (“Journal de Monaco”). The Supreme Court (“Tribunal Suprême”) has the power to declare that any provision of law is unconstitutional and thus cancel it. Judicial case law decisions are also made by the courts (jurisdictions of first instance, Court of Appeal, Court of Revision) to determine or clarify tax law.   2. What are the principal procedural obligations of a taxpayer, that is, the maintenance of records over what period and how regularly must it file a return or accounts? Individuals are neither subject to personal income tax nor wealth tax and are therefore not subject to any annual tax compliance obligation in this respect. Taxpayers subject to CIT (i.e. entities or individuals carrying on a business activity subject to CIT) must file a CIT return with the Monaco tax authorities within 3 months following the end of the financial year, or before April 1st, for financial year aligned with the civil year (article 23-2 of the Ordinance n°3.152). In addition, taxpayers are required to maintain adequate records for at least: 5 years for entities not subject to CIT in Monaco; 10 years for entities subject to CIT in Monaco. 3. Who are the key regulatory authorities? How easy is it to deal with them and how long does it take to resolve standard issues? The Monaco tax authorities (“MTA”) are the key regulatory authorities responsible for administering the tax system. It is rather easy to liaise with the MTA and set up an inperson meeting. The MTA can issue private tax ruling upon request within a reasonable time (approx. one month), depending on the circumstances of the case. 4. Are tax disputes capable of adjudication by a court, tribunal or body independent of the tax authority, and how long should a taxpayer expect such proceedings to take? In most of circumstances, tax matters are solved amicably with the MTA, unless there is a true and actual question of law that requires the intervention of the judge. In case of a contentious tax claim, MTA’s definitive decisions (regarding a tax reassessment or a tax claim) can be appealed before local courts (First instance Judge, Court of Appeal, Court of Revision), which overall can take between 3-4 years up to the Court of Revision. 5. Are there set dates for payment of tax, provisionally or in arrears, and what happens with amounts of tax in dispute with the regulatory authority? The payment of CIT is made as follows: payment of 4 CIT installments throughout the year (February, May, August and November). Each installment amounts to 20% of CIT paid in respect of the previous financial year ; the payment of the outstanding CIT balance is made spontaneously upon the filing of the CIT return. If the CIT installments paid throughout the year exceed the CIT due, excess CIT paid will be offset against CIT due in respect of the 2 following fiscal years. 6. Is taxpayer data recognised as highly confidential and adequately safeguarded against disclosure to third parties, including other parts of the Government? Is it a signatory (or does it propose to become a signatory) to the Common Reporting Standard? And/or does it maintain (or intend to maintain) a public Register of beneficial ownership? Monaco tax legislation provides for strict confidentiality and non-disclosure rules regarding taxpayer information. However, in some cases other Monegasque authorities can receive taxpayer information. Monaco has entered into a number of double tax treaties and exchange of tax information agreements under which the Principality will exchange tax information on a government-to-government basis in certain situations. Monaco is a signatory of the Multilateral Competent Authority Agreement and the Common Reporting Standard (‘CRS MCAA’) and fully implemented the OECD’s standards for automatic exchange of information. As regards the Common Reporting Standard Monaco applies the Common Reporting Standard (CRS) developed by the OECD and signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAAC), which is the legal basis for Automatic Exchange of Information on 13 October 2014. Monaco also signed on 15 December 2015 the Multilateral Competent Authority Agreement for the Automatic Exchange of Financial Account Information (MCAA) in order to demonstrate his willingness to comply with the leading international standards in this area. At the European level, Monaco signed the Amending Protocol to the ‘Agreement between the European Community and the Principality of Monaco providing equivalent measures to those of the Council Directive 2003/48/CE’ on 12 July 2016. This Protocol enables automatic exchanges of information between EU member States and Monaco. Monaco has ratified the 3 above-mentioned agreements and convention in December 2016. These agreements were transposed by Sovereign Ordinance on 20 December 2016 and entered into force on 1 January 2017. Therefore, the consequences are the following : For residents of Monaco (except for French nationals) : no