Currency of Monaco
Monaco adopted the euro as its official currency in 2002 as a replacement for the Monegasque franc, which had been used as the legal tender of the country since 1837. Besides Monaco, the franc was also used by France and Andorra. The ISO code of the currency was MCF. One Monegasque franc was divided into 100 subunits known as centimes or ten units called décimes. In 1960, Monaco revised the value of its franc and introduced a new series of francs to replace the old franc at a ratio of 1 new franc to 100 old francs. When the euro was adopted by the country, the conversion rate of the franc to the euro was 6.55957 MCF to 1 EUR.
Monaco is a rich country. It has the lowest poverty rate in the world and its nominal GDP per capita of $153,177 is the second highest in the world. The service sector is the backbone of the country’s economy, with the main source of income being tourism.
Tourism contributes to 15% of the country’s GDP. Its casinos and great climate are the main attractions, bringing in many foreigners into the country each year. The banking industry in the country also attracts clients from across the world, and it is estimated to hold funds worth more than €100 billion. Of late the country is also investing in small environmental friendly industries which have high returns like biometrics and cosmetics.
The government of Monaco monopolizes many sectors such as postal services and tobacco. In communications, the state owns 45% of the telephone company Monaco Telecom. Monaco and France have a union that governs the country’s economy and customs. In 2011, the revenue generated by the country was approximately $5.748 billion. The rate of employment is 98% and besides the citizens, there are about 48,000 employees who commute daily from Italy and France. Living standards in Monaco are however high, and the real estate prices of Monaco are the highest in the world.
Monaco is perceived as a tax haven because it does not impose income taxes on its citizens and taxes on businesses are very low. This draws a lot of investors into the country. 75% of the Monaco’s income comes from foreign companies that have either set up offices or businesses in the country. The social insurance tariffs paid by both employees and employers to the government are however high. Employers are required to contribute around 35% of the gross salary plus benefits while employees contribute an additional sum that is about 13%. Residents pay taxes to the government by purchasing services and goods which come with a value added levy of 19.6%.
The country has been a subject of various tax policy organisations due to its financial system. It does not disclose its revenues and it also does not cooperate with the international community in regard to availing information needed to investigate crimes of tax evasion. The country has also been faulted for having relaxed laws on money laundering. The government of Monaco is pointed out for interfering with the judicial system of the country when it comes to investigating cases of money laundering.