Being SELF EMPLOYED IN FRANCE or SOLE TRADER IN MONACO

22 January 2021


Starting a business requires obvious analysis of the costs, the market potential, the competition, the taxes, the legal form, etc. to name a few.

When you live close to a border you also have to compare the advantages and disadvantages implied by setting up the company in such or such country.

The same applies here between Monaco and France.

Although a full analysis would depend on the nature of the business, we still can draw the main differences of the two destinations.

THE SET UP PROCESS
We all went it to be easy and quick. France offers that, thanks to its web portal. Indeed starting as an auto entrepreneur for instance has never been so easy. You will get started within a week from France, when it will take approximately 3 months for you to become a sole trader (or sole proprietor) in Monaco. Not only that, but Monaco implies an application process, as it is not guaranteed for everyone to be granted the access to the market, depending on the sector of activity (see our article on regulated and oversupplied activities) and the person’s background check.

THE RUNNING COSTS
This highly depends on the type of business, your place (whether you can accommodate an office space), your suppliers, and so on so forth.
Accounting expenses and other administrative costs look roughly the same.

SOCIAL CHARGES
In France, except if you remain an AUTO ENTREPRENEUR with a low turnover, your social charges will be proportional to the income you make. And it will be very expensive as France needs to finance a one-of-a-kind social model, providing healthcare and education to the whole population and free of charge.

In Monaco (which also offer healthcare and education by the way, financing its budget Ina different manner) it is just simpler. All the active business owners (some traders, managing partners of a company, except in the SAMs) pay two charges, one for healthcare, one for retirement. The former is a flat fee for everyone, whether you earn one euro or one million euros. This fee (at the moment around 900 euros per quarter) is increased according to inflation every year. The latter is a fixed amount determined by the owner’s personal revenue.

The system looks to us cheap and fair in the tiny Principality, whereas the French rules have a bigger impact on the company’s financials.

TAXATION
This is a hot topic. Simple to analyse though, since you have to consider the two main aspects of tax :
– personal tax will hurt your financial situation in France whatever your nationality. In Monaco, there is none, except for French people (yes “chers amis” and you can thank the General de Gaulle’s Administration back in the 1960’s).
– corporate income tax, which works the same way and at almost the same rate from one country to another. The differences are based on the incentive that the Prince’s Government offers for new businesses (a 5-year sliding scale) and the flexibility in the way one can report expenses incurred, permitted by the Tax Office.

THE IMAGE OF YOUR COMPANY
This is a very controversial topic, again because it is mostly related to the nature of the activity. In general Monaco tends to offer a stronger and brighter image internationally.
However, it is not always the opinion of all your potential clients or partners. Some indeed still have this view of the Principality being a tax heaven, a place for rich retired businessmen to enjoy a stunning quality of life in the shiny south of France.

Unsure about which country to start from? Get in touch with us and we’ll tell you.