information regarding their accounts held in Monaco will be exchanged. Monaco will receive information about any accounts they hold in jurisdictions participating in automatic exchange of information with Monaco; For residents of another jurisdiction with which Monaco has agreed to exchange information : Information about any financial accounts they hold in Monaco will be sent to the tax authorities of their tax residence. As regards the public register of beneficial ownership The following legal persons and entities are required to declare their beneficial owners in the “Register of Beneficial Owners”, which is annexed to the Trade and Industry Register: (i) commercial companies and economic interest groups that are registered in the Trade and Industry Register, (ii) non-trading companies that are registered in the special register held by the Trade and Industry Register service. The register is filed with the Business Development Agency: (i) when applying for registration with the Trade and Industry Register or at the latest within 15 days of delivery of the receipt, (ii) within 30 days of any fact or action requiring the rectification of, or addition to, the information mentioned therein. Under article 46 of Law n°1.503 of 23 December 2020, information contained in the Register of Beneficial Owners are accessible to accredited agents of MTA to f ight against money laundering and the financing of terrorism and corruption. Any other person can access more limited information (name, month and year of birth, country of residence, nationality of the beneficial owner, the nature and extent of the beneficial interests held) upon a request to the Trade and Industry Register Department which informs the relevant legal entity which has two months to request a restriction of access to all or part of this information. The individuals may only consult the Register of Beneficial Owners on site subject to the payment of a fee of 500 euros. 7. What are the tests for residence of the main business structures (including transparent entities)? Monaco has no legal definition of ‘residence’ for CIT purposes. However, an enterprise is generally deemed as a Monegasque resident if its head office, its place of effective management or its main establishment is located in Monaco. 8. Have you found the policing of cross border transactions within an international group to be a target of the tax authorities’ attention and in what ways? As a matter of principle, intercompany transactions involving a Monaco entity must be “arm’s length” and therefore reflect market conditions set in comparable transactions between unrelated entities. Article 9 of the Sovereign Ordinance n°6.713 expressly provides that the MTA may use the country-by-country reporting to check if the transfer pricing policy of an eligible international group is compliant with the transfer pricing rules (see our comments below under Section 9). In addition, as a consequence of the Monaco’s BEPS commitments and in particular as regards Action 13 (see our comments below on Section 11), the MTA have been recently more active in controlling intercompany transactions to ensure that no profit is artificially transferred abroad by companies subject to CIT. 9. Is there a CFC or Thin Cap regime? Is there a transfer pricing regime and is it possible to obtain an advance pricing agreement? As regards Transfer pricing Under Article 14 of the Ordinance n° 3.152, the commercial or financial relations that a Monegasque company has with any nonresident natural or legal entity must be carried out under arm’s length conditions. In the absence of specific elements making the tax reassessment possible, taxable income is determined by comparison with taxable income of similar companies that operate normally. In case of tax reassessment on this topic, the transactions are added back for CIT purposes in the Monegasque company’s accounts for an arm’s length amount. No specific legal provisions rule advance rulings or pricing agreements which remain possible in practice. As part of the implementation of the OECD’s BEPS Action 13, Monaco signed the Multilateral Agreement between Competent Authorities on the exchange of country-bycountry declarations dated 2 November 2017 and adopted two Ordinances n° 6.712 and 6.713 of 14 December 2017 related to the exchange of the Country-by-Country Report (CbCR). The CbCR is produced by the ultimate parent entity(“entité mère ultime”) or a surrogate parent entity designated by the parent entity (“Entité mère de substitution”) of multinational enterprise groups (“groupe d’entreprises multinationales”) with consolidated annual revenue of more than 750 M€ before tax. Consequently, Monaco requires Monegasque “constituent companies” belonging to such multinational enterprise groups to report to the MTA whether they are the ultimate parent entity or the surrogate parent entity, at the latest on the last day of the Group’s reportable f inancial