Cutting Through Complexity Of The Monaco Family Office World
By Mariett Ramm
Monaco has a small wealth management component with very sophisticated, institutional-like family offices that are familiar with of the full scope alternative investments. Some of them allocate their funds to third-party managers, and others manage assets internally. Current figures suggest that around 300-400 billion Euros are being controlled from Monaco, with a substantial demand for hedge funds and alternative investments.
About 34 banks operate in Monaco, a significant number by any measure for a country of 38,000 people – however, further consolidation may be on the horizon. On the other hand, the number of independent asset managers has expanded enormously over the last decade -ten years ago, there were few firms in existence – now there are 46. Besides, a few hedge funds have moved to Monaco, in recent years including Tyrus, a multi-billion-dollar international hedge fund, which shifted most of its staff in Monaco.
The Monaco Single and Multi-Family office International Association works at developing the knowledge and the use of family office services by wealthy families in Monaco. It is the enhancement of the expertise of the professionals involved in the different branches related to family office activities, as well as of the family members so that they can find all the possible advantages. Monaco Single and Multi-Family office International Association works under the dynamic and skillful Presidency of Mr. Giuseppe Ambrosio for the respect of neutrality and transparency of both single and multiple family offices.
Mr. Ambrosio agreed to share some thoughts with Billionaire Chronicle in a special official interview about living and creating family offices in Monaco.
BC: Good morning Giuseppe. During the 6th Global Family Office Investment Summit Monaco, you chaired a very successful roundtable discussion “Make it Happen In Monaco.” Could you give our readers some insights into the conversation during this event? Many readers are curious about the Monaco Family Office ecosystem. Let’s start with a fundamental question. How does one become a resident of the Principality of Monaco?
GA: It’s mainly about three elements that have to be reunited at the moment of the application, accommodation in Monaco in line with the size of your household, financial resources and proven good character. Yes. It is widely known that Monaco ranks top for millionaire density and about a third of residents are millionaires. However, finances are not necessarily a prerequisite to becoming a resident. Alternatively, you would need an employment contract with a company, or you would need to be self-employed or have sufficient savings attested by a bank.
BC: Once someone is a resident, what are the actual fiscal advantages?
GA: Well, except for French nationals, Monaco offers excellent taxation regime for expat residents because Monaco does not levy a personal income tax, therefore, residents are not required to prepare or submit annual tax returns. There is no capital gains or net wealth tax imposed, and no inheritance tax is imposed to direct relatives. Also, bear in mind Monegasque residents are not required to disclose global assets. No individual taxation is due on employment income except social security contributions.
BC: Would you share your thoughts about differences between assistance offered to a family and functionality of a Single Family Office (SFO) a Multi Family Office (MFO) in Monaco?
GA: A Single Family Office is a civil company, therefore it is not a business, has no clients and no business activity is permitted. Only a Multi Family Office can bill clients for its services. Authorized Multi-Family Offices can also provide financial services: financial advice to families (i.e., investment advisory services) and trades execution on the financial markets. If an MFO is authorized to provide also financial services, it shall have a mandatory minimum share capital of 300.000€ instead of the 150.000€ required for SFO. A SFO is considered as non-commercial entity, and therefore a SFO is not subject to the Monaco Tax on Profits.
On the other hand, a MFO carries out a commercial activity, and as such, it is subject to the Monaco Tax on Profits that is applicable to a rate of 33,33%. Further information can be provided on a case by case basis by the Family Office Association or by any Monaco authorized professional. Civil Activity is carried out for the benefit of its shareholders. Therefore, an SFO will be deemed and will be bound to carry out a civil action, whereas an MFO carries out Commercial Activity, i.e., will provide services to and bill clients.
BC: What is the required company format in Monaco for a Single and Multi-Family Office, and what is the minimum share capital?
GA: SAM is mandatory, (SAM, Societé Anonyme Monegasque, Public limited liability Monegasque company) with a minimum share capital of 150,000€. Global costs may vary, for members of the Monaco Single and Multi-Family office International Association under certain circumstances all setup cost is borne by the association, total cost includes notary, taxes, and professional fees.
MR: What are the types of the activities you would expect to be dealt with by an SFO or MFO?
GA: With this respect family offices in Monaco are no different from other locations, they provide administrative and concierge services daily to families. They coordinate lawyers, accountants; they supervise and coordinate work of tax advisors and liaise with tax authorities. Manage, acquire and dismiss real estate including all related activities such as attending co-owners general meetings, paying charges. It is entirely reasonable to see family offices dealing with travel arrangements, residency matters, school arrangements for the family members. Family offices deal with opening bank accounts and its monitoring and finally purchasing /selling of cars, yachts, planes, and helicopters depending on the amount, taste and diversification of family wealth.