SAN MARINO, the oldest Republic of the world (founded in the 301 a.c.), enjoys independent sovereignty having its own independent institutions; San Marino has acquired international status through acknowledgment from other States and adhesion to international treaties and organizations.
– Corporation tax (IGR)
The company income tax rate is 17% (proportional).
The profits distributed to the owners/shareholders are not subject to additional taxation in San Marino (if the shareholders are resident abroad becomes necessary to evaluate the treaties between San Marino and the foreign country n the “double taxation”).
– Tax withholding at the source
The San Marino companies act as withholding agent (on behalf of the Revenue Service) when they correspond payments to subjects nonresident (both companies and individuals), in money or nature, for carried out performances(consultancy of any kind). The withholding tax rate is 20%
– Tax on commissions to agents / on advertising and data editing
The San Marino companies when paying out commissions to agents and/or representatives nonresident (both companies and individuals), are obliged to pay a tax rate of 6% when selling or promoting foreign merchandise or services (the rate is reduced to 3% when selling or promoting sammarinese merchandise or services).
The San Marino companies when paying out remuneration to subjects nonresident (both companies and individuals) for advertising or data editing services are obliged to pay a tax at a rate of 3%.
– Import tax
The tax on the imports of goods and services connected to the goods is called “monofase” and has a rate of 17%.
As a different concept from the “VAT” , this tax only affects the goods and the services connected when those enter San Marino territory, not the “added value”. The rate of 17% is reduced for specific categories of goods and according to their future use (i.e. personal computers or furniture for the company offices are taxed at 1% if they are instrumental to the activity). This tax is refundable when the goods are exported, even when they have undergone transformation. (i.e. a San Marino based company I buys a product at 100 euro, on this amount the company pays a tax of 17 euro. When the Company sells the product at, let’s say 100% above its original value, the final price of sale to customers will be 217 euro (while with the VAT system, that would be 240 euro, considering VAT at 20%)
START UP AND REGISTRATION OF A COMPANY:
The type of companies recognized by San Marino corporate law are:
the limited liability companies (S.R.L.) and the stock companies (S.P.A.).
Anonymous companies (S.A.) have been abolished effective September 30th 2010.
Anyone can own shares (up to 100%) of a San Marino company no matter the nationality and /or the residency(with limitations for trading companies where 51% of the shares must be owned by a SM resident and specific sector where a preventative authorization must be released by the Adinistration – see below). In the majority of cases, the registration of a new company in San Marino is very simple and not subject to restrictions.
The main conditions are the following:
• The owners/shareholders must be clearly identified by producing a valid I.D. and of “suitable integrity” by producing a clear criminal record and a non bankruptcy certificate;
• The company business case must be lawful, feasible, determined and consistent with the business purpose;
• The minimum company stock is according to the law: € 25.500,00 for the limited liability companies (S.R.L.), € 77.000,00 for the stock companies;
The administrative tasks for the start up and registration are fairly simple and can be fulfilled in about 20/30 days (our Chartered Accountant firm can guide you through all the steps of the process).
The companies can be managed by a “sole director” or by a Board of directors (from 2 to 7 members).
The financial statements must be approved by the shareholders assembly within May 31st, every year .
The companies are required to present the following fiscal documents to the Revenue Service every year:
the income tax return (within June30th), and where necessary the declaration of “tax withholding at the source” (within June30th) , the declaration of ” tax on commission to agents” (within June30th), the declaration of “tax on imports” (within June30th).
LIMITATIONS ON THE RELEASE OF A BUSINESS LICENCE :
For the following business categories the a.m. steps for the start up and the registration of a Company must be preceded by the authorization of the Administration (if there is a solid business plan behind the request, the authorization is normally granted):
1. the economic activities in the field of application of the 1997 Agreement between San Marino and the Italian Republic on the Mtual Regulation of the International Road haulage;
2. the economic activities of production and printing in the field of numismatics and philately;
3. the economic activities of construction in the field of building;
4. the economic activities of installation in the fields of pavements, coverings, plasterwork and house finishing;
5. the economic activities of installation and repair in the field of air conditioning, plumbing, distribution of water , gas and electric power;
6. the economic activities of construction in the field of road construction and repairs including the systems and nets below;
7. all the economic activities in the field of energy (excluded clean/renewable energies);
8. all the economic activities in the field of telecommunications;
9. the economic activities in the field of garbage management;
10. the economic activities in the field of real estate;
11. the economic activities in the field of rental and chartering of vehicles, boats and aircrafts;
12. the economic activities of commission agent;
13. all the economic activities related to beauty treatment and personal hygiene;
14. all the economic activities in the field of weapons, explosives and gun powder;
15. all the economic activities in the field of private security and investigations;
16. all the economic activities in the field of services related to debt collection;
17. all the economic activities in the field of metal scrap “.
For the activities in 3, 4, 5, 6, 10 and 13 the authorization is not necessary when:
a) the company is registered in the form of stock company (S.P.A.) or limited liability company, and
b) the totality of shares belong to a San Marino resident, and
c) the majority of members of the board of directors or the sole administrator is a san Marino resident.
Furthermore, for the economic activities in the financial field (banking, investments, insurance, financing, fiduciary activity) it is necessary, other than the authorization of the Administration, the acceptance by the Surveillance Authority of San Marino Central Bank.
SAN MARINO BANKING SYSTEM
Anyone can open a bank account in san Marino, by showing proof of identity (a valid I.D.) and undergoing Customer Due Diligence in accordance with Gafi recommendations.
San Marino bank privacy can be lifted in the following cases:
• upon specific request from countries whose tax authorities have signed a TIEA or DTA according to OECD model;
• upon request from a San Marino judge who is conducting a criminal investigation;
• upon request from San Marino Tax authorities;
• upon request from San Marino Finacial Intelligence Unit who is in charge for countering money laundering and financing of terrorism.
SUMMARY OF SAN MARINO FISCAL ADVANTAGES:
1. The existence of only one company income tax . Companies are subject to an income tax rate of 17% (proportional).
2. Simple and friendly fiscal system.
3. The profits distributed to the shareholders are not subject to additional taxation.
4. All costs supported in managing the company and attaining the profit are tax-deductible
5. Amortization: totally tax-deductible from the first fiscal year.
6. The profit attained can be completely distributed (there is no legal reserve, except for banks and financial companies)
7. Financial lease contracts: possibility of deduction according to the duration of the contract (other than that, for properties the
maximum amortization rate is 4%). Minimum duration of financial lease: 24 months for personal properties, 48 months for real estate.
8. Possibility to take forward a financial loss in the 3 successive fiscal years
9. No VAT system. The tax on the imports of goods and services connected to the goods is called “monofase” and has a rate of
17%. As a different concept from the “VAT” , this tax only affects the goods and the services connected when those enter San
Marino territory, not the “added value”. The rate of 17% is reduced for specific categories of goods and according to their future
use (i.e. personal computers or furniture for the company offices are taxed at 1% if they are instrumental to the activity). This tax
is refundable when the goods are exported, even when they have undergone transformation.