year (Article 4 of Ordinance n° 6.713). Failing such requirement, the Monegasque company is subject to a penalty of 750 € (Article 11 of Ordinance n° 6.713). The CbCR shall be submitted to the MTA each year, within 12 months after the last day of the financial year (Article 6 of Ordinance n° 6.713). The CbCR includes: Aggregate information on revenues, profit before tax or loss before tax, income tax paid, income tax payable, share capital, retained earnings, staff and tangible assets other than cash or cash equivalents, for each of the jurisdictions in which the Group operates; The identity of each entity belonging to the Group, specifying the jurisdiction of residence for tax purposes of the entity and the nature of its activity. A CbCR is drawn up for each country in which the Group has constituent entities. Under Article 12 of Ordinance n° 6.713, in the event of failure to file the CbCR within the timeframe set above, the penalty shall be: 10 000 € if the report is not sent on time; 50 000 € if the declaration is sent within 30 days after the receipt of a formal notice sent via registered letter with acknowledgment of receipt; 100 000 € if the situation has not been regularized after this Inaccuracies and missing information lead to a penalty of 150 € (250 € if the entity fails to regularize within 30 days after the receipt of a formal notice sent via registered letter with acknowledgment of receipt (Article 13 of Ordinance n° 6.713). As regards CFC rules There are no CFC rules in Monaco. As regards Thin cap rules Maximum interest rate Under Article 9.1.3° of Ordinance n° 3.152, the deduction of interest paid by a Monegasque company to its shareholders is allowed up to a maximum interest rate equal to the marginal lending facility rate of the European Central Bank, plus 200 basis points. In addition, interest paid by a Monegasque company to its controlling shareholders (who “in law or in fact” control the company) are not deductible when the aggregate sum of the shareholders’ loans exceed equal to 50% of the borrower’s share capital (Article 9.1.3° of Ordinance n° 3.152). Net financial expenses limitations Limitation to financial expenses allowances applies to loans borrowed from both related and un-related parties (Ordinance n° 7.334 dated 1 February 2019). (a) General Limitations Net interest expenses are deductible from the CIT basis up to the highest of (i) 3 M€ per fiscal year (or, if applicable, for the 12-month period) or (ii) 30% of the taxable result, including net interest expenses, amortization and provisions allowances as well as capital gains and losses (« Tax EBITDA »), and before offset of tax losses carried forward. Excess net interest expenses can be carried forward with no time limitation and are deductible under the same conditions. The tax deduction capacity that has not been used can also be carried forward over the 5 following fiscal years. (b) Thin-capitalization limitations This limitation applies to loans from related entities, when the borrower is deemed thin-capitalized. Monegasque thin capitalization rules apply to all loans granted to the borrowing company by any related party: affiliation links are deemed to exist between two entities (i) if one entity holds directly or through an interposed entity the majority of the share capital of the other or exercises de facto the decision power, or (ii) where both entities are under the control of a third entity (e.g. sister companies). When the average yearly amount of proceeds granted by a related entity exceeds a debt/equity ratio of 1,5:1, the entity is deemed thin-capitalized: net interest expenses accrued on related party loan are deductible up to the highest of (i) 1 M€ per fiscal year (or, if applicable, for the 12-month period) or (ii) 10% of its Tax EBITDA. Excess net interest expenses can be carried forward for 1/3 of their amount (2/3 are lost) and are deductible under the same conditions, with no time limitations. The tax deduction capacity that has not been used is however definitely lost. 10. Is there a general anti-avoidance rule (GAAR) and, if so, in your experience, how would you describe its application by the tax authority? Eg is the enforcement of the GAAR commonly litigated, is it raised by tax authorities in negotiations only etc? There is no GAAR in Monaco. 11. Is there a digital services tax? If so, is there an intention to withdraw or amend it once a multilateral solution is in place? There is no digital services tax in Monaco. 