What are business assets in Monaco and how to invest?

Buying business assets in Monaco is a unique process, with legal specificities particular to the Principality that differ significantly from those in other countries. In France, commercial law clearly distinguishes between commercial property (the real estate) and the business assets (the commercial activity itself, including tangible and intangible assets but excluding the real estate). This distinction is also present in England, Germany, and Italy, but with variations in terminology and practices.

For example, in English-speaking countries like the United Kingdom or the United States, one would refer to buying a "business" or "business assets" to designate the acquisition of an activity without the premises, while "commercial property" or "premises" refers to the purchase of the associated real estate. Thus, the expression "buying a business (or business assets)" refers to purchasing the business assets, while "buying the commercial property" means acquiring the premises.

In Monaco, investors who buy business assets acquire the right to operate a commercial activity in a location without owning the premises. They pay rent to the owner of the premises under a commercial lease. This situation can include nuances such as "specialization change," which occurs when the buyer wishes to change the activity conducted in the premises (for example, transforming a jewelry store into a bakery). This process is specific to Monegasque regulations and requires a thorough understanding of local rules.

Our agency, Petrini Exclusive Real Estate Monaco, specializes in luxury real estate, particularly in the sale, rental, and management of exceptional properties. In our catalog, we also offer numerous professional properties, such as offices, as well as a wide selection of business assets in Monaco. If you are looking for this type of property, we can help you find the perfect location, with or without a shopfront, and guide you through the Monegasque market. Whether you are looking to acquire a restaurant, a retail store, or an office, contact us so we can help you find the ideal business asset.

In this guide, we will precisely define all the technical terms related to buying business assets, explaining in detail what it encompasses, as well as the essential distinctions with commercial property. You will also discover the particularities of the commercial lease in Monaco, the steps to follow to buy or sell a business asset, and practical advice for investing in promising sectors in the Principality.

What is a business asset in Monaco?

A business asset represents all the elements used by a businessperson to operate their commercial activity. In Monaco, as in France, it is essential to understand that when you buy a business asset, you do not acquire the commercial property where the activity is conducted, but rather the rights related to operating the activity. The premises remain the property of a third party, usually the landlord, and the occupant must pay rent to use the space under a commercial lease.

The distinction between the commercial lease and the leasehold rights is crucial in this context:

• The commercial lease is a contract signed between the owner of the premises (the landlord) and the businessperson (the tenant). This contract grants the businessperson the right to occupy and operate their activity in the premises in exchange for rent. It defines the rights and obligations of both parties, such as the lease duration, renewal conditions, and any restrictions on changing the activity.

• Leasehold rights, on the other hand, are an element of the business asset. It is the right of the current tenant (or the owner of the business asset) to benefit from the terms provided by the current commercial lease. When you buy a business asset, you take over these leasehold rights, which means you can continue to occupy the premises and operate the activity under the terms of the existing commercial lease.

Clarification: Leasehold rights and the business asset

The business asset is a set of tangible and intangible elements that allow the operation of a commercial activity. These elements include:

1. Leasehold rights: the right to use the premises where the activity is conducted, according to the terms of the commercial lease in force. It is a key element, but it is only part of the business asset.
2. Clientele: existing commercial relationships and the company's reputation, which are valuable assets.
3. Trade name and signage: the name under which the activity is known to the public and the distinctive signs used to identify it.
4. Licenses and permits: in some sectors, specific licenses (like a license for a bar or restaurant) are also part of the business asset.
5. Equipment and tools: everything necessary for operating the activity, such as furniture, tools, and technical equipment.

The role of leasehold rights in the business asset

The leasehold rights are an intangible element of the business asset. They confer to the operator the right to occupy the commercial premises under the terms of the commercial lease signed with the owner of the premises. Without this right, the businessperson could not operate their activity in these premises.

However, the business asset is not limited to the leasehold rights. It also includes all the other elements mentioned above (clientele, trade name, equipment, etc.), which are just as important for the commercial activity.

Concrete example for clarification:

Imagine you are buying a restaurant in Monaco. This restaurant consists of several elements:

• Leasehold rights: this allows you to continue occupying the premises under the conditions provided in the commercial lease (rent, duration, renewal, etc.).
• Clientele: you benefit from the loyal customers who already frequent the restaurant.
• Equipment: tables, chairs, kitchen equipment, etc., everything necessary to run the restaurant.
• Trade name: if the restaurant has a good reputation, you also purchase the notoriety associated with its name.

