International Tax Compliance
Maintaining economic development of Monaco while respecting international regulations.
Monaco has an enviable model of economic development that respects the international requirements on tax transparency and fairness advocated by the OECD.
The Principality of Monaco is pursuing the policy set out by H.S.H. Prince Albert II on transparency and exchange of information for tax purposes. Like the countries of the G20, Monaco has for several years played an active role in the international movement to strengthen standards and increase exchange of information between countries.
Monaco's regulations comply with the highest international standards on tax matters, in order to secure its economic development model in an environment of increased international cooperation.
Broad recognition from peers at the OECD Global Forum
Indeed, at the behest of His Serene Highness Prince Albert II, Monaco has been committed, since 13 March 2009, to concluding agreements on the exchange of information which comply with the standards developed by the OECD.
Before the G20 Summit in Pittsburgh, the Prince’s Government had reached agreements on tax transparency with twelve countries. Since 23 September 2009, the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes has classified Monaco within the group of countries which "have substantially implemented the internationally recognised standards in the area of tax".
Steps successfully undertaken since 2009
This commitment is embodied by the signature of agreements on cooperation in tax matters with numerous States and ongoing commitment towards continuing improvement within the framework of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes , which brings together 150 countries and jurisdictions to this day to debate the many issues relating to transparency and exchange of information.
The resulting review reports recorded the progress made by Monaco through the development of its domestic legislation to comply with OECD and international standards, and took note of the application of these provisions by the Monegasque Government to guarantee the exchange of information for tax purposes on request.
Following these reviews, the 2012 OECD Global Forum report, ratified during the sixth annual meeting in November 2013 in Jakarta, judged Monaco to be "largely compliant " with international standards for tax transparency, alongside countries such as Germany and the United States of America, which was an acknowledgment of the efforts the country has made over a number of years.
Monaco IS “compliant” with ALL OECD international standards
The legal framework and Monegasque practice in the area of exchanges on request have been reviewed, in order to verify their compliance with the international standard on exchanges of information on request, and notably the new rules introduced in 2016. This assessment is a process that has lasted several years since the last Global Forum evaluation in 2012.
Members of the OECD’s Peer Review Group proposed an overall rating of “Compliant” at a meeting held in Paris from the 26 February and 1 March 2018.
This new rating of “Compliant” by the Global Forum improves the rating obtained in 2013 and is a new recognition of Monaco's commitment to implementing and updating its laws and practices in line with changes to international standards on tax transparency, in line with the decision taken by HSH the Sovereign Prince since 2009.
For more information on Monaco’s recognition at the OECD Global Forum, click here .
The signature of bilateral agreements
To date, Monaco has signed 35 bilateral agreements (33 of which are in force) and discussions are underway with other countries to develop bilateral relationships.
To see the details of bilateral agreements, click here .
OECD Multilateral Convention on Assistance in Tax Matters
Monaco is engaged in the OECD Convention on Mutual Administrative Assistance in Tax Matters the aim of which is to increase the exchange of tax information between countries, specifically on demand and automatically, in order to better combat tax evasion and tax fraud.
Following the vote on Tuesday 29 November 2016 at the Public Session on the Laws approving ratification by the National Council, the Minister of State, Mr. Serge Telle, accompanied by the Minister of Finance and Economy, Mr. Jean Castellini, deposited the instrument of ratification of the Convention on Mutual Administrative Assistance in Tax Matters, signed by H.S.H. Prince Albert II of Monaco, with the Secretary General of the Organisation for Economic Co-operation and Development (OECD), Mr. Angel Gurría, at the Château de la Muette, the OECD's headquarters in Paris on Wednesday 14 December 2016.
To date, more than 120 jurisdictions participate in the Convention, including all the G20 countries, all the OECD countries, the leading financial centres and a growing number of developing countries. Out of these jurisdictions, the Convention has now entered into force in a hundred countries, including Monaco.
This Convention, which was signed on 13 October 2014 by the Minister of Foreign Affairs and Cooperation, Mr. José Badia, took effect in Monaco three months after its ratification.
As a reminder, the Principality of Monaco is committed to implementing the automatic exchange of information on financial accounts; exchanges will begin in 2018 of information collected in 2017.
Furthermore, Monaco is one of the signatories of the Multilateral Competent Authority Agreement for the Automatic Exchange of Financial Account Information, which clarifies the Convention and will take effect at the same time.
Additionally, the "common reporting standard" provides that tax administrations collect from financial institutions information concerning the accounts of their clients who are non-resident in the Principality and transmit it automatically to the tax authorities of their State of residence, preserving the rights of taxpayers while guaranteeing the confidential treatment of their exchanged data.
The Amending Protocol of the "Agreement between the European Community and the Principality of Monaco providing equivalent measures to those of the Council Directive 2003/48/CE"
The Minister of State, Mr. Serge Telle, accompanied by the Minister of Finance and Economy, Mr. Jean Castellini, the current President of the Council of the European Union, Mr. Peter Kazimir, and the European Commissioner for Economic and Financial Affairs, Taxation and Customs, Mr. Pierre Moscovici, signed the Amending Protocol "Agreement between the European Community and the Principality of Monaco providing equivalent measures to those of the Council Directive 2003/48/CE, on 12 July 2016 in Brussels".