12. Have any of the OECD BEPs recommendations been implemented or are any planned to be implemented and if so, which ones? Monaco undertook to apply the following 4 BEPS Actions: Actions 5 and 6 on the prevention of harmful practice and tax treaty abuses, Action 13 on transfer pricing documentation and Action 14 on dispute resolution. In this context, Monaco implemented the following measures: Signature of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS which entered into force on 1 May 2019; The Sovereign Ordinances n° 6.712 and 6.713 implemented the country- by-country reporting applying to international groups of companies whose turnover on a consolidated basis exceeds 750 M€. To date, no BEPS recommendations regarding the OECD’s recent two pillar solution to address the tax challenges arising from digitalization of the economy have been implemented in Monaco. To our knowledge, no-draft tax legislation has been proposed in this respect. 13. In your view, how has BEPS impacted on the government’s tax policies? Monaco undertook on 17 May 2016 to adopt all the mandatory measures of BEPS and to apply them in a consistently manner. To date, Monaco is also working on the implementation of Action 5 and continues to implement the other 3 mandatory actions. Regarding Action 14 on dispute resolution, OCDE has published on January 24, 2022, a report which reflects the outcome of the stage 2 peer monitoring of the implementation of the Action 14 Minimum Standard by Monaco. According to this report, Monaco meets the Action 14 Minimum Standard. 14. Does the tax system broadly follow the recognised OECD Model? Does it have taxation of; a) business profits, b) employment income and pensions, c) VAT (or other indirect tax), d) savings income and royalties, e) income from land, f) capital gains, g) stamp and/or capital duties. If so, what are the current rates and are they flat or graduated? Monaco is pursuing the policy set out by H.S.H. Prince Albert II on transparency and exchanges of information for tax purposes. Like the countries of G20, Monaco has for several years played an active role in international movement to strengthen standards and increase exchange of information between countries. Monaco’s regulations comply with the highest international standards on tax matters in order to secure its economic development model in an environment of increase of international cooperation. As regards business profits: Monaco CIT (“impôt sur les bénéfices”) is levied at 25 % for financial years starting as from 1 January 2022. As regards capital gains : As a general rule, capital gains realised by enterprises subject to CIT are taxed to CIT as regular income (Article 8,1 of Ordinance 3.152). However, the following incentive schemes may apply: Capital gains realized upon the sale of fixed assets are exempt from CIT if the company undertakes to reinvest, within a three-year period as from the end of the financial year in which the capital gains were realized, a sum equal to the amount of the capital gains increased by the cost price of the assets sold, in certain qualifying fixed assets (e.g. except for lavish ones). The capital gains reinvested are deducted from the cost price of the new asset in order to compute its depreciation and possible future capital gain from its sale. Finally, this provision can apply to the sale of shares provided they constitute fixed assets (i.e. (i) if they offer full ownership of at least 20% of the capital of an unrelated company, or (ii) if the shareholding is below 20% if they have been held for at least two years as of the sale date) (Article 10 of Ordinance n° 3.152) ; Under certain conditions, capital gains realized on goodwill (“fonds de commerce”)(tangible and intangible assets) and recorded at the time of the sole trader’s death(individual) or at the time of the business’ sale or termination, are exempt from CIT provided the business is continued by certain persons including the sole trader’s heirs in direct line or surviving spouse (Article 11,1 of Ordinance No. 3,152). Capital gains deriving from the sale of fixed assets upon the termination of the business may benefit from the following incentive schemes: (i) only 50% of the capital gains are taxable if such events occur less than five years after the creation or acquisition of the business, and (ii) only 20% of the capital gains are taxable if such events occur after this fiveyear period (Article 11,3 of Ordinance 3.152). Capital gains realized by enterprises that are not subject to CIT or by non- resident companies are tax. As regards employment income Employers are subject to the following social charges assessed on an employee’s monthly gross salary: Contribution for sickness benefits, family allowances and the salary guarantee fund at a rate of 14.75%, limited to 8 800 € per month (for the period 1 October 2020 – 30 September 2021); Contribution for pension benefits at a rate of 8.35%, limited to 5 048 € per month (for the period 1 October 2020 – 30 September 2021); Contribution for unemployment benefits at a rate 05%, limited to 13 712 € per month (for the period 1 January 2021 – 31 December 2021). Moreover, employers must insure their employees against the risks of vocational hazards (Law n°636 of 11 January 1958). Employee Tax or Contribution: Employees are subject to the following social charges assessed on their gross salary: Contribution