Fortress of capital: Fiscal engineering and holding companies in the Principality of Monaco, 1934–1945

This article examines Monaco’s holding company regime (MH34), introduced in 1934 and abolished in 1945, within the broader development of European tax havens during this period. In response to a state budget crisis, Monegasque lawmakers adopted a framework inspired by Luxembourg’s 1929 model to attract international capital via locally registered holding companies. Using a newly constructed dataset covering all MH34-incorporated entities, the article analyses the regime’s legal architecture, actors, and practices. Particular attention is given to the role of brokers: transnational intermediaries who engineered capital flows between Monaco, France, the UK, Luxembourg, and other jurisdictions by exploiting regulatory asymmetries. These actors also facilitated transfers from occupied Europe to Monaco during the war. However, unlike Switzerland or Luxembourg, Monaco’s fiscal sovereignty was subordinate to France. When MH34 conflicted with postwar French fiscal priorities, the regime – in its 1934-1945 configuration – was unilaterally dismantled through direct intervention by the French government.