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Monaco and Italy complete Tax Information Exchange Agreement
05/03/2015

Monaco and Italy sign Tax Information Exchange Agreement 

On the 2 March 2015 Italy and Monaco signed a Tax Information Exchange Agreement (‘TIEA’). The signing ceremony was concluded between the Italian Ambassador to Monaco, Mr Antonio Morabito, and the Monaco Minister of Foreign Affairs and Cooperation, Mr Giles Tonelli.

The Agreement has yet to enter into force, as it will be subject to completion of the parliamentary procedures in both countries but when in force it will take effect from the date of signature ie 2 March 2015.

Since 2009 HSH Prince Albert II has been committed to concluding agreement on the exchange of tax information to meet the OECD international standards of best practice. In the following year an assessment by the OECD concluded that Monaco met the required standard, though it also noted that the Principality needed to do more to conclude agreements with its partner states, including Italy.  This is the 32nd TIEA signed by Monaco and follows the TIEA recently signed in January with the UK, (see our report of 25 February 2015). 

It should be noted that the TIEA does not require the automatic exchange of information. Information will only be exchanged on request, providing the request meets the detailed criteria set out in the TIEA and the detailed safeguard requirements are met.

The TIEA largely follows the OECD template and includes additional provisions covering double taxation and tax residency. The TIEA was signed with an accompanying protocol providing commitments linked to the Italian Voluntary Disclosure Act. The Voluntary Disclosure Act allows individuals who wish to regularise their affairs with the Italian authorities to do so until 30 September 2015.

The Agreement requires that any request for tax information submitted by one state to the other must meet the following minimum standard, which can be summarised as follows:  

A. The formal request is required to state:

1. The identity of the person to which the application relates;

2. A statement detailing the information sought;

3. The period for which the information is requested;

4. The tax purpose of the request;

5. The grounds to believe the information is available in the jurisdiction of the other party; 

6. A statement that the request confirms with the law and practise of the applicant; and

7. All means have been pursued by the applicant to obtain the information in its own jurisdiction.

 

B. The applicant is also required to confirm that the information that it requests is materially relevant to:

1. The determination, assessment and collection of taxes;

2. The recovery and enforcement of claims for tax; or

3. The investigation or prosecution of tax claims.

If the requirements are not met, under the terms of the TIEA, it is open to the party in receipt of the request to refuse the applicant’s request. The grounds provided by the Agreement include:

1. The request does not comply with the terms of the Agreement;

2. The information could not be obtained under the laws of the requesting party;

3. The disclosure of information would be contrary public policy.

The requirement of the requesting party to provide details of the subject and nature of the request is to prevent general ‘fishing expeditions’ in the hope of obtaining information from the other party on the tax affairs of residents. The Agreement further provides that a recipient party is not obliged to obtain information that it is not required under its own the laws; it is thus only obliged to provide information collected in the course of the administration and enforcement of the law in its jurisdiction.

All information provided is required to be kept confidential by the receiving party and used only in connection with its  tax administration.

For further information on this or for assistance with the voluntary disclosure process please contact us at Rosemont Consulting SARL in Monaco at consulting@rosemont.mc