THE European Union and Monaco signed an agreement aimed at improving tax compliance by private savers on July 12 which will require that financial information is exchanged automatically between the Principality and the Union.
This is part of an on-going programme which has seen similar agreements struck between the EU and Andorra, Liechtenstein, San Marino and Switzerland and when ratified is due to come into force in January 2018.
The agreement upgrades a 2004 agreement that ensured that Monaco applied measures equivalent to those in an EU directive on the taxation of savings income. The aim is to extend the automatic exchange of information on financial accounts in order to prevent taxpayers from hiding capital representing income or assets for which tax has not been paid.
Three parties signed the document, Peter Kažimír, Finance Minister of Slovakia and President of the European Council, Serge Telle, Minister of State of Monaco and Pierre Moscovici, European Economic Commissioner.
Basically, the agreement provides for Monaco to meet exactly the same standards of transparency and exchange of information as if they were full members of the EU. Such information may include release of names, addresses, tax identification numbers and dates of birth of each member states residents with accounts in the Principality, as well as other financial and account balance information.
Slowly but surely, it is becoming more difficult for private individuals to avoid the payment of tax in their place of domicile, although no doubt those who are really rich will still be able to settle in low tax areas such as Monaco and Switzerland whilst corporations and even cartels will endeavour to hide their profits through technicalities and loopholes although even they are beginning to feel the pinch.