The law regulating the profession of property traders, published on July 26, 2024, in the Journal of Monaco (https://journaldemonaco.gouv.mc/Journaux/2024/Journal-8705/Loi-n-1.560-du-2-juillet-2024-relative-a-l-encadrement-de-l-activite-de-marchand-de-biens), was anticipated by the Monegasque community.
Indeed, this law regulates both access to and the conditions of practicing this profession. It also establishes administrative and criminal sanctions to ensure its enforcement.
Regulation of Access to the Profession
The conditions for entering the profession are now regulated.While this activity remains subject to the standard declaration a nd authorization regime, obtaining authorization to engage in the property trader profession is contingent upon two criteria:
- First, direct or indirect ownership of at least 75% of the capital of real estate trading companies must be held by a person of Monegasque nationality or by a foreign nationality with permanent residence in Monaco.
- Secondly, any individual or manager of a limited liability company conducting this activity must have their residence in the Principality.
The Creation of New Obligations
This law also creates new obligations. A financial guarantee, designated for the payment of registration fees, is required and must be provided by a Monegasque establishment. This guarantee must be available upon the first request from the Treasury without any exceptions from the guarantor. The minimum amount of this guarantee will be set later by Sovereign Ordinance. Professional civil liability insurance must also be taken out with an accredited institution in the Principality.
Regulation of Registration Fees Payment
The law also regulates the payment of registration fees.
The registration fees for acts not subject to VAT will be halved if the following cumulative conditions are met:
- Compliance with obligations related to intermediary operations for the purchase or sale of real estate or business assets, as outlined in Article 8 of Law No. 474 of March 4, 1948, concerning reform of registration and stamp duties, as amended.
- Filing of a compliant declaration with the tax authorities within fifteen days following registration with the Trade and Industry Registry, as provided by the Administration.
- Declaration, in the acquisition deed, of the intention to resell within 3 years, a period that may be extended by one year.
- Commitment in the acquisition deed to comply with electrical and energy standards in effect during resale.
Failure to meet these conditions will result in the cancellation of favorable provisions regarding registration fees. Real estate traders will be required to pay the full amount of these fees within one month following the expiration of the 3-year period, possibly extended, plus interest at the legal rate and an additional 5% fee.
Introduction of New Sanctions
In addition to these financial penalties, the law introduces administrative and criminal sanctions.
Thus, if the aforementioned conditions for exercising the profession of property trader are not met, or if the holder of the authorisation or declaration has remained without carrying out a transaction for more than three years without any legitimate reason, the authorisation or declaration to exercise the profession may be suspended or revoked.
Finally, practicing this profession without authorization or through a front person may result in a fine of up to twice the profit made.
These provisions automatically apply to all pending declaration or authorization procedures, and property dealers already in business have three months to comply with them once this law comes into force.
All acquisitions taking place on or after 1 September 2024 will be affected by the new registration duty provisions.
ALTIQA SAM and its teams are at your disposal to assist you in bringing your business into compliance with these new legal obligations.
Article 8 of Act no. 474 of 4 March 1948 reforming registration and stamp duties, as amended: Any natural person or legal entity acting as an intermediary for the purchase or sale of real estate or business assets must keep two columnar directories, not subject to stamp duty, showing day by day, without blanks or spaces and in numerical order, all powers of attorney, promises of sale, deeds transferring ownership and, in general, all deeds relating to their profession as an intermediary. These registers, which are kept in the same way as those of public and ministerial officers, must be endorsed and initialled by the President of the Court of First Instance. They must be presented to the Receiver of Registration for approval in the first ten days of January, April, July and October of each year. Any breach of the provisions of this article is punishable by a fine of between 150 and 15,000 euros.