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A friend (Swiss resident) and me (US resident) consider to…

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Hi! A friend (Swiss...

Hi! A friend (Swiss resident) and me (US resident) consider to set up a Monaco SCP (Societe Civile Particuliere), which is a private partnership. My question is (since for startup-ups in Monaco after 5 years, corp. tax is 33%): Since we are both subject to double-taxation, would we just pay our regular income tax (e.g.25%, no social security, pension, etc.) in our countries or in Monaco, resp. would we need to pay the remaining part (in case of 25%) of 8% taxes in Monaco?

Lawyer's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

Maybe just for Information: We are both Austrian citizens.

Submitted: 4 months ago.Category: European Law
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3/20/2018
Lawyer: Michelle-mod, Moderator replied 4 months ago
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Customer reply replied 4 months ago
please continue. Thank you!
Lawyer: Rakhi Vasavada, Financial and Legal Consultant replied 4 months ago
Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: European Law
Satisfied Customers: 4,550
Experience: Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

From what I understand from your situation, you will not be subject to double taxation and you will just pay your taxes in Monaco.

Commercial activities in Monaco is subject to the profits tax in respect of their contribution to the overall turnover of the foreign group. Where the contribution to the overall result cannot be determined, the tax is based on the running expenses of the headquarters. In such case the tax is generally levied at the normal rate (33.33%) on 8% of the head-
quarters’ running expenses, i.e. the effective rate is 2.66% of the running expenses.

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,

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Customer reply replied 4 months ago
Thank you for your advise! So you mean that if all the turnover is done in a foreign country (e.g. in the US), and it can be determined, the tax would also be just 33.33% on the 8% of the running expenses? What if we don't have runnning expenses (or expenses are neglactable)?
Customer reply replied 4 months ago
By the way, we would just have our Monaco SCP (so our headquater would be Monaco).
Lawyer: Rakhi Vasavada, Financial and Legal Consultant replied 4 months ago

Dear Friend,

Hello and welcome again.

Yes, that is right. Secondly, you would just have your Monaco SCP, so your headquarter would be Monaco.

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,

Ask Your Own European Law Question
Customer reply replied 4 months ago
Sorry, but my question was: What if we don't have running expenses? On which basis is then the tax base assessed?
Lawyer: Rakhi Vasavada, Financial and Legal Consultant replied 4 months ago

Hello and welcome again.

Then a flat rate of 33.33% will apply.

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,

Ask Your Own European Law Question
Customer reply replied 4 months ago
But then I could say, i have USD 500 expenses per year and just pay taxes of that???
Lawyer: Rakhi Vasavada, Financial and Legal Consultant replied 4 months ago

No, there is a method of computing your income. Please have a look at the taxation document.

https://www.ibfd.org/sites/ibfd.org/files/content/pdf/European%20Tax%20Handbooks%202015_Corp.pdf

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,

Ask Your Own European Law Question
Customer reply replied 4 months ago
I know this document, which chapter are you referring to? 33.33% is really high...So if my SCP pays it's taxes in Monaco, then I don't have to pay any personal income taxes anymore once I take the money out?
Lawyer: Rakhi Vasavada, Financial and Legal Consultant replied 4 months ago

Hello again.

Yes, that is true. You will not have to pay any personal income taxes anymore.

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,

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