Monaco and UK TIEA – Update


Monaco - UK TIEA

Earlier this year, in our news bulletin dated 25th February, we reported on the signing of the Tax Information Exchange Agreement (TIEA) between Monaco and the UK. The agreement would come into effect on completion of the necessary formalities in each jurisdiction. At the time of signature no indication was given as to when as to when the formalities were expected to be complete.

On the 4th August the Monaco Sovereign Order n°. 5,438 was passed which confirmed the entry into force of the TIEA with the UK with effect from 22nd April 2015.

As reported in our earlier news bulletin the Agreement for the exchange of information between the two states is subject to various safeguards, with exchange only taking place after the submission of a detailed request to the other party. It is not an agreement for the automatic exchange of information.

When submitting a request for information the TIEA provides that the applicant must:

1.  Identify the person to whom the application relates;
2.  Supply a statement detailing the information requested;
3.  State period covered by the request;
4.  The tax purpose of the request;
5.  The grounds to believe the information is held by the other jurisdiction;
6.   Confirms that the request conforms to the law and practice of the applicant; and
7.   All means have been pursued to obtain the information in its own jurisdiction.

In addition, the applicant party must demonstrate that the requested information is relevant to:

1. The determination, assessment and collection of taxes;
2. The recovery and enforcement of claims for tax; or
3. The investigation or prosecution of tax claims.

The safeguards are intended to prevent general or open ended requests for information by one party to the other, ie ‘fishing expeditions’. Furthermore, the recipient of the request may decline obtaining or providing the information requested, in certain circumstances including:

1.  The request does not comply with the terms of the Agreement;
2.  The information could not be obtained under the laws of the requesting party;
3.  The disclosure of information would be contrary public policy.

The Agreement does not require the party receiving the request to obtain and provide information that it is not required to obtain under the laws of its own jurisdiction. The effect of this provision is to limit the obligation to provide information it has collected for the administration and enforcement of its own laws, to the requesting party.

The TIEA applies to all UK taxes and Monaco taxes relating to corporate profits tax, inheritance and gift tax.

All information provided is required to be kept confidential by the receiving party and used only in connection with its tax administration.

For more information on this subject please contact Peter Brigham