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Monaco : EU Tax Information Exchange Agreement signed
23/02/2016

On 12 July 2016 the EU and Monaco signed the new tax transparency agreement, under which they will automatically exchange information on the financial accounts of each other's residents from 2018.

The provisions of the TIEA mirror the agreements that have already be executed by the EU with Switzerland, Liechtenstein and San Marino in the course of last year and Andorra, which signed in February (see our Bulletin 16 February 2016). The agreement follows the European Council Directive and meets international standards for the exchange of tax information, including the new OECD and G20 global standards on the automatic exchange of information.

The details provided to EU member states by Monaco will be the individual’s name, address, the tax information number and date of birth of those EU residents who hold bank accounts in Monaco. The information will start to be collected from 1 January 2017, with the first exchange of information starting the following year. From 2018, the account balance and other financial information will also be provided.

The EU could provide the same information to Monaco, on Monaco residents holding accounts in the EU.

This EU text is based on the original US FATCA legislation, and refers to the Common Reporting Standard for guidance, however there are subtle differences between the three texts which will need to be carefully analysed.

In announcing the agreement earlier in the year the government of Monaco stated that it ‘…is part of an ongoing process of transparency and the latest example of the country’s policy on fighting international tax evasion and fraud; part of a commitment to conclude agreements complying with international standards…’. Monaco will be committing resources to meet its obligations under the TIEA, as well as introducing the necessary legislation to facilitate the process.

A copy of the underlying EU Council Directive can be found here.

Mr. J. Castellini, the Monaco Minister for Finance and Economy, stated, ‘This agreement constitutes a further example of the policy implemented by Monaco to combat international tax avoidance and evasion, as part of our commitment to conclude agreements which respect international standards developed by both the European Union and the OECD Global Forum, in terms of the exchange of information.’

The EU Commissioner for Economic and Financial Affairs, Mr. P Moscovici, is reported as saying, ‘The agreement marks the beginning of a new era between Monaco and the EU….This agreement is a step forward in achieving our aim in an efficient and fair manner.’

On July 12, 2016 the EU and Monaco signed an Amending Protocol to the Agreement between the European Community and the Principality of Monaco providing for measures equivalent to those laid down in Council Directive 2003/48/EC. The Protocol amend the 2004 agreement that ensured that Monaco applied measures equivalent to those in an EU directive on the taxation of savings income. The following extracts clarify the terms of the agreement:

JOINT DECLARATION BY THE CONTRACTING PARTIES ON COMPLIANCE WITH THE GLOBAL STANDARD

The Contracting Parties agree on the compliance with the Global Standard of the provisions on the automatic exchange of information contained:

(i) in Council Directive 2011/16/EU on administrative cooperation in the field of taxation, as amended by Council Directive 2014/107/EU,

(ii) in the Agreement and its annexes, and

(iii) in other agreements that the European Union has negotiated in parallel on the same subject matter with the Swiss Confederation, the Principality of Andorra, the Principality of Liechtenstein and the Republic of San Marino, although some of these agreements contain further details concerning confidentiality and data protection because of the different positions on the subject of the Principality of Monaco and these four other countries, to the extent strictly necessary to allow the European Union Member States to comply with the requirements imposed on them by Union law in their relations with jurisdictions outside the European Union.

The Contracting Parties agree, regarding the implementation of the Agreement and Annexes I and II thereto, to use the Commentaries to the OECD Model Competent Authority Agreement and Common Reporting Standard as a source of illustration or interpretation and in order to ensure consistency in application.

JOINT DECLARATION OF THE CONTRACTING PARTIES ON ARTICLE 5 OF THE AGREEMENT

The Contracting Parties agree, regarding the implementation of Article 5 of the Agreement on the Exchange of Information upon Request, that the Commentary to Article 26 of the OECD Model Tax Convention on Income and on Capital should be a source of interpretation.

For advice on the application of this agreement please make contact with your Rosemont advisor in Monaco.