for pension benefits at a rate of 85%, limited to 5 048€ per month (for the period 1 October 2020 – 30 September 2021); Contribution for unemployment benefits at a rate of 40%, limited to 13 712 € (for the period 1 January 2021 – 31 December 2021). In addition, and as already mentioned, in Monaco, there is no withholding tax on employment income and pensions paid to a non-Monaco and no personal income tax is due for Monaco resident individuals. As regards royalties : No withholding tax applies to royalties and rent paid to domestic /foreign licensors. At the level of the licensor, it is reminded that companies whose activity carried out in Monaco consists in receiving income from (i) the sale or licensing of patents, trademarks, manufacturing processes or formulas, or (ii) literary or artistic copyrights, irrespective of whether their turnover is realized in Monaco or abroad, are subject to CIT (see Section 2.1.2). As regards transfer taxes : In Monaco, transfer taxes are levied on the declared value of real estate property or any associated rights or on its/their fair market value if it is higher. Transfer taxes are due by the purchaser (article 30 of Ordinance of 24 April 1828). Real estate: Under Law n°580, as amended, the sale of Monegasque real estate properties or associated rights is subject to registration duties amounting to 4,5% when the purchaser is either a natural person or a Monegasque civil company (“société civile”) other than public limited company (“société anonyme” or “société en commandite”), the share capital of which is exclusively held by individuals, the identity of which is disclosed to the Monegasque tax authorities and which assets include Monegasque real estate property or any associated rights (“Qualifying Monegasque Civil Company”). Otherwise, a 7,5% tax applies when the purchaser is considered as an “opaque” company (i.e. when the purchaser is a Monegasque or foreign corporation or a non-qualifying civil company) (Articles 12, 1° and 13 bis of Law n° 580 of 29 July 1953). The purchaser will also have to pay notary fees at the rate of 1.5%. In addition, the sale of shares in Qualifying Monegasque Civil Company are subject to a transfer duty amounting to 7.5% computed on the portion of the transfer price (or market value if higher) related to these properties(Article 13 bis, 7° of Law n° 580 of 29 July 1953). This 7.5% transfer duty is reduced to 4.5% when the purchaser is either a natural person or a Qualifying Monegasque Civil Company (Article 12, 1° of Law n° 580 of 29 July 1953). In any case, the sale of shares in a legal entity other than a Qualifying Monegasque Civil Company, triggering a change of ultimate economic beneficial owner(s), must be disclosed to the Monegasque tax authorities and may give rise to a 4.5% duty levied on the full fair market value of Monegasque real estate properties (see below). Others: Under Law n°1.381, any so-called “opaque” entity owning Monaco based property or real property rights shall appoint a tax representative in order to declare annually a change or a non-change in its beneficial ownership (Qualifying Monegasque Civil Companies are not subject to this filing obligation). Any change of beneficial owner is subject to a 4,5% duty levied on the full fair market value of the underlying property. By exception, a 10 euros nominal duty applies if the change of beneficial owner takes place between spouses or between lineal relatives. As regards real property taxes: There are no real property taxes in Monaco. As regards taxes on Movable Property : Transfers for consideration of a going concern (“fonds de commerce”) are subject to a 7.5% transfer tax (Article 14 of Law 580 of 29 July 1953). Transfers of shares are subject to a 1% transfer tax(Article 9, 6° of Law n° 580 of 29 July 1953). Sales of precious metals are subject to a specific tax amounting to 11% computed on the sale price. Nonresident sellers are exempt (Ordinances n°6.163 of 12 December 1977, n°4.731 of 21 February 2014 and n°6.810 of 22 February 2018 which increased the rate from 10% to 11% as from 1 January 2018). As regards fixed asset taxes : There are no fixed asset taxes in Monaco. As regards taxation on income from land : no taxation for individuals (non- French nationals) and subject to CIT for entities subject to this tax in Monaco, subject to the application of the capital gains regime if applicable (see our comments above). As regards miscellaneous taxes : Not applicable. As regards VAT : All persons regularly making paying business transactions are subject to VAT. French and Monegasque territories, including their territorial waters, form a customs union organized by the France-Monaco customs agreement of 18 May 1963. French customs regulations apply directly in Monaco. Monaco is incorporated into European customs territory (although it remains a third country with regard to the EU). Goods and services in the Single European Market can thus be accessed from Monaco. 