Thus, the leasehold rights are a fundamental intangible asset of the business asset, but it is only part of the whole. Buying a business asset means acquiring all these elements that allow the continuous operation of a commercial activity.

Let's take an example: If a businessperson owns a restaurant in Monaco, they will have signed a commercial lease with the owner of the premises, allowing them to rent the space for their restaurant. When they sell their business asset, they transfer their leasehold rights to the buyer. The latter can then continue to operate the activity in the same premises, under the same conditions as those provided in the initial commercial lease, without having to renegotiate a new lease with the property owner.

However, if the buyer wishes to change the activity (for example, transforming a restaurant into a clothing store), a specialization change procedure will be necessary. This means requesting authorization from the landlord to modify the use of the premises, which can lead to additional costs and contractual adjustments.

Thus, the leasehold rights are one of the major intangible assets of the business asset. They allow the buyer to benefit from the conditions of the existing commercial lease without having to negotiate a new rental contract, which can be a considerable advantage, especially in Monaco where rents can be high.

How to buy a business asset?

The process of buying a business asset is structured around several crucial steps: preparation, evaluation, negotiation, due diligence, and finalizing the acquisition. Here is a detailed overview of these steps to ensure a successful transaction.

Preparation and research

The first step is to clearly define your specific needs based on your business project. Ask yourself questions about the activity you wish to develop, the ideal location, and the local specificities related to Monaco. Your budget will also play an essential role in selecting business assets. In Monaco, some sectors like catering and luxury retail are highly sought after, and searching for a suitable business asset can take time.

Once your criteria are defined, actively search for available business assets. Working with a specialized agency like Petrini Exclusive Real Estate Monaco can greatly facilitate this step, as we have access to a wide portfolio of business assets for sale, with or without commercial property, in key sectors of Monaco.

Evaluation of the business asset

When you have identified a business asset that meets your criteria, it's time to evaluate it thoroughly. Analyze the financial statements of recent years to check the profitability and stability of the activity. In Monaco, where the commercial sector is very dynamic, elements like location and the company's reputation play a crucial role.

Pay particular attention to intangible assets such as the clientele, leasehold rights, licenses (especially for restaurants or bars), and any patents or trademarks. These elements can significantly influence the value of the business asset. In the Monegasque context, the leasehold rights are particularly valuable, as they allow you to continue operating the activity in the premises under the conditions of the existing commercial lease, often in strategic locations.

Negotiation and purchase offer

After the evaluation, Petrini Exclusive Real Estate Monaco will enter into negotiation with the seller on your behalf. At this stage, you can discuss the terms of the sale, including the price, payment terms, and the takeover of the business's assets. It is common to present a conditional purchase offer, based on the results of the due diligence, but also pending authorizations issued by the Direction of Economic Expansion, which has recently changed its name to the Direction of Economic Development. This allows you to adjust the offer based on the elements discovered during the evaluation. In some cases, adjustments may be necessary if undisclosed liabilities or debts are discovered.

Due diligence

The due diligence is one of the most critical steps. It is a thorough verification of the legal and financial aspects of the business asset. In particular, in Monaco, this verification should include a meticulous analysis of the existing commercial lease (remaining duration, rent amount, renewal conditions), contracts with suppliers, and any potential debts.

Ensure that all necessary authorizations to operate the activity (e.g., restaurant or bar licenses) are valid and transferable. Also, check for any potential liabilities, such as ongoing litigation or contractual commitments that could affect your activity after the transaction. This step is essential to ensure that you will not inherit hidden problems after the acquisition.

Finalizing the acquisition

Once the due diligence is completed, you can proceed to sign the sales contract. This contract must be carefully drafted, ideally with the help of a lawyer specialized in business law and commercial transactions in Monaco or a Notary in Monaco. The contract will specify the payment terms, the transfer of assets (leasehold rights, equipment, clientele, etc.), as well as the guarantees provided by the seller regarding the absence of undisclosed liabilities.

After signing, make the payment according to the agreed terms and ensure that the transfer of all aspects of the business asset is officially completed. This includes the transfer of licenses, ongoing contracts, and of course, the leasehold rights, which will allow you to continue operating the activity in the concerned premises. You can then take full management of the business, being confident that all formalities have been correctly fulfilled.

