Why You Should Set Up Your Family Office in Monaco
Are you interested in setting up a family office? Monaco is one of the best locations to set up a family office for wealthy families or high net-worth individuals. What makes the family office stand out? A 2017 Bloomberg study declared that “[f]amily offices have become the vehicle of choice to protect and preserve assets for future generations.” The family office of yore is also changing, and we’ll go into not only the advantages of establishing your family office in Monaco but how you can transform yours to endure in the future.
What is a family office?
While the origin of the term family office relates to an entity created to manage the wealth of families or high net-worth individuals (HNWIs) and ensure the sustainability of all aspects of their wealth, they have evolved to encompass a broader range of capabilities. As such, the meaning of the family office will depend on the context. Some family offices now carry out transactions that used to be the territory of large corporations and private equity firms.
Another critical distinction for a family office is whether it is a single-family office (SFO) or a multi-family office (MFO). An SFO is what we consider to be “...the traditional family office that serves as an advisory and wealth-management firm supporting one ultra high net worth family.” In contrast, an MFO brings together a group of experts to advise and manage assets for multiple families.
Family office regulatory framework in Monaco
In 2016, Monaco passed a multi-family office law that established two new categories of MFOs. The first category relates to entities that are solely responsible for administering assets without the power to perform financial transactions, while the second category governs MFOs that can provide their clients with financial advice as well as complete deals. The MFOs in the latter category need authorisation from the regulator in the principality, the Commission de Contrôle des Activités Financières (CCAF), as well as the central government. They must also have a minimum startup capital of €300,000.
What sort of services do family offices offer?
As we previously noted, the services that encompass the family office have expanded. You have asset management, but there is a significant component dedicated to wealth structuring to preserve value across and in generations that include foundations and family trusts. They can also include immigration services should the family be relocating such as finding a school or property, financial projections or even setting up charitable foundations. Depending on the family office, you may have a more traditional asset management and estate planning entity or a one-stop-shop for anything a family might need.
Why Monaco?
Monaco has a favourable tax regime for high net-worth individuals that not only makes it an ideal location for resettlement but also family offices. Its proximity to the United Kingdom makes it easy to take a trip over to Monaco for a face-to-face meeting should the need arise.
Not only that, it’s one of the world’s most critical family office hubs with its family offices embodying an institutional character. There are at least 50 family offices headquartered in Monaco. With the fact that the principality has no income tax and an overall lower tax burden, it allows you to gain the expertise from one of the best family office centres while seeing a smaller impact on your wealth you could see from other markets. Family offices also see strong support from the government with the Monaco Association of Family Offices created as a result of national law 1.355 to develop family office service knowledge and use, along with enhancing the expertise of the professionals that offer services to family office activities.
This combination of expertise, proximity and favourable regulatory frameworks makes Monaco the ideal location for your family office.
What does the future hold for family offices both in Monaco and abroad?
Sir Anthony Ritossa, the Chairman of the Ritossa Family Office, based in Monaco, hosted the 9th Global Family Office Investment Summit in the principality. Among the topics that were discussed during the two-day event included the notion that families must communicate about critical issues to move forward, Deep Tech and impact investing. The Bloomberg study noted figures from the 2016 UBS/Campden Wealth Global Family Office Report that “62% of family offices are now active or expect to be active in impact investing.”
Along with the topics discussed at the Ritossa conference, another trend that will come to the family office is the increased focus on cybersecurity. The 2016 UBS/ Campden Wealth Global Family Office Report found that “15% of family offices reported having experienced a cyber-security breach in the past.” They are also divesting their investments from traditional industries into sectors such as climate change, agriculture and alternative energy. Plus, “[o]ther main areas that will see a lot of attention include working toward real-time consolidated reporting, developing soft factors like defining a clear mission and purpose.”
The 10th Family Office Investment Summit will be held from 23 November to 25 November in Dubai. The invitation-only conference will include discussions about digital assets, blockchain, agriculture and more. We will keep abreast of the developments to ensure that your family office embraces the new frontier.
Interested in setting up your family office in Monaco?
Are you looking for a partner to serve as your family’s personal Chief Financial Officer? Our family office services at Europe Emirates Group gives you the control benefits of a family office. We’ll set up a personalised plan covering wealth transfer strategies, investments and performance reporting. We’ll do this through highly optimising your tax mitigation and comprehensively managing all risks involved. Should you like to get started in setting up your family office, don’t hesitate to contact us.
Written by
Adrian Oton
CEO, Europe Emirates Group