The Principality of Monaco is a sovereign city-state governed under a constitutional monarchy with Prince Albert II as the head of state. Monaco is located at the very south of France and is a part of the French Riviera at the Mediterranean Sea coast. It is widely recognized as a tax haven and one of the most expensive places in the world. It is home to some of the wealthiest people worldwide and holds the highest GDP per capita. Monaco also has an unemployment rate of 2% and the lowest poverty rate, having the most billionaires and millionaires per resident worldwide.

Disclaimer: Be aware that this article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.

Registration process of sole traders in Monaco

By Monaco's law, anyone who wants to conduct professional work in any business sphere can register as a sole trader. Sole trading is the easiest and the fastest way to start your business because sole traders don't have the constraints of forming a company or have to set aside a minimum amount of capital as companies do.

Business and professional activity registrations are managed by the Direction de l'Expansion Economique (DEE). To complete the registration, you need the following documents:

• Application for permit to carry out a business activity in the Principality of Monaco
• The "Personal Information" form
• A Certificate of Nationality or copy of ID card (for Monegasques)
• A copy of the residence permit (if applicable)
• A copy of the ID card or passport (for foreigners)
• A birth certificate
• A copy of the criminal record, not older than three months. This should be obtained from The National criminal records office.

Obtaining a NIS number

A sole trader also has to register to the Monegasque Institute of Statistics and Economic Studies for obtaining a NIS number (Statistical Identification Number) by filling in the Declaration of registration for Statistical Identification Number form.

Taxation system in Monaco

Monaco is well known for not having income tax for individuals, and therefore has become a home to many "tax refugees".

On the other hand, no one is exempt from paying Value Added Tax (VAT). The standard VAT rate in Monaco is 20%. To apply for VAT, you have to submit the following documents to the Department of Tax Division:

• Proof of Statistical Identification Number (NIS) registration with the Monegasque Institute of Statistics and Economic Studies 
• A copy of the company's entry in the Trade and Industry Registry (accept for sole traders who don't need it)
• A completed printout of the "Régime TVA" form
• If necessary, written authorization for your representative to carry out the declaration on your behalf.

Even though sole traders don't need to pay income tax in Monaco, they are subject to social contributions and pension contributions.