Apart from the unavoidable global movement toward fiscal transparency, which
our Sovereign Prince has embarked on, the agreements that Monaco has signed need to be evaluated and perceived as beneficial for our economic position.
Monaco is essentially signing two types of bilateral agreements, separate from the multilateral Convention on Mutual Administrative Assistance in Tax Matters signed in late 2014:
Double tax agreements (DTA),
Tax information exchange agreements (TIEA).
DTAs achieve two goals:
First, it pertains to following international regulations to allocate the right tax liability on income to the right country.
The benefit is that it protects the taxpayer, whether it be an individual or a business, because both nations have signed an agreement governed by powers that supersede domestic law.
Next, the treaty reduces domestic law source deductions, so it allows for economic trade without undue tax burdens.
TIEAs have a narrower goal in the sense that they simply enable the exchange of requested information between two countries, providing that the stringent terms of implementation are followed.
They make it possible for our economy to be transparent, which creates a space where investors and operators are unfettered by banking restric- tions or interpretations of third-party tax administra- tions. Hence they pave the way for economic affairs, for our businesses as much as for families in Monaco. It is important to point out that there is a provision in the last agreement Monaco signed with Italy on 2 March pertaining to resolving residency conflicts for individuals.
It is precisely within the context of this provision on residency – one that will become a critical in the future – the effective residence of individuals and thereby any business-owning families in Monaco will be an asset for our principality.
The evaluation of bilateral agreements and the multi- lateral convention on administrative assistance leads to a single conclusion: the winners of this global trend will be the actual residents of our principality, because there is no future in pretending to set up a business in some random country. So it is best to use taxation as a means and not as an end.
This should encourage us to continue our work on attractiveness and make improvements with support from everyone – economic players, workers, government authorities – welcome this customer base and provide high-quality services, quality that also includes our instal- lations, in order to deal with future challenges in the economy, digital technology and finance. We have our work cut out for us because competition is fierce.
Nevertheless, our institutional and tax system, our image as a safe peaceful place and our quality of life are unquestionably our biggest assets.
Therefore, we must seize the opportunity international agree- ments afford us to guide our economy’s growth. Welcoming businesses and the families that run and uphold them is a real situation and a sign of hope for the well-balanced growth of the principality.