A new Private Foundation in perspective for Monaco’s HNWIs
Monaco’s National Council has this week adopted a proposition de loi (bill) to create a new “fondation patrimoniale monégasque,” a private patrimonial foundation structure for wealth management. Unlike a government-initiated projet de loi, this measure originates from the Conseil National (National Council) and is currently at the bill stage. It must still go through legislative approval – including a final vote by the Council – and formal enactment before becoming law. If adopted, the new vehicle would mark a significant development in Monaco’s legal toolkit, offering onshore estate planning options previously unavailable in the Principality.
This proposed foundation is essentially a Monaco-based legal entity designed to hold and administer assets for the benefit of one or more beneficiaries (primarily family members) or to achieve specific purposes. Notably, the bill confines the foundation’s use to those with a substantial connection to Monaco: the founder must be domiciled in the Principality and the majority of the foundation’s administrators must also be Monaco resident. The initial endowment is set high (at €10 million in cash) to ensure it targets High-Net-Worth Individuals and significant family wealth structures. While the foundation may engage in philanthropic or cultural initiatives as a secondary activity, its main purpose is patrimonial – managing private wealth – and it cannot primarily serve as a charity or run commercial businesses (except ancillary activities). Crucially, any transfer of assets into the foundation must not infringe on forced-heirship rights under applicable succession law, meaning the tool is designed to complement Monaco’s civil law inheritance framework, not bypass it.
Aligning with International Standards and Compliance
Monaco’s current foundation laws, dating back to 1922 (with updates in 2010), have lagged behind those of other wealth centers like Switzerland, Liechtenstein and Belgium. Traditional Monégasque foundations could only serve public-benefit or philanthropic aims, limiting their utility for private wealth planning. The new patrimonial foundation bill aims to align Monaco with international standards by introducing a modern, private family foundation akin to structures available in jurisdictions such as Liechtenstein’s Stiftung or the Dutch family foundation. This alignment not only enhances the Principality’s competitive standing but also responds to the needs of a significant segment of Monaco’s resident population – namely HNWIs – who have been seeking sophisticated onshore solutions for asset structuring.
Key features of the proposed Patrimonial Foundation include:
- Wealth Preservation and Succession Planning: Enables founders to consolidate and manage family assets (e.g. real estate, art collections, shareholdings) within a Monaco-domiciled entity, ensuring their preservation and controlled transfer to heirs. For example, a founder could stipulate that a prized art collection remain in the family or be loaned to museums in the future, thereby safeguarding its legacy. The foundation can serve as a robust succession-planning tool, helping avoid fragmentation of assets and providing continuity across generations.
- Asset Protection: Provides a legal structure to protect valuable assets from external risks or family disputes. Assets endowed to the foundation are owned by a separate legal person, potentially offering insulation against creditors or litigation, while still benefiting designated family members according to the founder’s directives.
- Ancillary Philanthropy: Allows an optional philanthropic component – founders may dedicate part of the foundation’s activities to charitable or cultural goals (such as art or educational initiatives), though this cannot be the foundation’s sole purpose. This flexibility mirrors international practice, enabling families to combine private wealth management with legacy philanthropy under one structure.
- Regulatory Oversight and AML Compliance: The bill incorporates strong transparency measures in line with FATF (Financial Action Task Force) recommendations. Foundations would be subject to mandatory registration in a special register maintained by Monaco’s Business Development Agency, disclosure of beneficial owners, and inclusion in Monaco’s Register of Beneficial Owners. Each foundation must appoint a responsible officer to maintain basic information on the entity and its beneficiaries. These safeguards ensure the structure meets anti-money laundering and counter-terrorism financing standards – a timely reform as Monaco works to reinforce its compliance framework.
