Adoption of the draft law No. 252 relating to the regulation of the profession of property trader

NB: Parliamentary draft law no. 252 has been transformed by the Government into Bill no. 1064.

The draft law no. 252 on the regulation of the profession of property trader (of parliamentary origin), tabled in public session of the National Council on 15 October 2020 and adopted on 10 May 2021, aims at regulating the profession of property trader autonomously.

A property trader is a natural person or a commercial company who, as a regular occupation and for his/her/it own account, buys real estate, business capital or shares in real estate non-trading companies (Société civile immobilière – SCI) with a view to reselling them.

As Monegasque legislation stands, the profession of property trader falls under the common law regime of authorisation and administrative declaration to exercise provided for by Law No. 1.144 of 26 July 1991, amended, concerning the exercise of certain economic and legal activities.

Proposed provisions:

> to establish the profession of property trader as a new regulated profession (as well as other real estate professionals subject to the provisions of Law No. 1.252 of 12 July 2002 on the conditions of exercise of activities relating to certain operations concerning buildings and businesses) and to ensure the security of real estate transactions;

> to reinforce the conditions of access to the profession of property trader, distinguishing according to whether the person is of Monegasque (declaration) or foreign (authorisation) nationality;

> to prove, in the context of the declaration or application for authorisation, that a financial guarantee has been obtained from a bank or financial institution authorised to give a guarantee and having its registered office or branch in the Principality, as well as the subscription of an insurance contract covering the financial consequences of professional civil liability;

> to recast the specific and derogatory tax regime from which property traders benefit when acquiring real estate [1] so that it is more profitable for the State and the Monegasque economy, and to encourage property traders to make substantial improvements to the property they have acquired with a view to reselling it[2].

The exemption from transfer duties would be partial, and conditional on the completion of work within a period of three years, which may be extended by one year.

A registration duty of 2.25% of the value of the property acquired (which corresponds to half the rate applicable to sales of property to persons meeting the transparency criteria set out in Act No. 1.381 of 29 June 2011 on registration duties payable on transfers of property and real estate rights) would apply, with the obligation to carry out an amount of work equal to 5% of the market value of the property acquired.

Thus, Draft Law No. 252 intends to encourage “large-scale renovation work, which will be all the more noticeable in the old sector, where the quality of life of residents could be greatly improved by the work carried out, (…) energy renovation work on buildings, to support the Principality’s energy transition process”, as well as the local economy, through incentives (VAT refunds) if a company from the Principality of Monaco is used. [3]

[1] Act No. 1.044 of 8 July 1982, as amended, concerning exemption from registration duties on transactions by property dealers, public sales of certain tangible movables and contracts for works, supplies or materials.

[2] Explanatory Memorandum to Draft Law No. 252, pp. 4-5.

[3] Report on draft law No. 252, 29 March 2021, pp. 4-5.