Monaco, known for its status as a global financial hub, has committed to international tax transparency standards despite not being a member of the European Union (EU) or the Organisation for Economic Co-operation and Development (OECD). While Monaco has implemented measures to enhance its cooperation with global tax authorities, the principality has not yet adopted Country-by-Country Reporting (CbCR) as part of the OECD’s Base Erosion and Profit Shifting (BEPS) framework. However, multinational enterprises (MNEs) with operations in Monaco must remain informed about their potential obligations under CbCR in other jurisdictions. This guide provides CFOs and financial executives with an overview of the current CbCR situation in Monaco and important considerations for global tax compliance.

Applicability of CbCR in Monaco

Criteria for Reporting:

• Monaco has not yet introduced domestic CbCR legislation based on the OECD BEPS Action 13 framework.
• Multinational enterprises headquartered in Monaco are not required to file a CbC report locally.
• However, if a Monegasque entity is part of a multinational group with a parent entity in a jurisdiction that mandates CbCR, the group may still be required to comply with CbCR obligations in that parent jurisdiction.

Relevant Legislation:

• Monaco’s current tax legislation does not include any provisions for Country-by-Country Reporting, although the principality has taken steps toward greater transparency and exchange of tax information through its commitment to the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters and other international tax agreements.
• MNEs headquartered in Monaco should be aware of reporting obligations in other jurisdictions where they operate.

Reporting Requirements

Information to be Reported:

• Since Monaco does not have CbCR legislation, there are no specific reporting requirements related to CbC reports within Monaco.
• However, MNEs that are headquartered in jurisdictions with CbCR obligations must comply with those requirements, typically including:
  • Total revenues (related-party and unrelated-party transactions)
  • Profit or loss before tax
  • Income tax paid and accrued
  • Stated capital and accumulated earnings
  • Number of employees
  • Tangible assets (other than cash or cash equivalents)
• MNEs based in Monaco that are required to file CbC reports abroad must ensure that the report is prepared according to the specific format and submission guidelines of the respective country, often in XML format following the OECD standards.

Filing Deadlines

• Since there is no CbCR requirement in Monaco, there are no specific filing deadlines associated with this reporting in the principality.
• For MNEs subject to CbCR in other jurisdictions, the filing deadline is typically 12 months after the end of the fiscal year. For example, if the fiscal year ends on 31 December 2023, the CbC report must be submitted by 31 December 2024 in the relevant jurisdiction.

Penalties for Non-Compliance

Penalties:

• Since Monaco has not adopted CbCR, there are no penalties associated with failure to file a CbC report in the principality.
• However, multinational groups with CbCR obligations in other jurisdictions could face significant penalties for non-compliance, including:
  • Monetary fines, which may range from €10,000 to over €100,000 depending on the jurisdiction.
  • Increased scrutiny from tax authorities, leading to potential audits or legal action.

Defences:

• In jurisdictions with CbCR mandates, businesses can typically present a reasonable cause for delays or errors, such as technical issues or administrative misunderstandings. However, this does not apply in Monaco, as there is no local filing requirement.

Confidentiality and Use of Information

Data Protection:

• Monaco has not implemented CbCR requirements, so there are no specific regulations on the handling or protection of CbC reports within the principality.
• However, for MNEs with CbCR obligations in other jurisdictions, it is essential to ensure that reports are handled according to the confidentiality and data protection standards mandated by those jurisdictions and the OECD.
• CbC reports filed in compliant jurisdictions are exchanged between tax authorities under the Multilateral Competent Authority Agreement (MCAA), ensuring that information is shared only with authorities that meet strict confidentiality standards.

Additional Resources

• For further information on tax compliance and reporting obligations in Monaco, visit the Monaco Government website.
• MNEs operating globally can refer to the OECD’s CbCR guidelines on the OECD BEPS Action 13 page for additional details on reporting requirements in other jurisdictions.
• For understanding broader tax exchange agreements that Monaco participates in, consult the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

Conclusion

Monaco has not adopted Country-by-Country Reporting under the OECD BEPS framework. However, multinational enterprises with operations in the principality should remain aware of their global tax obligations, particularly in jurisdictions where CbCR is mandatory. Non-compliance with CbCR in other countries could result in significant penalties and reputational damage, even if no local filing is required in Monaco. MNEs should maintain close contact with tax professionals and remain informed about international tax developments to ensure full compliance with global tax transparency