Purpose and Legal Nature: The fondation patrimoniale monégasque is a distinct legal entity (personne morale) created to hold and administer assets (movable or immovable property or real rights) transferred by one or more founders for the benefit of designated beneficiaries or to achieve specific purposes. It is essentially a private wealth foundation intended for long-term asset preservation or defined family purposes, as opposed to Monaco’s traditional public-benefit foundations. By law, it may not engage in regular commercial business (except as an incidental activity in pursuit of its purpose) and cannot practice liberal professions or industrial/artisanal activities. Notably, while the foundation can carry out philanthropic projects as a secondary activity (e.g. cultural or charitable endeavors), such philanthropy must remain ancillary and not the exclusive purpose of the foundation’s asset management.
Who Can Establish the Foundation: The founder may be any individual or an entity whose corporate object is the management of one or more persons’ wealth. However, to ensure a genuine link with Monaco, the founder must be domiciled in Monaco, and at least the majority of the foundation’s administrators must also have their domicile (or registered office, for any corporate administrators) in Monaco. In practice, this restricts the patrimonial foundation to those with an effective connection to Monaco (e.g. Monaco residents), aligning with the law’s goal of serving the local resident HNWI community.
Administration and Governance: Management of the foundation is entrusted to one or more administrators (who function similarly to trustees or board members). Administrators may be individuals or legal entities; if a corporate entity is appointed, it must designate a permanent individual representative who will bear the same civil and criminal responsibilities as an individual administrator.
Registration Duties: Upon establishment, the foundation’s constitutive act must be registered with the tax administration, and a one-time registration duty is levied. If the founder is a natural person, the act is subject to a fixed registration duty of €1,000 (payable upon presentation of the act, within 10 days of signing if notarized or within one month if under private signature). However, if the founder is a legal entity (such as a company or trust acting as founder, as permitted under Article 1), a higher proportional registration tax applies: 2% of the total value of assets and rights transferred to the foundation (in lieu of the €1,000 fixed fee), with a reduced rate of 0.5% for any Monegasque securities contributed.
Ongoing Taxation: Monaco notably has no income tax or wealth tax on individuals, and similarly it imposes no income or capital gains taxes on the foundation itself (so long as the foundation does not engage in commercial business).
Tax at Founder’s Death (Succession Duty): A critical fiscal point is how assets in the foundation are treated upon the founder’s death. Monaco does not levy estate or inheritance tax between immediate relatives (e.g. 0% between parents and children), but does impose such tax on more distant heirs or unrelated beneficiaries on a sliding scale. Under Article 20 of the proposal, when a founder (natural person) dies, the assets and rights held in the foundation are treated for inheritance tax purposes as if they were part of the founder’s estate passing to the beneficiaries. In other words, the portion of the foundation’s assets attributable to each beneficiary will be subject to Monaco’s succession (inheritance) duties, calculated according to the kinship between the founder and that beneficiary.
Regulatory Compliance and Transparency Measures
Monaco’s Proposition 268 places strong emphasis on transparency, oversight, and anti-money-laundering (AML) compliance, in line with international standards (notably the FATF – GAFI – recommendations). The authors explicitly noted that the law was crafted to meet FATF Recommendation 24 on the transparency of legal persons. Several layers of regulatory compliance are built into the framework:
- Government Authorization & Supervision: As described, a patrimonial foundation cannot exist without prior administrative authorization by the Minister of State. This vetting process likely involves background checks on the founder and administrators, and ensures the proposed foundation’s purpose and rules are acceptable.
- Registry and Public Disclosure: The patrimonial foundation must be registered in a special registry held by the RCI (Monaco’s company and commerce registry) upon creation. Certain key information about the foundation is thus recorded officially. Furthermore, an extract of the constitutive act is published in the official gazette (Journal de Monaco) shortly after authorization.
- Beneficial Owners and Beneficiaries: Critically, the law extends Monaco’s AML beneficial ownership regime to patrimonial foundations. Article 29 of the proposal subjects these foundations to the same obligations regarding beneficial owners as companies are, under Monaco’s AML Law 1.362 (as amended).
