On October 17, 2025, the European Union took a significant step toward greater financial transparency and international tax cooperation by publishing a series of Council decisions in the Official Journal of the EU. These decisions, focused on updating and enhancing fiscal agreements between the EU and several microstates—namely Liechtenstein, Andorra, Monaco, and San Marino—have the potential to reshape the landscape of cross-border financial information exchange.
The publication in the Official Journal, as reported by IPSOA Quotidiano and Giuffrè Francis Lefebvre, marks the formal signing of protocols that modify longstanding tax agreements. These updates are not just bureaucratic housekeeping; they are designed to bring the EU's arrangements with these countries into alignment with the latest international standards for the automatic exchange of financial account information. The changes reflect recent amendments to the Common Reporting Standard (CRS), a global framework developed under the auspices of the Organisation for Economic Co-operation and Development (OECD).
The journey toward these new protocols began over a year ago. On May 21, 2024, the EU Council authorized the European Commission to launch negotiations with the four microstates. The goal? To revise the agreements in a way that would mirror the changes to the CRS, which had been updated at the international level to address evolving challenges in tax compliance and financial reporting. According to the Official Journal, the negotiations concluded successfully, culminating in the signature of the new protocols. Notably, the protocol with Andorra was specifically highlighted for its focus on the automatic exchange of financial information, a move intended to bolster international tax compliance and reduce opportunities for tax evasion.
The significance of these agreements lies in their scope and ambition. As the editors at Memento noted, "The updated protocols will ensure that the exchange of information between EU Member States and third countries is aligned with the recently updated common communication standards developed by the OECD." This alignment is not merely technical—it represents a concerted effort to plug loopholes that have historically allowed individuals and entities to hide assets and income offshore. By bringing these microstates into closer conformity with EU and OECD standards, the Council aims to make tax evasion more difficult and to promote a level playing field for all taxpayers.
But the EU's efforts do not stop with Liechtenstein, Andorra, Monaco, and San Marino. On October 10, 2025, just a week before the protocols were published, the Ecofin Council (the Economic and Financial Affairs Council of the EU) updated its agreement with Switzerland, another key player in European finance. Although the details of the Swiss agreement have yet to be published in the Official Journal, the move signals a broader push for transparency among the EU's neighbors and financial partners.
In tandem with these updates, the Council also authorized the start of negotiations with Norway for an administrative cooperation agreement in the field of direct taxation. This would further extend the EU's network of tax cooperation, ensuring that information can flow smoothly between EU Member States and Norway when it comes to direct taxes. The decision to engage Norway underscores the EU's commitment to comprehensive coverage, not just with traditional offshore jurisdictions but with all countries where financial secrecy might pose a risk to tax compliance.
These developments come at a time when international tax cooperation is under intense scrutiny. The CRS, first introduced in 2014, has become the global standard for the automatic exchange of financial account information. More than 100 jurisdictions have committed to implementing the CRS, but differences in interpretation and implementation can create gaps that sophisticated actors may exploit. The recent updates to the CRS, and the EU's efforts to incorporate those changes into its agreements, are a direct response to these challenges.
According to the Council's published decisions—specifically Decisions EU 2025/2120, EU 2025/2124, EU 2025/2125, and EU 2025/2126—these protocols are not just about information sharing; they are about trust and the integrity of the international financial system. By ensuring that all participating countries adhere to the same high standards, the EU hopes to foster greater cooperation and reduce the risk of tax base erosion and profit shifting.
The process of updating these agreements has not been without its complexities. Negotiations with small but financially significant states like Monaco or Liechtenstein require careful diplomacy. These countries, often prized for their banking secrecy and favorable tax regimes, have sometimes been wary of measures that could erode their competitive edge. However, the global momentum toward transparency—and the pressure from larger economies—has made such reforms increasingly inevitable.
The focus on the automatic exchange of information is particularly noteworthy. Under the updated protocols, financial institutions in Liechtenstein, Andorra, Monaco, and San Marino will be required to collect and report information on account holders who are tax residents in EU Member States. This data will then be shared automatically with the relevant tax authorities, making it far easier to detect undeclared assets and income. The hope is that, by removing the cloak of secrecy, both the EU and its partner countries can improve tax compliance and ensure that everyone pays their fair share.
While the updated protocols represent a major step forward, they are also part of a broader, ongoing effort by the EU to combat tax evasion and avoidance. The Council's decision to maintain its list of non-cooperative jurisdictions—the so-called "blacklist"—demonstrates that the EU remains vigilant against countries that do not meet its standards. By continually updating agreements and expanding its network of partners, the EU is sending a clear message: tax evasion will not be tolerated, and international cooperation is the only way forward.
Looking ahead, the real test will be in implementation. Signing protocols and updating agreements is one thing; ensuring that information is actually exchanged efficiently and securely is another. The EU and its partners will need to invest in robust IT systems, staff training, and oversight mechanisms to make the new arrangements work as intended. But if successful, these reforms could serve as a model for other regions grappling with similar challenges.
For now, the publication of these Council decisions in the Official Journal marks a milestone in the EU's quest for financial transparency. As the world becomes ever more interconnected, the ability to track assets and income across borders is essential for fair and effective taxation. With these updated protocols, the EU is taking a decisive step in that direction—one that could have ripple effects far beyond its own borders.