15. Is the charge to business tax levied on, broadly, the revenue profits of a business as computed according to the principles of commercial accountancy? Taxable income is calculated based on the accounting income, i.e. including operating income, financial income and extraordinary income such as capital gains, subject to certain book-to-tax adjustments, including tax incentives schemes. 16. Are different vehicles for carrying on business, such as companies, partnerships, trusts, etc, recognised as taxable entities? What entities are transparent for tax purposes and why are they used? As previously mentioned in Section 1 above, CIT was introduced in 1963 in Monaco and only the following entities are subject to CIT in Monaco: Companies of any legal status that carry out industrial or commercial activities, directly or by interposed person, if at least 25% of the turnover is generated outside Monaco ; Companies whose income relates to the sale or licensing of patents, trademarks, processes, or formulas and to royalties from intellectual property rights. In addition, Administrative offices (“Quartiers généraux ) are also subject to CIT, but this tax is applied according to the specific terms relevant to their situations. The CIT is determined by a flat rate, generally equal to a certain percentage of their total annual operating expenses. Generally, Administrative offices are taxed on 8% of the annual operating expenses such as personnel expenses, travel expenses provided they do not carry out any commercial or industrial activity. The legal form of an enterprise is irrelevant with regards to the application of the CIT. As a consequence, companies whatever their legal form (partnership such as civil companies or limited liability companies such as ‘Société Anonyme Monégasque” (SAM) or ‘Société à responsabilité limitée’ (SARL)) that carry out civil activities will not be in the scope of the CIT. Since there is no personal income tax in Monaco for Monegasque resident individuals (with some specific tax rules for French nationals), the profits made by these ‘civil companies’ are not taxed in Monaco either at the level of the company itself or at the level of its Monaco resident shareholders. Such ‘civil companies’ are used as single family office, for the acquisition of real estate properties located in Monaco and/or in France and for any activity which is not an industrial or a commercial one. 17. Is liability to business taxation based upon a concepts of fiscal residence or registration? Is so what are the tests? Resident companies are subject to CIT on their worldwide income, including capital gains, derived from a commercial or industrial activity carried out in Monaco. Under Article 1.2 of the Ordinance n°3.152, the corporate tax base of Monegasque companies subject to CIT does not include foreign source income deriving from : (i) a foreign permanent establishment, (ii) a ‘complete commercial cycle’ outside Monaco and (iii) operations conducted outside Monaco through foreign dependent intermediaries lacking a distinct legal personality which have the authority to conclude contracts in the name of the Monegasque companies. As previously mentioned in Section 7, Monaco has no legal definition of ‘residence’ for CIT purposes. However, an enterprise is generally deemed as a Monegasque resident if its head office, its place of effective management or its main establishment is located in Monaco. 18. Are there any special taxation regimes, such as enterprise zones or favourable tax regimes for financial services or coordination centres, etc? In Monaco, there is no special tax regime for certain economic zones. To be noted that Holding companies which activity is exclusively confined to participations management are forbidden in Monaco. However, in addition to the special rules for Administrative offices (see our comments above on Section 15), Monaco has the two following categories of tax relief: Business startup regime Companies established in Monaco that fall within the scope of CIT that carry out a genuinely new business are exempt from CIT for a two-year period and subsequently benefit from a favorable regime for the following three years, i.e., First and second years: CIT exemption; Third year: the CIT is computed on 25% of the taxable income; Fourth year: the CIT is computed on 50% of the taxable income; Fifth year: the CIT is computed on 75% of the taxable income; and As from the sixth year, the CIT is computed on 100% of the taxable income. Tax credit for research and development Companies subject to CIT can deduct research and development (“R&D”) expenses incurred during the fiscal year. In addition, they may optionally receive a R&D tax for eligible R&D expenses incurred during the fiscal year. Such R&D tax credit amounts to 30 % for the fraction of the eligible expenses below 100 M€ and 5 % for the fraction exceeding this amount and is capped at 10 M€. Ordinance no 8.847 of 27 September 2021 introduced a deduction limit and a time limit for the Monegasque R&D tax credit carryover for fiscal years beginning on January 1, 2021. This R&D tax credit is chargeable against CIT up to half the amount of tax for the fiscal year in which the R&D expenses were incurred and for the 5 subsequent years. The R&D expenses eligible for this R&D tax credit are notably: depreciation charges on fixed assets other than buildings allocated to carrying out scientific and technical research operations relating to researchers, depreciation, charges on patents acquired for carrying out research operations. 