Investing in Monaco via an SCI: Benefits and Pitfalls

Published on November 1, 2025 and written by Cyril Jarnias

Investing in Monaco real estate through a Civil Real Estate Company (SCI) offers numerous attractive advantages, while also presenting some challenges to anticipate. The Principality of Monaco, with its reputation as a tax haven and prestigious real estate market, appeals to many investors seeking to diversify their portfolios.

However, before opting for an SCI, it’s essential to understand the tax mechanisms specific to Monaco, as well as the administrative complexities associated with structuring and managing such an entity. This guide will shed light on the tangible benefits of investing via an SCI in Monaco, while warning you about potential pitfalls to help you make an informed choice.

Optimizing the Legal Structure for Investing in Monaco

The Civil Real Estate Company (SCI) is the reference legal structure for investing in Monaco real estate. It allows one or more investors – residents or non-residents – to collectively own and manage real estate assets. The Monegasque SCI offers great statutory flexibility, simplified management, and legal mechanisms adapted to local asset management challenges.

Available Structure	Number of Partners	Liability	Applicable Taxation
SCI	2 minimum	Unlimited	Corporate Tax (IS) or tax transparency depending on activity
SARL	2 to 99	Limited to contributions	IS
SAM	Legal minimum	Limited to contributions	IS

Specifics of Monegasque Law

• Non-residents can freely create and hold SCI shares, thereby facilitating foreign capital investment.
• The legal environment is stable, with regulations aimed at transparency while remaining less restrictive than in other European countries.
• Any real estate acquisition must go through a Monegasque notary who ensures strict compliance with legal obligations.
• SCIs are subject to administrative control but benefit from streamlined management compared to other corporate forms.

Specific Taxation:

• Taxation on real estate income depends on the type of activity conducted through the SCI: simple asset holding may benefit from the so-called “translucent” regime (taxation at the partner level), while commercial activity subjects it to local corporate tax.
• Monaco imposes no property tax or wealth tax for individuals; however, certain transactions may incur registration duties during transfers.

Potential Advantages of the SCI:

• Simplified Management: contractual freedom in the bylaws, flexible choice of manager, and customized distribution of powers among partners.
• Facilitated Asset Transfer: possibility to gradually transfer assets through share transfer or donation rather than the real estate itself, sometimes with lower tax impact depending on personal circumstances.
• Enhanced Protection: statutory mechanisms protecting minority interests and clearly organizing succession/transfer.

Common Risks and Pitfalls:

• Negligence in drafting bylaws leading to conflicts between partners or deadlock during important decisions
• Omission or misinterpretation of local tax obligations: risks related to automatic change in tax regime in case of “commercial activity”
• Non-compliance with administrative formalities (registration with competent authorities)
• Lack of succession planning leading to complex transfers

A well-chosen legal structure sustainably optimizes your investment:

Desired Objective	Suitable Structure
Easy Family Transfer	SCI
Protection Against Contingencies	Customized Bylaws
Tax Optimization	Prior Analysis Required

Practical Tips for Successful Real Estate Establishment with an SCI:

• Systematically engage a Monegasque notary, essential for securing any real estate transaction
• Carefully draft customized bylaws to precisely match targeted asset objectives
• Annually verify your tax situation with specialized advisors in local law
• Anticipate any transfer from the initial formation

To maximize your benefits while limiting tax/legal risks, always prioritize documentary rigor, succession planning, and expert advice tailored to the Monegasque context!

SCI in Monaco: A Lever for Real Estate Purchase

The Civil Real Estate Company (SCI) serves as a strategic lever for real estate purchase in Monaco, particularly due to the specificities of the Monegasque market and the advantages offered by this structure.

The real estate market in Monaco is distinguished by:

• Its exceptional stability: demand remains strong despite limited supply, and the price per square meter has increased by over 70% in ten years.
• Its international prestige, attracting a clientele of investors seeking to diversify their assets in a secure and highly valued environment.

The SCI facilitates property access through the following characteristics:

Key Advantage	Specific Detail in Monegasque Context
Pooling	Ability to combine financial resources of multiple investors to jointly acquire a property, making prestigious assets accessible that are usually reserved for very wealthy clients.
Flexible Structure	Flexible management of share capital: free distribution of shares among partners according to their contribution or asset strategy; possibility to customize economic or voting rights.

Favorable tax and succession implications include:

• Absence of capital gains tax on real estate upon sale in Monaco.
• No local tax levy on real estate holding via an SCI.
• In case of direct succession transfer, applicable rate reduced to 0%, while for other transfers the rate varies between 8% and 16% depending on degree of kinship.
• No VAT on real estate transactions conducted by the SCI.

Other strategic advantages:

• Asset optimization: fine-tuned structuring adapted to family or professional needs (possible creation of different share categories).
• Partial anonymity preservation: only certain information is public (location), thus ensuring partner confidentiality.

Summary list of key strengths:

• Remarkable market stability
• Facilitated pooling
• Optimized asset transfer
• Attractive local taxation
• Legal flexibility

Points of attention or potential challenges:

• Initial costs related to SCI formation can be high (notary fees, specific administrative formalities).
• Ongoing management requiring accounting and reporting rigor.
• Unlimited liability but proportional to the number of shares held by each partner; each investor must therefore carefully assess their risk exposure.

In this highly sought-after context that is Monaco, the increasing use of SCIs is therefore explained both by the strategic need to optimize asset management and by the unique tax attractiveness offered in this prized destination.

