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10/12/2016

Monaco signs up to EU’s tax transparency scheme

Euro & Finance

Monaco signs up to EU’s tax transparency scheme

Famed for the F1 race around its streets, Monaco will now automatically share financial information with the EU.

[United Autosports/Flickr]

The EU has signed a fiscal transparency agreement with Monaco in an attempt to stop Europeans hiding undeclared income in the Mediterranean principality. EurActiv Spain reports.

Famous for its glamorous casinos and annual Formula One race, Monaco is also known for not levying income tax and for being somewhat of a tax haven. The new agreement with the EU will take effect in 2018 and involves Monaco automatically sharing information with the member states on bank accounts, as well as Monégasques who live in the wider EU.

The member states will, as a result, have access to a large amount of fiscal data, as well as the names, addresses, tax numbers and other financial information of any of their citizens residing in Monaco.

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The European Commission announced that the agreement is intended to make sure both parties are “better equipped to detect and pursue tax evaders, who will no longer be able to hide income and assets in financial institutions abroad”.

The Commission’s Pierre Moscovici, whose portfolio includes taxation and customs, said that the agreement “reinforces Monaco’s commitment to international tax transparency standards”.

The executive also insisted that the deal is “fully in line” with the OECD’s new global standards on automatically exchanging information.

The EU already signed similar agreements with Switzerland, Liechtenstein and San Marino in 2015; it also added Andorra to its list of agreements in February.

Background

Relations between Monaco and the EU are primarily conducted through France. Through that relationship Monaco directly participates in certain EU policies. Monaco is an integral part of the EU customs territory and VAT area, and therefore applies most measures on excise duties and VAT.

Monaco is a de facto member of the Schengen area (its borders and customs territory are treated as part of France) and it officially uses the euro as its sole currency. It uses the euro via an agreement with the EU and France and is allowed by the EU to mint its own coins. Monaco uses the euro as it previously had its currency tied 1:1 with the French franc.