Green light bill automatic exchange of information on tax matters in Andorra

The Andorran government presented on 16 June, the draft Law of automatic exchange of information on tax matters, fixing the exchange of data between Andorra and the 81 countries participating in the agreement.

The Principality of Andorra is immersed in a process of transformation of its economic and financial model . The first step was the approval in September 2009 of the Law on tax information exchange upon request , based on the model established by the Organization for Economic Cooperation and Development (OECD) , which Andorra renounced its status as a tax haven. Since then, they have signed up a total of 23 agreements to exchange tax without retroactive until the bill automatic exchange of information on tax matters in Andorra , presented on 16 June by the Council of ministers.

AUTOMATIC EXCHANGE OF INFORMATION ACT ON TAXATION IN ANDORRA

The Law automatic exchange of information regulated through the Convention of the Council of Europe and the Organization for Economic Cooperation Development (OECD) on mutual administrative assistance in tax matters, exchange of automatic information between Andorra and the other states participating -l'acord includes 81 countries-.

Thus, from 2018, as established by the bill, which still must undergo aprovació- Andorra should provide tax, for the year of 2017 , those accounts preexisting individuals with a balance of over one million dollars. The bill Automatic Exchange of Information on tax matters in Andorra suggests postponing until 2019 the automatic communication of the accounts of individuals with tax residence outside Andorra with a balance less than a million dollars , as well as the accounts of legal entities worth more than $ 250,000.

WHO WOULD AFFECT THE AUTOMATIC EXCHANGE OF INFORMATION ACT ON TAXATION?

The Ministry of Finance of Andorra will be the body responsible for delivering the information to the tax authorities of each country. The bill indicates that this agreement will affect individuals or entities resident tax account in a member state of the European Union or in a country where the agreement has been implemented automatic exchange of information, as well as entities resident in Andorra, located branches of non-residents in the country, and insurance operating entities of the financial system (banks, financial investment companies, agencies, investment firms, asset management companies and companies managing investment collective financial assets).

This first version of the draft Law of automatic exchange of information on tax matters in Andorra excludes a number of accounts, although variations may occur until the final approval of the project. So far, however, be excluded:

• Accounts linked to insurance instruments that pension plans and other employee welfare contributions below $ 50,000 per year and a maximum contribution, throughout life, less than a million dollars.
• Accounts linked insurance and savings products for other purposes (buying a house, of unemployment, accidents, illness and disability in general or aimed at training).
• Inactive financial accounts with a balance of less than $ 1,000.
• Operating accounts intended solely to cover payments relating to the ownership or use of a second residence located in Andorra (annual average balance must be less than $ 10,000).
• Escrow deposit accounts where only debt securities issued by government or other public institutions Andorra Andorra (annual average balance must be less than 50,000 euros).

MODALITIES OF EXCHANGE OF INFORMATION ON TAX MATTERS APPLICABLE TO ANDORRA

The Law Clearing fiscal provides three modes:

1. Exchange of information upon request: the requesting country must be requested by an application. Andorra apply this method since 2009.
2. Automatic Exchange of Information allows bilateral or multilateral regularly. Andorra apply this model from 2018.
3. Spontaneous exchange of information: the country reporting data can be sent without having received any request or agreement of automatic case suspect that the information may be of interest to some member countries of the agreement.

Sources: The Diary of Andorra and BonDia