Monaco and the European Union
Relations with the European Union
The Principality of Monaco is a third country with respect to the European Union. The Monegasque state nonetheless established a permanent relationship with the EU by accrediting an Ambassador to Brussels in 1999.
Moreover, given its customs union with France the Principality has been part of the Community customs territory since 1968. (See Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code ).
In addition, the Franco-Monegasque agreements signed on 18 May 1963 and 26 May 2003 stipulate that Value Added Tax is assessed and collected in Monaco on the same basis and at the same rates as in France, and establish a sharing account for the tax collected in France and Monaco. Consequently, Monaco is part of the European VAT system.
The Principality of Monaco also belongs to the Eurozone. To enable Monaco to retain its sovereign right to mint coins, a Monetary Convention was concluded between the French Republic on behalf of the European Community and the Government of H.S.H. the Prince of Monaco on 26 December 2001. A new Monetary Convention was signed by Monaco, France and the European Commission on 29 November 2011. This new agreement amends the 2001 Convention with respect to the quota of Monegasque euros that can be issued.
Furthermore, the Principality of Monaco is not a signatory to the Schengen Agreements, but it is a port of entry into Europe as a result of the maritime and air access to the country, and the free movement that is in place between France and Monaco. A Decision of the Schengen Executive Committee dated 23 June 1998 recognised the Heliport and the Port of Condamine as authorised external border crossing points and gave holders of Monegasque residence permits the right to move freely within the Schengen Area for stays lasting less than three months.
The Principality of Monaco has also concluded sectoral agreements with the European Union. An agreement between the European Community and the Principality of Monaco on the application within the Principality of Monaco of certain Community legal instruments relating to medicinal products for human and veterinary use, cosmetic products and medical devices was signed on 4 December 2003 with the European Community. On 6 May 2011, the Principality also signed an Agreement on Operational and Strategic Cooperation with European Police Office (Europol).
Like the other small third-country nations in Europe, Monaco conducted negotiations with the European Community to reach an agreement setting out measures equivalent to those covered in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments. This agreement, signed on 7 December 2004, entered into force on 1st July 2005.
It was complemented by the signature on 12 July 2016 of an amending protocol providing for the automatic exchange of information between Monaco and the European Union member states on the financial accounts of non-residents, starting in 2018. The information will be collected from 1st January 2017 (See also: Agreements on Tax Matters ).
Towards a new framework for relations
Since 18 March 2015, the Principality of Monaco has been officially engaged in negotiations with the European Union (UE) aimed at reaching a balanced agreement, which will allow Monaco to participate as fully as possible in the EU’s internal market, while ensuring respect for the Principality’s vital interests, taking account of its unique geographical, demographic and economic features.
The launch of these negotiations was the outcome of a dialogue with Monaco, Andorra, and San Marino begun by the European Commission in 2010, acting on the basis of Declaration No. 3. on Article 8 of the Treaty of Lisbon (2009): "the Union will take into account the particular situation of small-sized countries which maintain specific relations of proximity with it".
In December 2010, the Council of the European Union requested an assessment of the EU’s relations with European countries of small territorial dimension – Principality of Andorra, the Principality of Monaco and the Republic of San Marino – noting that "their current relations with the EU are extended but fragmented". (Conclusions on EU Relations with EFTA countries of 14 December 2010 ).
Following the adoption of a report produced by the Hungarian Presidency, dated 14 June 2011 (document 11466/11 ), the Council invited the European External Action Service (EEAS) and the Commission to continue their analysis and reflections on the future development of EU relations with the three countries, noting that this should include exploring further a possible new institutional framework for relations, taking into account the importance of a coherent approach for all three countries, while respecting the particularities of each.
In November 2012, the Commission published a communication in which it presented the “relations of the EU with the Principality of Andorra, the Principality of Monaco and the Republic of San Marino” and explored "options for closer integration with the EU". (Communication COM(2012) 680 ). The communication looked at five options: the status quo, a sectoral approach, a framework association agreement, participation in the European Economic Area, and membership of the EU. It was accompanied by a working paper on the obstacles the three countries face in terms of access to the EU’s internal market and cooperation in other areas (Commission staff working paper ).
On the basis of this report, the Commission and the Council retained two options: participation in the European Economic Area and the negotiation of one or more framework association agreements. (Council Conclusions of 20 December 2012, document 17591/12 ).
In November 2013, the Commission adopted a report in which it concluded that negotiation of one or more association agreements was the more viable of the two options. In this report, it also set out the key principles which should underpin the negotiations: respect for shared values, the need to ensure the homogeneity and good functioning of the internal market, and consideration for the specificities of countries of small territorial dimension (Report COM(2013) 793 ).
In December 2013, on the basis of this report, the Council invited the Commission and the High Representative to submit, by the end of April 2014, a recommendation on opening negotiations with the three countries with a view to concluding one or more association agreements. In its conclusions, the Council notably reaffirmed that a "closer association of Andorra, Monaco and San Marino with the EU is also in the interest of the EU. It should contribute to addressing gaps and overcoming inconsistencies in relations, which are currently fragmented and diverge from one country to the other. Furthermore, enhanced participation of the three countries in the internal market could have a positive, though limited economic impact on the EU, in particular with regard to employment in the neighbouring regions and cross-border economic activity". (document 16075/13 ).
Negotiation of an Association Agreement
In December 2014, the Council gave the Commission and the EEAS a mandate to open negotiations with Andorra, Monaco and San Marino (Council conclusions of 16 December 2014 ).
The negotiations were formally launched on 18 March 2015, in Brussels, in the presence of Ms Federica Mogherini, the EU’s High Representative for Foreign Affairs and Security Policy, and Vice President of the European Commission (you can watch a video of the ceremony here (French only) ).
The main aim of the Association Agreement being negotiated with the EU is to enable Monaco and all of the country’s economic stakeholders to be a part of the European internal market, including by removing the obstacles which may currently impede exports from Monaco to EU member states.
The signature of an Association Agreement would also provide the benefit of a lasting legal and political framework for relations between Monaco, the EU, and EU member states. Among other things, it would set out the procedures for resolving any difficulties that might be caused by its implementation, by introducing a mechanism for settling disputes.
In addition to expanding economic prospects, the fact of establishing a partnership with the EU opens up the possibility of developing cooperation in areas of shared interest and participating in some of the EU’s horizontal policies on such issues as research, the environment and education (ERASMUS).
The first round of negotiations took place in Brussels in May 2015. The talks are being held at a rate of one three-day session every seven weeks.
In December 2016, the Council took note of the negotiations conducted over the previous two years and encouraged all parties to continue to make steady and concrete progress towards the finalisation of these negotiations (Council conclusions of 14 December 2016 ).
For further information, please consult Foire aux questions - Monaco et l'UE (240.64 kB)