Promising sectors and types of businesses in Monaco

Monaco, with its attractive tax framework and strategic positioning in Europe, is a sought-after destination for many investors and entrepreneurs. The market for business assets is particularly dynamic, and certain sectors stand out for their growth potential and profitability. When it comes to investing in a business asset, it is essential to choose the sector in which you want to establish yourself to maximize your chances of success.

Promising sectors in Monaco

1. Catering and hospitality: The catering sector in Monaco experiences sustained demand, driven by luxury tourism and a demanding international clientele. Investing in a restaurant business asset in Monaco can be particularly profitable, especially if the location is strategic, with good visibility and regular foot traffic. Restaurants located near the port, in tourist areas, or close to major hotels benefit from a high-end clientele, which can significantly increase the value of the business asset.

   Hospitality is also a key sector in Monaco, with an ever-growing demand for rooms and luxury accommodations. Even if acquiring an entire hotel may require significant investments, there are interesting opportunities in managing smaller establishments or ancillary activities related to hospitality, such as catering services or shops within hotel complexes.

2. Luxury retail: Monaco is globally recognized for its luxury boutiques, where major international brands and high-end retailers coexist. Business assets in this sector, whether jewelry stores, fashion boutiques, or perfumeries, are often highly sought after due to the strong purchasing power of residents and visitors. Locations in prestigious areas like the Carré d'Or or near luxury hotels are particularly prized.

   Purchasing a business asset in the luxury sector can also offer rapid growth opportunities thanks to a loyal clientele and positioning in a market where competition is more limited but highly qualified.

3. Financial and real estate services: The financial and real estate services sector is booming in Monaco. Companies specialized in wealth management, financial consulting, or luxury real estate agencies find a market in constant demand. Investing in a business asset in these sectors can be an excellent opportunity for entrepreneurs with an international network wishing to cater to a high-end clientele.

   Regarding real estate, the scarcity of available properties in Monaco, combined with the ever-growing demand for residences and offices, makes this sector a true pillar of the Monegasque economy.

4. Health and wellness: With the increasing focus on health and wellness, Monaco is seeing a growing interest in establishments specialized in these sectors, such as private clinics, luxury spas, and wellness centers. A business asset in the health sector can include activities such as aesthetic clinics, high-end gyms, or relaxation centers, which are highly sought after by wealthy residents and visitors to the Principality.

5. Tobacco shops and newsstands: Tobacco shops for sale in Monaco constitute another interesting investment opportunity. These businesses benefit from a regular clientele and often central locations, ensuring a certain financial stability. Although the tobacco market is subject to specific regulations, their acquisition remains attractive, notably due to the licenses and associated rights.

How to choose the right sector to invest in?

To determine the sector in which to invest in Monaco, it is important to consider several factors:

• Location: As in any city, location is paramount in Monaco. A business asset located in an area with high foot traffic, close to hotels, casinos, or tourist spots, will have greater profitability potential.
• Target clientele: Monaco attracts a wealthy international clientele, which naturally directs investment opportunities toward sectors like luxury, high-end catering, and specialized services.
• Market trends: Staying attuned to current trends can help you choose a promising sector. For example, the growing demand for wellness experiences or the popularity of tailor-made financial services can guide your decision.
• Regulations: In Monaco, certain activities require specific licenses or are subject to particular regulations. It is therefore essential to be well-informed about the legal requirements related to the sector you are targeting.

Why invest in business assets in Monaco?

Monaco, with its unique environment, tax advantages, and international appeal, is a privileged destination for investors looking to acquire a business asset. Several reasons explain why Monaco attracts a large number of entrepreneurs and investors each year.

1. Advantageous tax framework

One of Monaco's main assets is its attractive tax regime. The Principality does not levy income tax on Monegasque residents, making it a particularly sought-after destination for wealthy individuals and international entrepreneurs. This favorable tax environment is also reflected in the commercial sector, with reduced charges for local businesses, especially those operating in the services or luxury sector.

Moreover, Monaco does not impose wealth tax, which is a decisive factor for foreign investors wishing to protect and grow their assets. Acquiring a business asset in this context allows benefiting from these tax advantages while developing a thriving commercial activity in a high purchasing power market.

