Frequently Asked Questions (FAQ) on automatic exchange of information for tax matters

What does automatic exchange of information involve?

The automatic exchange of information involves applying the Common Reporting Standard (CRS).

The CRS was developed by the OECD and approved by the G20 Finance Ministers. It is a global standard for the automatic exchange of financial account information, designed to strengthen compliance with tax rules by fighting tax evasion more effectively.

In accordance with the CRS, financial institutions must follow standardised procedures to record certain accounts (reportable accounts) held by individuals who, for tax purposes, are residents of reportable jurisdictions or the accounts of certain entities in which such individuals hold shares, and to report information on these accounts to the local tax authorities on an annual basis. The tax authority of each country then send this information to the jurisdiction in which the account holder is considered to be resident for tax purposes and with which it has concluded a competent authority agreement and consequently is obliged to share such information.

To engage in automatic exchange of information, countries have put in place the appropriate operational processes and formats, as well as a legal framework authorising this type of exchange, such as a bilateral or multilateral agreement or, in the case of the EU, a directive.

The Principality of Monaco has worked to put in place the necessary legislation to move ahead with automatic exchange in 2018, as it has committed to do with both the European Union and the OECD.

Currently, more than 120 jurisdictions automatically exchange information based on the CRS. The Principality has activated exchanges with 94 jurisdictions, 83 of which are reportable.

Why and how has the Principality of Monaco committed to implementing automatic exchange of information?

Since his accession speech in 2005, H.S.H. Prince Albert II has confirmed Monaco’s determination to increase transparency with regard to tax matters. To this end, since 2009 Monaco has been committed to concluding agreements, which meet the standards developed by the OECD. The country has continued to make progress in strengthening the efforts to combat tax evasion and fraud implemented by the OECD World Forum and the European Union.

At the OECD World Forum on 5 November 2013, the Principality announced its commitment to signing the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAAC), the legal basis for Automatic Exchange of Information (AoEI). Monaco signed the agreement on 13 October 2014.

In addition to the Multilateral Convention, the OECD World Forum established a new document, the Multilateral Competent Authority Agreement for the Automatic Exchange of Financial Account Information (MCAA), designed to facilitate automatic exchange between signatories. With a view to becoming part of the movement towards strengthening international cooperation on tax matters and demonstrating the country’s willingness to comply with the leading international standards in this area, Monaco signed this Agreement on 15 December 2015.   

At the European level, Monaco signed the Amending Protocol to the "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. 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.

Following the ratification of the three above-mentioned agreements and conventions (the MAAC, the MCAA and the EU Protocol) in December 2016, automatic exchange of information entered into force in Monaco on 1 January 2017.  Monaco undertook its first automatic exchange of information with the participating jurisdictions in 2018, based on information from the year 2017.

How will this affect you?

Residents of Monaco only:

• No information regarding your accounts held in Monaco will be exchanged; as part of automatic exchange of information
• Monaco will receive information about any accounts you hold in countries participating in automatic exchange of information with Monaco. This data may be used for income tax purposes and will be subject to a statutory period of limitation. During this period, the data will be stored under optimal security conditions, which meet the highest international standards. The IT system has been deemed compliant by the OECD after their security audit

Residents of a state with which Monaco has agreed to exchange information:

• Information about any financial accounts you hold in Monaco (see question about reportable financial accounts ) ) will be sent to the tax authorities of your country or countries of residence

Which jurisdictions should be considered as reportable jurisdictions for Monaco with respect to automatic exchange?

Reportable jurisdictions are defined by Ministerial Decree and include:

• The member states of the European Union (EU) and Gibraltar, as part of the Amending Protocol to the "Agreement between the European Community and the Principality of Monaco providing equivalent measures to those of the Council Directive 2003/48/CE" negotiated between Monaco and the EU
• Jurisdictions which have signed the Multilateral Competent Authority Agreement (MCAA) for the Automatic Exchange of Financial Account Information, relating to the automatic exchange of financial account information and with which the Principality of Monaco has agreed to exchange information automatically 

The list of reportable jurisdictions, is published by Ministerial Decree and updated whenever new jurisdictions are deemed reportable. There are currently 83 reportable jurisdictions (last updated by Ministerial Decree 2023-776 of 26/12/2023).

Previous Ministerial Decrees:

• Ministerial Decree No. 2022-729 of 21 December 2022
• Ministerial Decree No. 2021-783 of 10 December 2021
• Ministerial Decree No. 2020-869 of 11 December 2020
• Ministerial Decree No. 2019-1080 of 20 December 2019
• Ministerial Decree No. 2018-1145 of 10 December 2018
• Ministerial Decree No. 2017-867 of 18 December 2017
• Ministerial Decree No. 2016-784 of 20 December 2016

Which jurisdictions should be considered as Monaco’s partner jurisdictions with regard to automatic exchange?