Tax Optimization and Rules to Know

Main Monegasque tax laws applicable to international investors:

• Monaco applies advantageous taxation: no income tax for resident individuals (except French citizens in some cases), and no wealth tax.
• Companies generating more than 25% of their turnover outside Monaco are subject to corporate tax at a rate of 33.33% on the portion of profit from abroad.
• Gift and inheritance duties apply based on the relationship between donor and beneficiary, with rates up to 16% for non-relatives.

Summary Table of Taxes in Monaco

Tax	Rate / Existence	Observations
Income Tax	None	Except for French citizens
Wealth Tax	None
Corporate Tax	33.33%	If >25% of turnover outside Monaco
Inheritance/Gift Duties	0 to 16%	Depending on family relationship or not

Tax Advantages Related to Investing via an SCI in Monaco:

• Complete absence of personal taxation (income, wealth) for Monegasque residents.
• For an SCI holding only properties located in Monaco: succession optimization thanks to low duties among close members.
• Indirect holding via SCI can offer flexibility in asset management and facilitate transfer.

Practical Tips to Remain Compliant and Avoid Tax Pitfalls:

Scrupulously respect:

• The obligation to declare ultimate beneficial owners to Monegasque tax authorities.
• International conventions: for example, if a real estate property held by an SCI is located in France or elsewhere, it may be subject to local taxation despite the favorable Monegasque tax regime.
• Compliance with the OECD BEPS framework against tax evasion (transfer pricing, permanent establishment).

Accounting and Reporting Requirements for a Monegasque SCI:

List of obligations:

• Maintenance of regular accounting compliant with local standards;
• Annual filings with the competent tax service;
• Possible compliance with international standards in tax matters (automatic exchange of information).

Concrete Examples of Possible Strategies

> Succession Optimization: Progressive transfer through successive gifts exempt or lightly taxed among close members thanks to the specific local scale.

> International Asset Structuring: Centralized holding via an SCI based exclusively in Monaco generally allows complete absence of wealth tax as long as assets remain located in the Principality. Caution however if certain assets are located outside the territory.

Important Warnings

Visual Summary – Common Mistakes to Avoid

Quick list:

• Forgetting to declare the actual beneficial owner
• Neglecting bilateral conventions with other countries
• Artificially diverting flows without real local substance

Pitfalls to Avoid in Corporate Law

Pitfalls to Avoid in Corporate Law When Investing in Monaco via an SCI:

• Specific Legal Complexities
  • Monegasque law is distinguished by a strict separation between companies with commercial purpose and companies with civil purpose, to which SCIs belong. This distinction doesn’t always exist in other countries.
  • The recent reform (Law No. 1.573 of April 8, 2025) modernized some rules but still imposes specifics on bylaws form, creation procedure, and governance regime.
  • Prior authorization from the princely government is mandatory for any company creation, including SCIs. This requirement goes beyond usual formalities in France or other jurisdictions.

• Common Errors During Creation
  • Neglecting to obtain the indispensable government authorization before any registration or activity.
  • Omitting an effective physical domicile on Monegasque territory: without a valid local address, no registration is possible.
  • Incomplete or imprecise drafting of bylaws: these must imperatively mention the corporate form, exact name, registered office address in Monaco, detailed contributions, and precise identification of each partner (individual or entity).

Main Statutory Requirements:

Requirement	Monegasque Specificity
Prior Authorization	Yes (princely government)
Domiciliation	Physical address mandatory
Bylaws	Detailed mentions mandatory
Partner Identification	Exhaustive data required

• Risks Related to Governance
  • Disagreement between partners: In case of ambiguity in the bylaws regarding social rights or decision-making modalities, a deadlock may occur.
    • Prefer from the outset a clear partnership agreement defining voting rights, rules in case of disagreement, and exit modalities.
  • Poor management: Imprudent administration or non-compliance with legal obligations exposes all partners to financial or even criminal risks.

To Limit These Risks:

• Explicitly specify in the bylaws:
  • The manager’s powers
  • Conditions for making certain important decisions
  • Modalities for regularly convening the general assembly

• Unexpected Tax Implications & Compliance
  • Despite its fiscally advantageous reputation (absence of corporate tax if more than 75% of turnover is generated locally), certain real estate income may be subject to taxation outside Monaco depending on the location of properties held by the SCI.
  • Specific reporting obligations apply to local and foreign tax authorities; non-compliance exposes to financial sanctions.

Key Obligations:

• Annual declarations to the Monegasque tax authority
• Strict compliance with international anti-money laundering conventions

Possible Legal Consequences in Case of Breach

“Non-compliance with statutory obligations — incomplete drafting/omitted declarations/absence of authorization — can lead to partial or total nullity of acts performed by the company as well as its judicial dissolution.”

“Civil or even criminal sanctions are incurred if a partner acts in disregard of local law.”

It is Therefore Crucial:

• To systematically obtain advice from a specialized lawyer before any commitment,
• To regularly update your corporate/statutory documents in compliance with evolving regulations,
• To scrupulously follow all specific administrative procedures imposed by Monaco.

Recommended Best Practices to Secure Your Investment via an SCI in Monaco:

• Anticipate all administrative steps from the outset (government authorization/domiciliation)
• Carefully draft your bylaws with local legal assistance
• Establish a clear agreement between partners
• Ensure all local/international tax obligations are respected
• Organize regular legal monitoring to remain compliant with regulatory developments

Specialized professional support remains indispensable to avoid any legal pitfall that could persistently hinder your real estate project via a Monegasque SCI.