2. International demand and high purchasing power

Monaco attracts millions of visitors each year, often from the most affluent social classes. The Principality is renowned for prestigious events like the Formula 1 Grand Prix or the Monte-Carlo Rolex Masters, which draw an international clientele. This tourist influx, combined with the presence of residents with substantial financial means, guarantees a constant demand for high-quality goods and services.

Investing in a business asset in Monaco therefore allows addressing a clientele with strong purchasing power, whether they are passing tourists or permanent residents. Whether you consider opening a high-end restaurant, a luxury boutique, or a financial services company, the revenue potential in Monaco is considerable, especially since competition remains limited due to the small size of the territory.

3. Stable and attractive real estate market

Monaco has one of the most stable and attractive real estate markets in the world. Commercial properties, whether commercial premises or spaces for rent, are highly sought after, and their value tends to maintain or even increase over time. This represents a considerable asset for investors who wish to acquire a business asset and benefit in the long term from the added value on their commercial assets.

Due to the scarcity of premises available for sale or rent, demand remains high, and opportunities to acquire a well-located business asset are limited. This also ensures price stability and income for investors who own a profitable business.

4. Stable political and economic environment

Monaco benefits from exemplary political and economic stability, offering investors a secure framework to develop their activity. The Principality has managed to maintain stable governance and a solid economy, with robust financial institutions and a business-friendly legal framework. This stability allows companies to operate in a secure environment with long-term visibility, a considerable asset for foreign investors.

Moreover, Monaco maintains excellent relationships with its European neighbors, notably France and Italy, further strengthening its position as an international hub for companies seeking to establish themselves in the region.

5. Privileged access to a network of entrepreneurs and investors

Monaco is also a meeting place for entrepreneurs, investors, and leaders from around the world. Thanks to its dynamic business ecosystem, the Principality offers unique opportunities to expand one's network and develop strategic partnerships. Entrepreneurs who establish themselves in Monaco benefit from privileged access to high-level investors, as well as exclusive events that promote business exchanges.

By acquiring a business asset in Monaco, you join this ecosystem and can leverage this network to develop and prosper your activity. The luxury, finance, and real estate sectors are particularly well-represented and offer interesting prospects for visionary entrepreneurs.

Who can own a business asset in Monaco?

Owning a business asset in Monaco is a lucrative opportunity, but it is subject to certain legal and administrative conditions. Whether you are a local or foreign entrepreneur, it is essential to understand the legal requirements that govern the acquisition and management of a business asset in the Principality.

1. Nationality and residence

Unlike other countries, Monaco does not impose strict restrictions on nationality for owning a business asset. Whether you are a Monegasque resident or not, you have the possibility to buy and manage a business asset. However, certain conditions must be met, especially if you are not a resident of the Principality.

• Monegasque residents and foreigners: Residents of Monaco, regardless of their nationality, can buy and own a business asset without major restrictions. The legislation is relatively flexible and encourages foreign investors to establish themselves in the Principality.

• Non-residents: If you are not a resident in Monaco, you can still acquire a business asset. However, it may be necessary to prove that you have the skills or qualifications required to operate the commercial activity you intend to acquire. It is also recommended to inquire about business visa or residence procedures if you plan to spend more time in Monaco to directly manage your company.

2. Legal conditions for foreign companies

If you are a foreign company and wish to acquire or operate a business asset in Monaco, specific rules apply. Monegasque legislation allows international companies to establish themselves in the Principality, but they must comply with certain formalities:

• Creation of a subsidiary: Foreign companies often need to create a subsidiary or a local legal entity to operate a business asset in Monaco. This allows the Principality to better regulate and supervise commercial activities operated by foreign entities on its territory.

• Authorization to operate: Certain activities are subject to specific authorizations in Monaco. For example, if you take over a business asset in the catering or financial services sector, you will need to obtain licenses or administrative authorizations before you can start operating.

3. Obligations for entrepreneurs

Entrepreneurs who own a business asset in Monaco must comply with certain legal and fiscal obligations. In addition to residence conditions and authorizations to operate, it is essential to comply with the legislation in force concerning business management, employee rights, and taxation.

• Registration of the activity: Any commercial activity in Monaco must be registered with the competent authorities. This involves providing documents proving that you meet the legal requirements to operate a business in the Principality, notably in terms of fiscal regularity and administrative compliance.

