Sotheby’s establishes first European gallery in Monaco

Thierry Orsini, Minister for Finance and Economy, to the left of Minister for Finance and Economics Jean Castellini

In a meeting with the media on Friday, December 16, Finance Minister Jean Castellini reiterated Monaco’s commitment to automatically exchange financial account information in time to begin the exchange in 2018. This is the Agreement on Exchange of Reports by Country and the Agreement on Multilateral Jurisdictions following the signing of the CRS Multilateral Jurisdiction on December 14. Both of these are based on Article 6 of Mutual Administrative Assistance in the Tax Treaty. Knowing that this data needs to be transferred at the latest on September 30, 2018, Castellini gives an overview of the year and how financial institutions can start collecting information sent during automated exchanges. did. It starts in two weeks, so it is imperative to have a lot of tools and approved texts ready for the EU and OECD to show that we have kept all our promises. “Finance said.

What happened last week?
On December 14, the Minister of State, accompanied by the Minister of Finance and Economy, submitted a letter of approval to the Mutual Administrative Assistance Treaty to Angel Gurría, OECD Secretary-General of La Muette, the OECD headquarters in Paris. In a tax issue signed by HSH Prince Albert II of Monaco. This Common Reporting Standard guarantees taxpayer rights while the Tax Administration collects information about accounts of non-resident customers in the Principality from financial institutions and automatically transfers them to the tax authorities in the country of residence. It stipulates that they should be protected. Confidentiality of exchanged data. On the night of December 15, two laws were voted by the Monaco Parliament. These laws complement the main texts voted on November 29th. Support management MutuelOr, an OECD multilateral agreement signed by Monaco on October 13, 2014. Castellini acknowledged the involvement of the Diet and the equality of studying this text within a very short time frame. “A good example of cooperation between elected representatives of Monaco and the government,” he said.

When did everything start?
In 2005, there was no agreement between 25 or 26 countries within the EU on taxation of non-residents and, in many cases, revenue declarations on foreign-owned accounts. The measures that were supposed to be temporary apply not only to EU member states, but also to many non-EU countries, including the Principality of Monaco, with EU member states and other European countries such as Monaco, Switzerland, Andra and Liechtenstein. .. “In the meantime, the world has changed,” Castellini said. “The economic crisis, the various G20 summits, and even within the EU, countries that did not accept the free exchange of information finally agreed. The question to Monaco was that there was no agreement between EU member states. The question was why countries outside the EU need to agree to apply the rules and methods. ”However, when the member states agreed, it was legalized to negotiate for two reasons. .. Countries other than Monaco and the EU are easier to negotiate with the EU as a whole than individual countries, and secondly, the assumed criteria for passing the 2005 Directive for the automatic exchange of information are 99% the same. was. As that of the OECD. “So I told them that it’s technically easier to apply the same rules than to try to apply two different criteria.”

How does the automatic exchange of information work?
Minister Castellini explained that in order to predict how automatic exchange would work, all parties would have to agree on the principle, which is effectively what a multilateral agreement does. This text has been around for quite some time and brings all states together in an OECD forum to provide a framework that allows states to change common reporting standards for exchanging financial information from “on-demand” information exchange. I am. For automatic replacement. At the Global Forum on Tax Transparency and Information Exchange in Berlin in October 2014, members defined how this change could be addressed and implemented. “This is the culmination of all work done since 2009, signing a number of bilateral agreements since the fall of 2009, and signing a number of new agreements, including an agreement to avoid double taxation. Currently, there are about 30 agreements: “The other side is the EU and the discussion began in 2013. European Commission member Semeta was accepted in Monaco in the summer of 2013 and since 2005. We have begun negotiations on a protocol to amend the measures that existed in. surla ficuture ité del’etat..