19. Are there any particular tax regimes applicable to intellectual property, such as patent box? There are no specific or incentive tax regime for intellectual property. 20. Is fiscal consolidation employed or a recognition of groups of corporates for tax purposes and are there any jurisdictional limitations on what can constitute a group for tax purposes? Is a group contribution system employed or how can losses be relieved across group companies otherwise? There is no group relief available in Monaco for tax purposes. Companies subject to CIT will be taxed individually in accordance with their own taxable result. 21. Are there any withholding taxes? No there is no withholding tax levied by Monaco on any kind of income. 22. Are there any recognised environmental taxes payable by businesses? No there are not such taxes in Monaco. 23. Is dividend income received from resident and/or non-resident companies exempt from tax? If not how is it taxed? Under the parent-subsidiary regime, dividends received by Monegasque companies from their Monegasque or foreign subsidiaries are exempt from CIT, provided that the recipient holds at least 20% of the share capital of the distributing company for at least 2 years. The aforementioned exception is only partial, a service charge computed on the gross dividend (net dividend income and foreign tax credits if applicable) being added backed to the recipient’s taxable income. The rate of this service charge depends on the recipient’s holding: 20% if, at the date of the payment of the dividend, the recipient holds less than 35% of the share capital of the distributing company; 10% if the recipient holds at least 35%; and 5% if the recipient holds at least 50%. Such service charge cannot exceed the aggregate sum of business expenses. Therefore, any tax paid abroad upon such foreign source dividends (e.g., withholding taxes levied abroad) does not grant a tax credit to be offset against Monegasque CIT. On the contrary, in case conditions of the parentsubsidiary regime are not met, dividends are subject to Monegasque CIT and any tax paid abroad grants a tax credit that can be offset against Monegasque CIT related to such dividends. For the computation of the Monegasque CIT, the amount of the foreign tax (withholding tax) must be, in such case, added to the gross amount of the dividends. 24. If you were advising an international group seeking to re-locate activities from the UK as a result of Brexit, what are the advantages and disadvantages offered by your jurisdiction? Monaco warrants a stable and attractive legal and fiscal framework particularly suited to international group, considering notably attractive corporate income tax provisions, the absence of withholding tax applicable to cross-border payments of dividend, interest and royalties and the income tax exemption of directors and employees in Monaco since the Principality does not provide for any individual income tax. Labor law is also rather “liberal”. We also note the possibility for Directors of obtaining advantageous social security insurance under inexpensive conditions. Overall, Monaco benefits from a sophisticated ecosystem and a central location within Europe, a strong political and financial stability, together with efficient and rather accessible authorities (including the tax authorities with the possibility to request ‘tax ruling’). From a tax perspective, the main disadvantage results from the rather poor double tax treaty network of Monaco with OECD countries, although Monaco signed a double tax treaty with Luxembourg and Malta providing for favorable provisions in view of eliminating double taxation. From a legal perspective, main disadvantages include rather burdensome business implementation process considering that the setting up of a business in Monaco is subject to a prior governmental authorization, together with strict regulations in some areas such as immigration law.