• Fiscal obligations: Although Monaco offers an attractive tax environment, with little or no taxes for resident individuals, companies must pay certain local taxes. For example, companies generating more than 25% of their turnover internationally are subject to corporate tax at a rate of 33.33%. It is therefore crucial to be well-informed about the fiscal implications of managing a business asset in Monaco.

4. Rights and protection of entrepreneurs in Monaco

Monegasque legislation also provides protections for entrepreneurs who own and operate a business asset. This includes rights concerning the renewal of the commercial lease and preemption rights in certain situations.

• Renewal of the commercial lease: Businesspeople who own a business asset generally benefit from the right to renew their commercial lease, allowing them to continue their activity in the same premises without the risk of losing the location. This security is a major asset for entrepreneurs who wish to settle permanently in Monaco.

• Protection in case of sale of commercial property: If the owner of the commercial property decides to sell, the holder of the business asset may sometimes benefit from a preemption right, allowing them to position themselves as a priority to purchase the premises. This ensures some stability for the entrepreneur and offers an additional investment opportunity.

5. Specific restrictions in certain sectors

Finally, certain sectors in Monaco are subject to restrictions or specific regulations. For example, acquiring a business asset in the banking, financial, or public health sectors may require additional licenses or authorizations. It is therefore essential to be well-informed about the conditions of access to these sectors before investing in a business asset.

How much does a business asset cost in Monaco?

The cost of a business asset in Monaco varies considerably depending on several factors, including location, the nature of the activity, and the specifics of the commercial lease. Monaco, being one of the most exclusive markets in the world, presents high prices for the acquisition of a business asset, but the returns on investment can be very interesting, especially in certain key sectors.

1. Factors influencing the price

The cost of a business asset in Monaco is influenced by a set of factors that vary from one business to another. Here are the main elements that can impact the price:

• Location: In Monaco, location is undoubtedly one of the most determining factors in evaluating the price of a business asset. Businesses located in tourist areas, such as the Carré d'Or, or near Port Hercule, where foot traffic is high, will have higher prices than those located in less frequented neighborhoods. A business with a shopfront highly visible on a busy street can also justify a higher price due to its visibility.

• Sector of activity: Certain sectors, such as catering, luxury, or financial services, are particularly sought after in Monaco, and business assets in these fields tend to have higher values. Conversely, more specialized or niche sectors may present lower acquisition costs, although they are also dependent on location and demand.

• Reputation and clientele: The prestige of a business and the loyalty of its clientele are crucial elements in evaluating a business asset. A restaurant or boutique with a regular and well-established clientele will benefit from a higher valuation, as it guarantees immediate profitability to the buyer.

• Duration of the commercial lease: The remaining duration of the commercial lease is also an important factor. The longer the lease duration, the more security the buyer has to operate the activity in the concerned premises. A lease nearing its end may require renegotiation with the owner of the premises, which can affect the sale price of the business asset. Moreover, the rent conditions (amount, indexation) can also play a significant role in the evaluation.

2. Average prices by sector

The cost of a business asset in Monaco can vary greatly depending on the sector of activity and location. Here are some examples of average prices by sector, to give an idea of price ranges in Monaco:

• Catering: Business assets of restaurants in highly frequented areas like Monte-Carlo or La Condamine can sell between €500,000 and €2,000,000, or even more, depending on the size of the establishment, its reputation, and its location. Restaurants with terraces or a view of the port can reach higher prices due to their attractiveness.

• Luxury boutiques: Luxury businesses located in areas like the Carré d'Or can reach very high prices, often several million euros, especially if the boutique benefits from a prestigious shopfront and a high-end clientele. The value of the brand, existing clientele, and premium location make this sector one of the most expensive in Monaco.

• Tobacco shops and newsstands: Tobacco shops in Monaco are highly demanded due to their stable clientele and exclusive licenses. A business asset in this sector can cost between €300,000 and €800,000, depending on its location and business volume.

• Offices and services: Offices or service companies (wealth management, real estate, etc.) can vary in price, with lower acquisition costs for activities without a shopfront. A business asset in this sector can cost between €200,000 and €1,000,000, depending on the size of the premises and the location.