What has happened in the last year?
On February 22, 2016, the text was approved by the Commissioner and Castellini, and the agreement was signed by the Minister of State in Brussels. “For these texts to take effect, we had to vote for at least two laws followed by other regulatory texts. Two laws voted by the National Council on the night of December 15, 2016. One is to protect the confidentiality of the information in the automatic exchange, and the other is about applicable prescriptions and criminal sanctions. “On December 23, two other texts were published. Will be done. Order souveleigne When Minister of Arete (Ministerial Ordinance), amend the list of competent partners. This will automatically exchange information. ”

Removed from list
Financial institutions can start collecting information in 2018 to enable information exchange. “Another goal for 2017 is to continue to work with certain EU member states that continue to have Monaco in place. It’s a discriminatory list that can be removed from this list,” he added. The above and administrative procedures may take weeks or months, but there is no reason why they should not be removed from this list. ” For OCDE, existing bilateral agreements and on-demand information exchange will continue to apply. This may be related to the inhabitants of Monaco. Once a certain number of elements have been automatically transferred, the countries concerned may request additional information about the individual or account through bilateral agreements. “We weren’t as transparent and attractive as this,” Castellini said. “It’s important for our residents to know what the future will bring, and for those who are thinking of settling in Monaco and doing business here, and this number continues to grow. The problem is that it can only provide stability and a long-term vision in a changing world, which is highly valued. ”

What do you expect in 2017 and 2018?
Treasury Secretary Thierry Orsini detailed what will happen from January 1, 2017. The first step is to identify the accounts that the bank can file. This will start on January 1, 2017 for new accounts. There are new steps to identify the client based on “self-authentication”. The new client fills out a document that contains all the necessary elements for the bank to determine the account holder and whether the account is reportable. Then, depending on the individual’s existing account and the amount held in the account, the bank will have some clients prior to January 1, 2018, and some clients until December 30, 2018. There are other timelines for updating files in. Tolerance of these identification checks and updates. The next step is to create a platform in Monaco where financial institutions need to register in order to report all relevant accounts. In Monaco, all agencies make country-by-country declarations. If you do not have the information to declare for a particular country Declaration Neante (Nil declaration), created. “For technical and IT reasons, it’s better to make a nil declaration so that the system is set up correctly, rather than making no declaration at all and changing it later depending on the situation,” Orsini said. I am saying. It will change. Once the reportable account and account holder have been identified, the bank will transfer that information to the Monaco platform. One of the information transmitted is the balance of the account on December 31, so it is until June 30, 2018. Monaco will then need to send all declarations to the OECD platform by September 30th. Information will be sent automatically to the countries concerned. This will be the same scheme every year. The balance of the previous year’s account is on the platform by June 30th of this year and must be notified to the common platform by September 30th.

Is there a penalty?
Sanctions may apply to financial institutions that do not comply with reporting standards. The client is responsible for notifying the bank of any changes in the situation (non-resident to resident status). Clients who misidentify, create incomplete information, or fail to communicate changes in circumstances will be penalized. From next year onwards, financial institutions will need to notify their customers of their responsibilities, as the results can be significant. The information sent by the OECD depends on the type of account. It is related to a particular transaction in your account and is not just about your balance. Also, if your account is closed, this information will be sent. There is no minimum account amount to be reported. Minister Castellini said that about 50% of accounts are owned by non-residents, but most of the account management is related to more recent resident accounts. Monaco’s financial institutions have been urging customers to prove that they are resident for the past few years, or asking them to sign a document that shows that the amount deposited in their account is financially transparent. I have taken on the job. If the client did not want to respect these obligations, the account was closed.

Corporate tax
Regarding corporate tax, Castellini argued that: The issue of taxing businesses that are doing business and making a profit is a central issue currently being addressed by OCDE and the EU. Monaco does not play games that try to attract businesses by proposing a tax framework that may be considered harmful to other countries. Since 2009, we have fully supported OCDE’s work on taxation and source erosion of non-residents. Profit shift is a tax avoidance strategy used by some multinational corporations to shift profits from where they generate profits to countries where they are less taxed. ”

The article first published on December 20, 2016.

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