by  David de Pariente, partner. Since the adoption of Law 1.528 on July, 7 2022, the “digital investors” can rely on a dynamic and more detailed legal framework in Monaco.  This technical law is in line with the European legislations adopted recently and provides several definitions which are essential to its understanding.  For instance, the Law 1.528 defines:  The metaverse as “a persistent and synchronous platform creating one or more virtual and immersive spaces offering simultaneously products and online services to several users in the form of avatars, the latter being able to move and to interact socially and economically”. In this regard, it should be noted that any supply or operating of a metaverse representing a part of the Principality’s national heritage shall be subject to the granting of a prior approval from the State Minister. The crypto assets as financial tokens (assimilated to financial instruments) or digital assets (virtual financial assets, usage tokens, and non-fungible tokens commonly referred to as NFTs). In a nutshell, Law 1.528 introduces a series of conditions in relation to the provision of services on digital assets and the provision of investment services on crypto assets (I) and also clarifies the legal regime of the Initial Coin offerings (ICOs), as already set forth  by Law 1.491 dated June 23 2020 and  Sovereign Order 8.258 (II). I. Conditions applicable to the provisions of services on crypto assets Law 1.528 operates a distinction between the provisions of services on crypto assets which are necessarily subject to a prior approval from the State Minister, and the provisions of services on crypto assets subject to a prior approval from the Commission de Contrôle des Activités Financières (“CCAF”). A mandatory prior approval for several provisions of services on crypto assets  A prior approval from the State Minister is required to operate the following activities in the Principality: • Issuance of crypto assets ; • Deposit or administration of crypto assets or access to crypto assets; • Operating of a negotiation platform displaying sale and purchase interests to crypto assets; • Transfer of digital assets with other digital assets, or with a legal tender; • Operating of a negotiation platform of digital assets. The prior said approval will only be delivered subject to certain conditions (i.e. registration of the service provider in Monaco, good reputation of the service provider’s managers, implementation of an AML/CTF procedure regarding the freezing of assets corresponding to the criteria of the Monegasque Financial Circuits Information and Control Service, etc.). A prior approval from the CCAF for certain provisions of services on crypto assets Obtaining a prior approval from the CCAF pursuant to the conditions set up by Law 1.338 of September 7, 2007 on financial activities, is required for the following activities:  • Investments in crypto assets;  • Execution of orders on crypto assets; • Reception-transmission of orders on crypto assets; • Advice on crypto assets. An exemption from obtaining a prior approval is provided to the benefit of financial providers of services which are already authorized by the CCAF to perform such class of financial activities in Monaco, subject however to a prior information to the regulator. II. Clarification of the legal regime applicable to ICOs in the Principality As a reminder, an ICO (Inital Coin Offering) is defined as an “Offering of tokens consisting in a proposal to subscribe such tokens by any means whatsoever” (see  Law 1.491 of July 23, 2020 and Sovereign Order 8.258). These fundraising transactions dedicated to companies registered in Monaco or in the process of being incorporated in Monaco are subject to a prior administrative approval issued by the State Minister, whether they qualify as public or private.  The private nature of the ICOs involving tokens is subject to at least one of the following criteria:  • Offer targeting qualified investors only;  • Offer targeting less than 150 non-qualified investors;  • Offer targeting investors who purchase tokens for a total price of at least EUR 100,000;  • Offering of tokens with a nominal value of at least EUR 100,000 per token. It should be noted that when the prior approval concerns a token with a unit nominal value of at least EUR 100,000, such an approval takes the form of a label/certification issued after examination of: • Information provided on the issuer and the project sponsors; • A summary note; • A «white paper» to the investors’ attention; • The terms and conditions for the deposit of the investor’s funds in escrow. Law 1.528 of 7 July 2022 provides that the offer of tokens cannot concern non-fungible tokens, and that when the ICO targets the public, the offer of tokens cannot be done with financial tokens. Furthermore, it is specified that the issuer shall determine the nature of the token and its related rights, the nature of the issuance (either public or private), or the nominal value of a token.   Gordon S. Blair’s expertise in Cryptoassets Gordon S. Blair Law Offices (Monaco) assists various actors involved in the crypto assets sector, in particular in the context of their relocation or installation in the Principality. The firm also assists banking and financial entities in this regard.