Politics and economics
Political focus
The political system of the Principality of Monaco is defined by the 1962 Constitution, which establishes a hereditary and constitutional monarchy. It guarantees the separation of powers and the rights of citizens.
Executive power is exercised by the Prince, assisted by the Minister of State and Government Councillors. Legislative power is shared between the Prince and the National Council, made up of 24 members elected for 5 years. Judicial power is delegated by the Prince to the courts and tribunals.
Monaco also has a Mayor, at the head of the municipal executive, and a Municipal Council of 15 members elected for 4 years.
7 facts about the economy
1. GDP will reach 9.24 billion euros in 2023, compared with 8.36 billion in 2022, representing inflation-adjusted growth of 5%. Since 2014, GDP has grown by almost 50%. Over the same period, growth has reached 27% worldwide, 14% in the eurozone and around 10% in France.
The top 5 major sectors of GDP activity include:
- scientific and technical activities, administrative and support services (24.4%)
- financial and insurance activities (18.6%)
- wholesale trade (9.3%)
- construction (8.6%)
- accommodation and restaurants (7.9%)
Per capita GDP will be 98,830 euros in 2023, representing real growth of 2.4% compared with 2022.
2. Since the 19th century, Monaco has financed itself mainly through revenues from monopolies, a 20% VAT rate on consumption, a tax on the profits of certain companies and transfer and inheritance taxes. The only direct tax levied in the Principality is tax on the profits of industrial and commercial activities. Below are the top 5 government revenues:
- commercial transactions (VAT)
- property (all income from rental properties and income from public car parks)
- business profits (tax on profits)
- legal transactions (transfer duties, etc.)
- financial transactions (income from securities, bank interest).
3. The Principality is one of the few States without public debt. Historically, budget surpluses have been paid into a reserve fund. Created by the 1962 Constitution, the Constitutional Reserve Fund (FRC) is the Monegasque State's reserve. It will amount to approximately 7 billion euros by the end of 2023. When necessary, the FRC makes cash advances to the State budget.
4. Although not a member of the European Union, the Principality is incorporated into the European customs territory and the intra-Community VAT system has been applicable to Monaco since 1993. Monaco also forms a customs union with France. Outside France, the main trade links are with Italy, Germany and the United Kingdom.
5. Monaco is one of the only countries in the world not to levy income tax. This original system has been in place since 1869, after the communes of Roquebrune-Cap-Martin and Menton seceded. Monaco regained its independence but lost 80% of its territory, depriving the State of its agricultural land and its main sources of revenue. A new economic model had to be built. It was against this backdrop that Prince Charles III had the Casino and Opera built (see above).
6. Monaco has developed centres of excellence in several fields, and digital technology is a growth driver in its own right. The Principality has succeeded in becoming an attractive hub for start-ups, and has several support structures for them. MonacoTech and Monaco Boost, supported by the Princely Government, are among the best known, offering a collaborative workspace, expert advice and development support. The Government also offers a range of financial assistance in the form of grants, tax exemptions and support for innovation projects through the Blue Fund.
7. Monaco, small in size but big in dynamism, is home to some of the world's leading economic players. The Principality is home to renowned companies such as Boutsen Aviation, APM Monaco, Monte-Carlo Société des Bains de Mer, SBM Offshore, Banana Moon, Giraudi and Sabrina Monte-Carlo, all of which contribute to its international reputation. Monaco cultivates a thriving ecosystem, attracting talent and investors, while remaining a symbol of excellence and know-how.