The Republic of San Marino is located in Southern Europe, surrounded by the Italian territory across the center-north Regions of Emilia Romagna (Province of Rimini) and Marche (Pesaro and Urbino). It is 61,19 square kilometers wide and has 32,821 inhabitants. The capital is San Marino City. The official language is Italian and the official currency is the Euro.

Political System
San Marino is a Presidential Republic.

Banking System
As of 31 December 2005, San Marino had 12 banks and 42 financial and trust companies.
Law no. 165 of 17 November 2005 (Law on Companies and Banking, Financial and Insurance, also known as “LISF”) has introduced new provisions regulating all financial activities, requiring the authorization of the Central Bank in order to operate. Pursuant to LISF, brokers and intermediaries activities were aptly reorganized (they were not regulated until 2005), and such is the case of investment companies and insurance companies.

Central Bank
The Central Bank of the Republic of San Marino (CBSM) is a public-private entity. According to its Statute, CBSM has the following functions:

  • banking, finance and insurance control, and investors protection;
  • payment system administration, regulation and control;
  • State and Public Entities treasury;
  • State and Public Entities depository;
  • overseeing local institutions dealing with international organizations, central banks, foreign financial regulators;
  • statistical tasks on controlled counterparties, and their activities;
  • issuing and handling public bonds;
  • State advisor in economic matters, the financial sector and public finance.

CBSM is regulated by its founding law (Law no. 96 of 29 June 2005 – Statute of the Central Bank) and the Law on companies and Banking, Financial and Insurance (Law no. 165, November 17, 2005).
Law no. 83 of 27 June 2003 and Law no. 96/2005 led to the merger of <<Istituto di Credito Sammarinese>> with the Inspectorate for the Office of Banking. This integration incorporated the two institutions’ functions into CBSM. Subsequent laws have expanded CBSM functions.
CBSM is a State controlled entity (the State control must be kept by law). San Marino banks, finance companies, and insurance companies can  own a minority part of CBSM capital.

Tax System
San Marino tax system includes direct and indirect taxes. Individuals and legal entities are taxed pursuant to a general income tax (IGR), introduced in 1984 and reformed by Law 166 of 2013.

Individual Taxation
IGR taxes resident and non-residents individuals (for income generated in the State) and companies or similar entities.
Residents have to declare foreign income, even though these incomes are generally tax exempt. Individuals living in the State territory for most part of the financial year are considered residents, and so are individuals having in San Marino the center of their interests.
The 2013 tax reform allows to deduct domestic expenses for goods and services purchased in the State territory and regulated by electronic payment systems (up to € 9,000).
Partnerships are not taxable as their revenues are credited to shareholders for transparency reasons, without regard to the actual earning of such revenues.

Tax rates vary according to the following income ranges:

Income Individual Tax
Up to € 10,000 9.00%
From  € 10,001 to € 18,000 13.00%
From € 18,001 to € 28,000 17.00%
From € 28,001 to € 38,000 21.00%
From € 38,001 to € 50,000 25.00%
From € 50,001 to € 65,000 28.00%
From € 65,001 to € 80,000 31.00%
Above € 80,000 35.00%

In the years 2014-2017, entrepreneurs and professionals (including partnerships) are taxed with € 1,000 fixed amount, if subject to ordinary accounting system. Over the same years, entrepreneurs and professionals are taxed with a € 500 fix amount, if subject to a simplified accounting system.

If the previous year’s turnover exceeds € 300,000, the tax is doubled. In 2016, it is expected that due tax rate will be 75% of the above mentioned amount, while in 2017 it is expected to decrease to 50%. 

Company Taxation
Legal entities are IGR subject with a 17% rate. From 2010 on, IGR is also levied to banks and financial institutions. IGR tax is due by residents and non-residents for incomes earned through a San Marino permanent establishment. Legal entities are considered residents in case they have any registered office, or administrative branch, for the most part of the financial year in San Marino. Profits resulting from the annual balance sheet are considered the  taxable income.
Tax reliefs, or in some particular conditions tax-exemptions, are granted to companies reinvesting their earnings or increasing their employees. Moreover, companies incorporated after 2 July, 2013, benefit from a six-year tax base reduction of 50%.
In the years 2014-2017, companies and other legal entities – as well as individual entrepreneurs – pay the special tax of  € 2,000 (which is doubled if previous year’s turnover exceeds € 300,000). Exceptions apply for cooperatives and non-profit organizations.

In addition to the 17% tax rate, San Marino companies pay:

  1. from 4% up to 5% of the total salaries paid to employees for Social Security;
  2. from 0.5% up to 4.5% of the total salaries paid to employees for the Unemployment Mutual Fund. The amount depends on company activities, and 0.5% of it is paid by employees;
  3. from 1.5% up to 4.5% of the total wages for the Wage Guarantee Fund, for specifically defined sectors.

