Financial Crime World

Monaco Introduces Compliance Reporting Requirements for Multinational Enterprises

Combatting Tax Evasion and Improving Fiscal Transparency

In a bid to combat tax evasion and improve international fiscal transparency, Monaco has introduced Country by Country (CbC) reporting requirements for multinational enterprises (MNEs). This move is part of the country’s implementation of Action 13 of the OECD’s Base Erosion and Profit Shifting (BEPS) plan.

Reporting Requirements

Under the new regulations, MNEs with consolidated annual revenue exceeding EUR 750 million will be required to submit a CbC report to the Department of Tax Services in Monaco. The report will contain information on:

  • Revenue
  • Pre-tax profit or loss
  • Income tax paid
  • Income tax accrued
  • Share capital
  • Retained earnings
  • Staff and tangible assets excluding cash or cash equivalents for each jurisdiction where the MNE operates.

Purpose of CbC Reporting

The aim of CbC reporting is to:

  • Reduce gaps and mismatches in tax rules between different countries
  • Restore the tax base in countries where business is generated
  • Increase international fiscal transparency

The reports will be used by tax authorities to assess transfer pricing risks and other BEPS risks, including economic and statistical analysis purposes.

Filing Requirements

According to the regulations:

  • MNEs resident in Monaco for tax purposes must submit their CbC report within 12 months after the last day of the reportable tax year.
  • The first reports are due for the 2018 fiscal year, with subsequent reports to be filed annually.

Scope and Constituent Entities

The reporting requirements apply to any company that is part of an MNE group, including:

  • Permanent establishments
  • Separate business units

Constituent entities must inform the Department of Tax Services of their identity and tax jurisdiction before the last day of the MNE group’s reporting fiscal year.

Report Exchange and Sharing

Reports received by the Department of Tax Services will be sent to the tax authorities in countries where the constituent enterprises of a Monaco reporting entity are present, with which Monaco has signed an agreement to share CbC reports. Similarly, Monaco receives reports from reporting entities in countries that have signed the OECD Multilateral Agreement between competent authorities on the exchange of country-by-country tax returns.

Additional Resources

The full set of instructions and documentation relating to transfer pricing and country-by-country reporting can be found on the OECD’s official website.