- Accounting and Audit Requirements: Patrimonial foundations are subject to rigorous bookkeeping and audit obligations to promote financial transparency and prevent misuse. They must prepare annual financial statements – a balance sheet showing the endowment funds and a profit-and-loss account – in accordance with Monaco’s accounting rules for sociétés anonymes (modified as needed for a foundation). In addition, the foundation is mandatorily required to appoint an auditor (commissaire aux comptes), chosen from the Monaco Order of Accountants.
- Local Asset Maintenance: Another compliance rule is the obligation for the foundation to hold a substantial portion of its assets in Monaco-based financial institutions. Upon formation, the foundation must open an account with a Monaco-established bank to deposit the initial endowment. Furthermore, throughout its existence, the foundation is required to maintain at least 50% of its financial assets in an account with a Monaco credit institution.
- AML and Sanctions: By incorporating the patrimonial foundation into the scope of Law 1.362 (Monaco’s primary AML/CFT law), the foundation and those who manage it are subject to all relevant obligations to prevent money laundering, terrorism financing, and corruption.
The Principality’s financial and legal sector has reacted positively to the proposed patrimonial foundation. The National Council’s Finance and Economy Commission – which reviewed the bill in June 2025 – expressed broad satisfaction with the measure. Observers note that it strikes an important balance: on one hand, it enhances Monaco’s competitiveness by giving wealth managers and advisors a tool comparable to those available in other international financial centers; on the other, it upholds stringent compliance obligations, reinforcing Monaco’s reputation for robust regulation. In essence, professionals in Monaco will soon be able to offer families a modern foundation vehicle similar to those in well-established jurisdictions, without compromising on transparency or oversight. This development has been welcomed as a sign that Monaco is listening to industry feedback and adapting its legal landscape to better serve wealthy residents.
Despite the optimism, it is emphasized that the patrimonial foundation is not yet law. As a proposition de loi, it requires further legislative steps. The bill was formally adopted by the Conseil Nationale; and if converted into a Projet de Loi by the Government a final vote by the Conseil National is needed to approve the text. Only after legislative adoption – and the subsequent sanction by H.S.H. the Prince – would the provisions come into effect. Lawmakers and stakeholders remain confident, however, that given the broad support and clear benefits, the proposal will move forward to implementation in the near future.
Monaco’s active community of trust and company service providers, lawyers, single and multi-family offices possesses a wealth of experience from handling similar foreign structures. Their input can help fine-tune the foundation’s regime – for instance, ensuring that the process to migrate foreign foundations or trusts into Monaco is smooth, or clarifying how fondations patrimoniales might interact with Monaco’s courts in the event of disputes or insolvency, or clarifying the professional obligations of the administrators of the foundations. The National Council has acknowledged that ongoing dialogue with practitioners will be valuable, given that these professionals will be the ones advising clients to use the new structure and administering many of them in practice. By incorporating feedback, Monaco can refine any aspects of the law that require adjustment and issue guidelines to resolve ambiguities (such as the treatment of forced heirship claims against foundation assets, or reporting duties for foundations with multi-jurisdictional asset holdings).
Conclusion: Monaco’s pursuit of a patrimonial foundation reflects a proactive leap towards modernizing its wealth management offerings. The initiative promises to fill a longstanding gap by providing Monaco’s high-net-worth families a domestic solution for succession planning and asset protection that is both internationally aligned and compliant. While the legislative process must run its course, the introduction of this bill signals a constructive and forward-looking outlook. If and when the patrimonial foundation framework is enacted, Monaco will have achieved a nuanced balance – bolstering its attractiveness as a private wealth hub while underscoring its commitment to global financial standards. The financial community is watching with anticipation, confident that this measure, once adopted, will further cement Monaco’s status as a secure and sophisticated jurisdiction for wealth structuring.
Rosemont will provide further updates and comments as this project advances.
For any questions please contact Peter Brigham