San Marino tax law does not apply VAT. The existing taxation on Imports is considered having effects equivalent to VAT. In the year 2013, a tax reform was planned in order to replace this tax with a general tax on consumption (IGC), applicable to services, quite similar to the European VAT (art. 66 Law 174/2013).

Taxation of Trusts
In 2005, San Marino has been one of the first civil law countries to regulate the creation of trusts (Law 37/2005). San Marino trust law was reformed in 2010 (Law 1 March 2010, n. 42): trusts can be only established through a notarized public deed and registration at the local Registry of trusts. Since 2014, a Special Court for trust and fiduciary relations is in place. This Court was established in San Marino with the Constitutional Law 26 January 2012 n. 1.
Law n. 38 of 2005 applies a tax regime for trusts regulated by Republic of San Marino laws and run by authorized trustees. This law applies to resident trusts (i.e., to trusts run by at least one San Marino resident trustee) with no ongoing business, artistic or professional activities. Trusts are subject to tax (Law n. 38/2005). Tax return,  liquidation and payment duties affect the trustee who is jointly responsible for the trust tax liability. Trust taxable income is 10% of the earnings from properties held in trust per each financial  year, including income from San Marino real estates. Above described trust revenues  are taxed with a 17% rate. Therefore, the actual real tax rate applied to trusts is 1.7%. The profitability coefficient is 50% when earnings, dividends or profits distributed by resident companies or other legal entities located in offshore countries with a privileged fiscal regime. Taxes paid abroad by a trustee on behalf of trust assets benefit from a tax credit.  A 15% withholding tax is applied by the trustee on trust earnings distributed to non resident beneficiaries. Withholding tax exemption is provided for non resident  beneficiaries disclosed to San Marino tax authorities. Transfers from settlor to trustee and from trust to beneficiaries are tax exempt. Within two months from the end of each financial year, the trustee has to disclose to San Marino tax authorities relevant trust beneficiaries, including personal data, citizenship and residence.

San Marino Law n. 47 of 2006 on companies regulates both partnerships (general partnership) and corporations (public limited companies and private limited companies).

San Marino sole proprietorship set up takes about 30 days, with the following procedures:

  1. Submission of the application form to San Marino Industry, Crafts and Commerce office, including required documents;
  2. Payment of € 110,00 licensing fee;
  3. Assignment of an Economic Operator Code by the San Marino Industry, Crafts and Commerce office;
  4. Within six months from the business license, further documentation regarding proof of residence and mandatory health certificates must be delivered to the San Marino Industry, Crafts and Commerce office.

Establishing a corporation (capital company) in San Marino requires a notary public act.
A company’s minimum share capital is € 25,500 for private limited companies and € 77,000 for public limited companies. San Marino company law mandates that within sixty days from company incorporation, at least half of the share capital must be secured and cash contributions must be deposited in a San Marino bank account. For single-owned companies, all contributions must be made in cash and paid within sixty days from incorporation and registration.
Contributions’ actual deposit must be confirmed by a company director’s statement, also through a personal declaration (with the forms and subject to penalties provided by Article 3 of Law 21 October 1988 n. 105). The statement must be filed to San Marino Industry, Crafts and Commerce office within thirty days. Payment of all due contributions must be requested by directors and paid within three years from company incorporation.
Private limited companies with more than € 2 million turnover or more than € 77,000 share capital are required to appoint a Sole Auditor. Private limited companies with more than € 7.3 million turnover for two consecutive years are required to appoint a Board of Auditors, with at least three members. The majority of Board of Auditors members must be San Marino residents.
Pubic limited companies have to appoint a Sole Auditor. Public limited companies with more than € 7.3 million turnover for two consecutive years are required to appoint a Board of Auditors with at least three members. The majority of Board of Auditors members must be San Marino residents.
Incorporating a San Marino limited company has an average cost (deed, stamp duties, taxes and registration) of € 3,500 for private limited companies and € 5,000 for pubic limited companies.

Incorporating a company in San Marino requires the following steps:

  • individuals and/or legal persons wishing to participate as partners should be considered “eligible”; eligibility is verified by submitting documents proving the integrity of the individual and/or legal entity;
  • the company headquarter has to be established in the territory of San Marino;
  • the company purpose must be lawful, possible and determined, and has to provide activities consistent with each other.

Company Shareholders and Directors
Shareholders, directors or members of the board of San Marino companies – resident or non resident – cannot conduct business if the following situations occur:

  • conviction, in San Marino or abroad, with a sentence involving deprivation of liberty for more than 2 years;
  • for a period of two years before company incorporation, the individual has been director, member of the board or representative in a company whose operations have been revoked by San Marino public authorities;
  • for a period of two years before company incorporation an individual has held a license revoked by San Marino public authorities;
  • an individual is subject to a judicial claim from creditors, or an equivalent procedure in a foreign legal system as director, in conjunction with incorporation of the company or of purchasing of shares;
  • an individual is resident in “Countries under monitoring”, as so identified by the San Marino “Financial Intelligence Agency”.
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