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Monaco Cracks Down on Tax Evasion
December 19th, 2016 - The Principality of Monaco has taken a significant step towards combating tax evasion by introducing new regulations that make individuals liable for criminal penalties if they intentionally provide incomplete or incorrect self-certification to financial institutions or fail to report changes in their circumstances.
New Regulations Require Reporting Financial Institutions to Register on EAI Portal
The new regulations require all Monegasque entities that meet the criteria of a Reporting Financial Institution to register on the EAI Portal, where they will be required to submit reports on a regular basis. This includes:
- Banks and custodians
- Certain Trust & Corporate Services Providers (TCSPs)
- Collective investment vehicles
- Other legal structures whose income is derived from financial assets
Reporting Obligations Apply to All Accounts Held by Individuals and Entities
The reporting obligations apply to all accounts held by individuals and entities, including:
- Trusts
- Certain Monegasque non-trading companies
Reporting Financial Institutions must follow due diligence procedures outlined in the Common Reporting Standard to identify reportable accounts and obtain required identification information from account holders.
New Regulations Require Latest XML2.0 Schema Published by OECD
In addition, financial institutions are required to use the latest XML2.0 schema published by the OECD in June 2019 to prepare and report information under automatic exchange.
Criminal Penalties for Incomplete or Incorrect Self-Certification
According to the new regulations, individuals who provide incomplete or incorrect self-certification to financial institutions are liable for criminal penalties. Similarly, those who fail to report changes in their circumstances are also at risk of prosecution.
Annual Reporting Process
The reporting process is expected to take place on an annual basis, with financial institutions required to submit reports to partner jurisdictions by September 30th of each year. The global reporting process includes:
- Submission of XML reports to all partner jurisdictions where account holders are resident for tax purposes
- Compulsory nil report for all partner jurisdictions where no reportable accounts were found
Key Takeaways
• Individuals who provide incomplete or incorrect self-certification to financial institutions are liable for criminal penalties. • Reporting Financial Institutions must register on the EAI Portal and submit reports on a regular basis. • The Common Reporting Standard sets out due diligence procedures that reporting financial institutions must follow to identify reportable accounts and obtain required identification information from account holders. • Financial institutions must use the latest XML2.0 schema published by the OECD in June 2019 to prepare and report information under automatic exchange. • The reporting process takes place on an annual basis, with financial institutions required to submit reports by September 30th of each year.
Resources
- User guide for the automatic exchange of information reporting platform: available for download or directly on the OECD’s official website.
- XML schema template and associated user guide: available for download or directly on the OECD’s official website.