Since Ministerial Decree No. 2023-776 of 26 December 2023, partner jurisdictions are those which have agreed to provide reports to Monaco.

The following applies:

• A partner jurisdiction included on the list of reportable jurisdictions is a reciprocal jurisdiction (i.e., one that sends and receives reports to/from Monaco).
• A partner jurisdiction not included in the list of reportable jurisdictions is a non-reciprocal jurisdiction (i.e., one that sends reports to Monaco but does not receive any in return).

The purpose of the list of partner jurisdictions is to enable Monegasque financial institutions to apply streamlined due diligence procedures for clients residing in these jurisdictions.

The list of partner jurisdictions is published by Ministerial Decree and updated when new jurisdictions enter into partnership. There are currently 94 partner jurisdictions, 11 of which are non-reciprocal (latest update: Ministerial Decree No. 2023-776 of 26 December 2023 ).

What types of information are exchanged?

The following types of information are exchanged as part of the Common Reporting Standard for all reportable accounts:

1. Name, address, tax identification number (TIN), date and place of birth [1]  (in the case of an individual)
2. Account number
3. Name and identifying number of the reporting financial institution

Depending on the type of account, other financial information should be reported:

How is the confidentiality of the information exchanged and the security of exchanges guaranteed?

Data is exchanged in accordance with the applicable legal provisions relating to confidentiality and the protection of personal data.

The exchange of data between financial institutions and the Administration for the purposes of automatic exchange is achieved through the provision of secure, point-to-point communications.

The exchange of data between the Administration and the OECD is carried out via the OECD’s centralised secure platform, Common Transmission System (CTS).

What documentation should financial institutions resident in Monaco consult when implementing automatic exchange?

The legislation below applies to the implementation of automatic exchange of information:

• Act no. 1.444 of 19 December 2016 relating to various measures regarding the protection of personal information and confidentiality in connection with the automatic exchange of information in tax matters
• Act no. 1.445 of 19 December 2016 relating to various measures regarding the applicable requirements and criminal penalties in connection with the automatic exchange of information in tax matters
• Ordinance no. 6.208 of 20 December 2016 implementing the Convention on Mutual Administrative Assistance in Tax Matters, of the Multilateral Competent Authority Agreement for the Automatic Exchange of Financial Account Information, and 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"
• OECD publications:
  • Standard for Automatic Exchange of Financial Account Information in Tax Matters
  • Standard for automatic exchange of financial information in tax matters: Implementation Handbook  
  • CRS-related FAQs  

In addition to the texts noted above, the Government has worked with professionals to develop a practical guide more specifically aimed at all Monegasque financial institutions to help them implement the exchange process within their organisations. 

This guide outlines specific aspects of the Common Reporting Standard, including the terms and conditions.

Does the Principality of Monaco provide its residents with a tax identification number?

No, the Principality does not provide tax identification numbers.

Can an individual account holder or a person who controls an entity which holds an account be a tax resident of more than one jurisdiction?

Yes. In these circumstances, reporting financial institutions will need to report the information collected to each jurisdiction in which the account holder (individual or manager of an entity) is a tax resident. In this context, a Monaco resident may be a reportable person if he or she is also resident in another reportable jurisdiction for Monaco.

Is the wider approach applicable in Monaco?

The Monegasque financial institutions must apply the wider approach with respect to due diligence (not reporting).

The wider approach involves applying due diligence procedures to all financial accounts opened with reporting Monegasque financial institutions.

The advantage of the wider approach for due diligence procedures is that it means that financial institutions do not have to review their classifications and collect new information if a foreign jurisdiction becomes a reportable jurisdiction.

Monegasque financial institutions are responsible for identifying reportable financial accounts. Only reportable accounts need to be reported to the Monegasque authorities.

What options are left to the discretion of reporting financial institutions?

In terms of implementation, the Common Reporting Standard leaves a series of options to the discretion of each jurisdiction. Some of these options are closed due to the fact that Monaco has signed the EU Protocol, which aims to achieve a degree of homogeneity between signatories. The Principality of Monaco has decided to leave the other options open in order to facilitate the work of Monegasque financial institutions and offer them some flexibility.

