Deciphering the automatic exchange of information on financial accounts

From 2018, the Principality is committed to the automatic exchange of information (AEI - also known as routine exchange) on financial accounts in accordance with the OECD's Common Reporting Standard (CRS).

In its capacity as the State of source of the capital, Monaco will transmit to the State of tax residence (with which an agreement will have been concluded) a block of predefined information on its taxpayers concerning the financial accounts they hold in Monaco, systematically and on an annual basis.

Vice versa, information on Monegasque residents received from foreign States may be used by Monaco for Income Tax purposes (ISB).

The country of tax residence will thus be able to check that its taxpayers (individuals and entities) have declared their foreign-source investment income or assets, the aim being to get them to declare them spontaneously.

The list of jurisdictions subject to declaration (reporting to the Monegasque tax authorities) and partners is set and updated by Ministerial Decree.

PLEASE NOTE: The Monegasque Government has published an evolving Frequently Asked Questions (FAQ) on automatic exchange of information for tax matters on its official website, which includes guides and EAI self-certification models.

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Article outline (PDF in FRENCH, dated January 2017):

Presentation

I. Transcription of the NCD/CRS into Monegasque law

I.1 Presentation of the EAR-CF Standard

►What does the full version of the AEI Standard include?

►Why and how is the NCD/CRS inspired by FATCA IGA 1?

►Does the AEI Standard have an impact on existing information exchange arrangements?

I.2 What Monaco must transcribe

►How are Financial Institutions (FI) identified?

►What accounts are reportable?

►What information will be declared?

►How will the Monegasque FIs proceed, and within what timeframe?

II. The selection of legal and operational instruments

II.1 Traditional instruments

►What is the legal basis authorising the applicable EAR?

►What is the operational basis laying down the conditions for EAR-CF?

II.2 The TAXUD Agreement between Monaco and the European Union

►What about the Protocol amending the 2004 Agreement with the EU?

►What are the specific features of the TAXUD Agreement between Monaco and the EU?

III. Setting up the IT and administrative infrastructure

III.1 Information technology arrangements

►What data structure schema will be used?

►What transmission/encryption method will be used?

III. 2. Information security management

►What information security standards should be applied?

►What procedures and policies should be put in place?

IV. Confidentiality and use of taxpayer data

IV.1. EAI data protection guidelines

►What are the key provisions of the Council of Europe conventions?

►What are the key provisions of European Union legislation?

IV.2 Legal protection of EAI data in Monaco

►How is the confidentiality of EAI information protected?

►What specificities apply to data processing by Financial Institutions?

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