Following the vote on Tuesday 29 November 2016 at the Public Session on the Law approving ratification by the National Council, the instrument of ratification of the Protocol, signed by H.S.H. Prince Albert II of Monaco, was deposited with the General Secretariat of the Council of the European Union on 9 December 2016.
Thus, this Protocol repeals and replaces the 2005 agreement between Monaco and the EU on the taxation of savings and brings the new Agreement into line with the common reporting standard, in order to enable automatic exchange of information between EU member states and Monaco.
For the Principality of Monaco, this signature is part of an ongoing process of transparency and is a further example of international anti-fraud tax policy, as part of the commitment made to reach agreements on the exchange of information that respects the international standards developed by both the European Union and the Global Forum of the OECD.
The entry into force of the protocol, on the 1st of January 2017, launches the begining of a new phase – as from 2018 (and all the subsequent years, in the nine months that follow the end of the calendar year to which it relates), Monaco will exchange information automatically on an annual basis with each of the Member States, with regard to their respective residents, on each Reportable Account in Monaco and, in the case of Monaco, on each Reportable Account of a Member state.
Monaco and the member States will also be able to exchange, on request, information that is likely to be relevant for the application of the provisions of the Agreement, following the same procedure as that already applied on the basis of existing OECD bilateral agreements.
All these commitments undertaken by the Principality of Monaco follow on from the wish expressed by H.S.H. Prince Albert II to increase transparency in tax matters, and all the measures implemented since 2009.
Monaco Does not appear on any EU “lists”
On 5 December 2017, the Council of the European Union published a list of 17 “non-cooperative tax jurisdictions” and they also drew up a grey list of jurisdictions who have “committed to improving” to comply with standards.
These lists were updated on 23 January 2018, following the commitment of jurisdictions willing “to address the EU’s concerns”.
To establish these lists, the Code of Conduct Group screened 92 jurisdictions on the basis of three criteria; transparency, fair corporate taxation, and a commitment to implementing the OECD’s BEPS measures.
The Principality of Monaco does not appear on these lists, as it satisfied these three criteria and, in particular, committed on 17 May 2016 to adopt all of the compulsory BEPS (Base Erosion and Profit Shifting) measures. As such, the Principality is now part of the inclusive framework on BEPS, in which 100 countries and jurisdictions work together to implement the measures resulting from the BEPS project of the OECD and the G20.
Monaco's commitment to the OECD's BEPS project
The Principality of Monaco undertook, on May 17, 2016, to adopt all the mandatory measures of the BEPS (fight against base erosion and profit shifting) and to apply them in a consistently.This commitment is in line with the will of S.A.S. the Sovereign Prince to follow the international movement in the field of transparency.
The 15 actions BEPS, published in October 2015, provide states with national and international instruments to fight against the erosion of the tax basis. However, at this stage, only 4 actions are mandatory (actions 5, 6, 13 and 14).
In order to implement Actions 6 and 14, the Principality of Monaco has acceded to the Multilateral Convention for the Implementation of Measures on Tax Conventions to Prevent Base Erosion and Profit Shifting (the "MLI"). On 7 June 2017, more than 70 ministers and high-level representatives took part in the MLI signing ceremony at the Château de la Muette, the OECD headquarters in Paris, including Minister of State Serge Telle, accompanied by the Ambassador Extraordinary and Plenipotentiary of the Principality of Monaco to France, Mr. Claude Cottalorda.
The new convention, an unprecedented multilateral agreement, allows jurisdictions to translate the results of the OECD and G20 BEPS project into their existing networks of bilateral tax treaties.
Apart from these two actions, the action 13 sets out a reporting requirement of a "country by country report" for all entities whose total consolidated group turnover is greater than or equal to 750 million euros.
Thus, these companies will have to transmit annually to the tax authorities of their State of residence, for each country in which they operate, country-by-country declarations which will then be exchanged between the tax administrations concerned.
In order to meet the unique requirements of Action 13, the Principality has signed the Multilateral Agreement between Competent Authorities on the exchange of country-by-country declarations dated 2 November 2017.
To date, 64 jurisdictions have signed this agreement between competent authorities to enable the exchange of country-by-country declarations between jurisdictions party to the Multilateral Convention on Administrative Assistance.
In order to meet the obligations of this action Monaco has put in place the following legal framework:
- Sovereign order n° 6.712 du 14 décembre 2017 rendant exécutoire l'Accord multilatéral entre autorités compétentes portant sur l'échange des déclarations pays par pays
- Sovereign order n° 6.713 du 14 décembre 2017 portant application de l'Accord multilatéral entre autorités compétentes portant sur l'échange des déclarations pays par pays
- Sovereign order n° 6.714 du 14 décembre 2017 portant modification de l'Ordonnance Souveraine n° 3.085 du 25 septembre 1945 relative aux droits et devoirs des agents des services fiscaux, modifiée
To date, Monaco is also working on the implementation of Action 5 and continues to implement the other 3 mandatory actions.
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