Monegasque financial institutions can:

• Engage service providers to discharge their reporting and due diligence obligations
• Apply the due diligence procedures for new accounts to pre-existing accounts
• Apply to lower value accounts (<USD 1 million) the due diligence procedures for higher value accounts (>USD 1 million)
• Apply the residence address test or electronic indicia search of files held to pre-existing lower value accounts held by individual account holders
• Opt not to review, identify and report pre-existing entity accounts with a an aggregate account balance or value of USD 250,000 or less
• Apply the alternative procedure for group cash value insurance contracts or group annuity contracts
• Use existing standardised industry coding systems for the due diligence process
• Use the thresholds stated in dollars in the CRS (thresholds have been converted into euros in Monegasque legislation)
• Apply the expanded definition of pre-existing accounts
• Apply the expanded definition of related entities
• Report the discretionary beneficiaries of a trust which is a passive non-financial entity only in years in which they receive a distribution

 Monegasque financial institutions are obliged to:

• File nil returns

 Monegasque financial institutions are not authorised to:

• Use the alternative approach to calculating account balances
• Use an alternative reporting period
• Gradually phase in reporting of gross sale proceeds

Apply grandfathering rules for bearer shares issued by exempt collective investment vehicles

What sanctions are applied in the event that financial institutions and/or their client fail to fulfil these obligations?

Pursuant to Act No. 1.445 of 19 December 2016 and Ordinance No. 6.208 of 20 December 2016 , reporting Monegasque financial institutions that do not complete their declarations and due diligence obligations or make incomplete or inaccurate statements are liable to administrative and criminal penalties.

Pursuant to Act No. 1.445 of 19 December 2016 , , individuals who intentionally communicate incomplete or incorrect self-certification to a financial institution or do not communicate a change in circumstances are liable to criminal penalties.

Financial institutions

Which financial institutions are required to report information as part of automatic exchange?

Financial institutions, which have a reporting obligation, include not only banks and custodians, but also certain TCSPs (Trust & Corporate Services Providers), collective investment vehicles and other legal structures whose income is derived from financial assets. Retirement funds and public pension funds are exempt from reporting obligations.

All Monegasque entities that meet the criteria of a Reporting Financial Institution must register on the EAI Portal (eai.gouv.mc ).

Special case: management companies

Management companies are, by virtue of their activities, reportable financial institutions. However, since they do not,as a rule, have any accounts to report, they are exempt from reporting obligations.

Special case: trusts

In accordance with the Common Reporting Standard, a trust may fall under various categories of entity, depending on the nature of its activities.

Financial accounts

What types of financial account are reportable as part of automatic exchange of information?

Reportable accounts include accounts held by individuals, some entities and certain investment vehicles, which includes some trusts and certain Monegasque non-trading companies. The Common Reporting Standard includes a requirement to look through passive entities in order to identify and report on the reportable individuals who control these entities.

Which low-risk accounts specific to Monaco are excluded?

No accounts are excluded in Monaco, beyond those already excluded in the Common Reporting Standard:

• Retirement and pension accounts
• Tax favoured accounts other than retirement accounts
• Temporary life insurance policies
• Estate accounts
• Escrow accounts
• Deposit accounts with unreturned overpayments

Due Diligence Process

What due diligence procedures must reporting financial institutions follow to identify reportable accounts?

The Common Reporting Standard sets out a solid body of due diligence procedures which reporting financial institutions must follow in order to determine reportable accounts and obtain the required identification information from account holders for these accounts.

These procedures distinguish between accounts held by individuals and entity accounts, and between pre-existing and new accounts, recognising that it is more difficult and costly for financial institutions to obtain information from existing account holders than at the time of opening an account.

Does the tax identification number for pre-existing accounts need to be declared if it is not noted in the records of the reporting financial institution?

For new accounts opened on or after 1^st January 2017 and for all pre-existing accounts that have been subject of a self-certification request and collection, the tax identification number must be reported.

For other pre-existing accounts for which a self-certification was not obtained. The reporting financial institution must provide evidence that it has made reasonable efforts to obtain the tax identification number at least once a year.

Reporting process

How and on what timescale does the reporting process take place?

The competent authorities exchange information according to a secure IT schema (XML), on an annual basis, in the nine months following the end of the relevant calendar year N, i.e. before 30 September of the year following the relevant year N+1.

In Monaco, financial institutions must apply the due diligence rules for identifying reportable accounts since 1 January 2017.

Each year, reporting Monegasque financial institutions have until 30 June of the year N+1 to send information relating to the previous year (the year N). 

The global reporting process for Financial Institutions includes:

• XML reports to all partner jurisdictions in which their financial account holders are resident for tax purposes, and
• A compulsory nil report for all partner jurisdictions in which the Financial Institution has not made a report due to a lack of declarable financial accounts

How does the reporting platform work?

A user guide of the automatic exchange of information reporting platform, intended for the use of the professionals involved in the process, is available and can be downloaded at the bottom of this page.

What schema should financial institutions use to prepare and report information to be shared under automatic exchange?

The reporting Monegasque Financial institutions must use the latest XML2.0 schema published by the OECD in June 2019.

The XML schema template and associated user guide are available for download at the bottom of this page or directly on the OECD’s official website at: www.oecd.org/tax/automatic-exchange

[1] It is not mandatory to report place of birth in Monaco.