3. Additional costs to anticipate

In addition to the acquisition price of the business asset, several other costs must be considered in the overall budget:

• Notary fees: As with any real estate or commercial transaction, acquiring a business asset in Monaco requires the intervention of a notary. Notary fees generally amount to a percentage of the sale price and vary depending on the transaction amount.

• Real estate agency fees: When buying a business asset in Monaco, it is common to go through an agency specialized in commercial real estate. Agency fees generally vary between 6% for the seller and 3% for the buyer (2024 official rates of the Monaco Real Estate Chamber) of the business asset's sale price, depending on the agency and the services provided. These fees cover property searches, investment advice, negotiation of terms, and management of legal and administrative aspects of the transaction. Working with an agency like Petrini Exclusive Real Estate Monaco ensures personalized support and in-depth expertise of the local market, securing the investment.

• Due diligence fees: Before buying a business asset, thorough due diligence is recommended to verify all financial and legal aspects of the business. This may include fees for lawyers, accountants, and advisors specialized in commercial transactions.

• Fitting or renovation costs: Depending on the condition of the premises and the equipment included in the sale, the buyer may need to invest in fitting or renovation works to tailor the business to their taste or to meet standards. This is particularly common in sectors like catering, where equipment may require upgrading.

4. Taxation and costs related to capital gains

When selling a business asset, the capital gain realized is generally subject to taxation. However, in Monaco, tax rules are more favorable than in other European countries. Depending on the company's situation and structure, the buyer may be exempt from certain taxes. It is therefore crucial to consult a tax expert in Monaco to fully understand the tax implications related to the sale or purchase of a business asset.

Investing in a business asset in Monaco: A strategic and thoughtful commitment

Investing in a business asset in Monaco is much more than a simple commercial transaction: it is an approach that involves understanding the nuances of the Monegasque market and benefiting from its many advantages. Unlike other countries, where the rules are similar but practices may vary, Monaco imposes specificities that make this market unique and extremely attractive for savvy investors.

The Monegasque tax framework is one of the Principality's major assets. With an absence of income tax for residents and very favorable taxation for local businesses, Monaco offers a rare environment to develop a commercial activity without being burdened by excessive tax charges. This, combined with the region's economic and political stability, creates a climate conducive to long-term investment.

Moreover, the commercial real estate market in Monaco, characterized by the scarcity of its commercial premises and strong demand, ensures that acquiring a business asset in sectors like catering, luxury, or financial services is often a strategic investment. Location plays a determining role in the valuation of a business asset, with prestigious locations like the Carré d'Or or tourist areas near the port ensuring a quality clientele and high profitability potential.

However, beyond simply acquiring a business, managing it in Monaco requires mastering certain technical aspects. The leasehold rights, for example, are a central element of the business asset that allows the buyer to continue operating the activity in premises without renegotiating the rental contract. Understanding this distinction is essential to avoid any confusion, especially since the commercial lease can also contain clauses specific to Monaco, such as specialization changes in case of activity change.

Therefore, due diligence before purchase remains a mandatory step. From financial analysis of the company to verifying contracts and possible debts, this step ensures that the buyer will not discover unpleasant surprises after the transaction. A precise evaluation of intangible assets, such as clientele, trade name, and licenses, is also essential to ensure that the business has sufficient potential to ensure profitability from the first years of operation.

Finally, choosing the sector of activity is crucial. Whether you wish to invest in a high-end restaurant, a luxury boutique, or even a tobacco shop in Monaco, each sector presents its own opportunities but also its own challenges. Understanding the dynamics of the local clientele, mainly composed of wealthy residents and international visitors, allows for better targeting of investments and optimizing chances of success.

It is in this context that Petrini Exclusive Real Estate Monaco positions itself as your trusted partner. With its in-depth knowledge of the market and numerous successful transactions, our agency accompanies you at each step of the process. We help you identify opportunities, evaluate the potential of business assets, and guide you through the complex administrative and legal procedures, whether to buy or sell a business asset in this unique Principality.

In summary, investing in a business asset in Monaco is a strategic commitment that requires both rigor and expertise. With the support of specialized professionals, you can maximize your chances of success and join the privileged circle of entrepreneurs who thrive in this iconic city. If you are ready to take the step, we are here to help you find the ideal business asset and make your project a success.

Glossary of Terms Related to Buying Business Assets in Monaco