Source: http://www.docstoc.com/docs/97845677/Global-Forum-on-Transparency-and-Exchange-of-Information-for-Tax-Purposes-Peer-Reviews-Andorra-2011
Timestamp: 2015-04-27 11:19:08
Document Index: 700388110

Matched Legal Cases: ['Art. 79', 'Art. 3', 'Art. 5', 'Art. 19', 'Art. 14', 'Art. 101', 'Art. 5', 'Art. 5', 'Art. 5', 'Art. 5', 'Art. 7', 'Art. 10', 'Art. 30', 'Art. 30', 'Art. 10', 'Art. 28', 'Art. 21', 'Art. 5', 'Art. 9', 'Art. 24', 'Art. 47', 'Art. 27', 'Art. 21', 'Art. 4', 'Art. 10', 'Art. 11', 'Art. 49', 'Art. 51', 'Art. 41', 'Art. 45', 'Art. 49', 'Art. 5', 'Art. 46', 'Art. 5', 'Art. 15', 'Art. 13', 'Art. 1', 'Art. 9', 'Art. 14', 'Art. 4', 'Art. 13', 'Art. 7', 'Art. 41', 'Art. 41', 'Art. 2', 'Art. 5', 'Art. 1', 'Art. 4', 'Art. 6', 'Art. 7', 'Art. 3', 'Art. 12', 'Art. 13', 'Art. 29', 'Art. 34', 'Art. 38', 'Art. 12', 'Art. 7', 'Art. 22', 'Art. 22', 'Art. 15', 'Art. 41', 'Art. 15', 'Art. 70', 'Art. 71', 'Art. 74', 'Art. 72', 'Art. 5', 'Art. 1', 'Art. 2', 'Art. 18', 'Art. 16', 'Art. 36', 'Art. 11', 'Art. 4', 'Art. 43', 'Art. 43', 'Art. 1', 'Art. 23', 'Art. 23', 'Art. 24', 'Art. 27', 'Art. 10', 'Art. 24', 'Art. 34', 'Art. 1', 'Art. 23', 'Art. 11', 'Art. 54', 'Art. 51', 'Art. 58', 'Art. 59', 'Art. 5', 'Art. 70', 'Art. 43', 'Art. 51', 'Art. 51', 'Art. 58', 'Art. 59', 'Art. 29', 'Art. 27', 'Art. 5', 'Art. 29', 'Art. 49', 'Art. 18', 'Art. 49', 'Art. 51', 'Art. 58', 'Art. 59', 'Art. 9', 'Art. 4', 'Art. 4', 'Art. 9', 'Art. 10', 'Art. 41', 'Art. 42', 'Art. 43', 'Art. 10', 'Art. 41', 'Art. 43', 'Art. 41', 'Art. 42', 'Art. 48', 'Art. 4', 'Art. 5', 'Art. 9', 'Art. 8', 'Art. 1', 'Art. 4']

Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Andorra 2011 by OECD
97845677
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 90 jurisdictions which participate in the work of the Global Forum on an equal footing. The Global Forum is charged with in-depth monitoring and peer review of the implementation of the standards of transparency and exchange of information for tax purposes. These standards are primarily reflected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax Convention on Income and on Capital and its commentary as updated in 2004, which has been incorporated in the UN Model Tax Convention. The standards provide for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party. “Fishing expeditions” are not authorised, but all foreseeably relevant information must be provided, including bank information and information held by fiduciaries, regardless of the existence of a domestic tax interest or the application of a dual criminality standard.All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange of information, while Phase 2 reviews look at the practical implementation of that framework. Some Global Forum members are undergoing combined – Phase 1 plus Phase 2 – reviews. The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes. All review reports are published once approved by the Global Forum and they thus represent agreed G
All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange of information, while Phase 2 reviews look at the practical implementation of that framework. Some Global Forum members are undergoing combined – Phase 1 plus Phase 2 – reviews. The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes. All review reports are published once approved by the Global Forum and they thus represent agreed G
as at June 2011)
Reviews: Andorra 2011: Phase 1: Legal and Regulatory Framework, Global Forum on
Transparency and Exchange of Information for Tax Purposes: Peer Reviews, OECD
http://dx.doi.org/10.1787/9789264117617-en
ISBN 978-92-64-11759-4 (print)
ISBN 978-92-64-11761-7 (PDF)
This document and any map included herein are without prejudice to the status of or sovereignty over any
territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or
Revised version, September 2011.
Detail of revisions available at: http://www.oecd.org/dataoecd/24/10/48659796.pdf
Information and methodology used for the peer review of Andorra . . . . . . . . . . . 9
Overview of Andorra . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Recent developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
A. Availability of information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
A.2. Accounting records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
A.3. Banking information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
B.2. Notification requirements and rights and safeguards. . . . . . . . . . . . . . . . . . 48
C. Exchanging information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   51
C.1. Exchange of information mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        52
C.2. Exchange-of-information mechanisms with all relevant partners . . . . . . . .                                       56
C.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       58
C.4. Rights and safeguards of taxpayers and third parties. . . . . . . . . . . . . . . . . .                             60
C.5. Timeliness of responses to requests for information . . . . . . . . . . . . . . . . . .                             61
PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – ANDORRA &#169; OECD 2011
Summary of Determinations and Factors Underlying Recommendations. . . . 63
Annex 1: Jurisdiction’s Response to the Review Report . . . . . . . . . . . . . . . . . . 67
Annex 2: List of all Exchange-of-Information Mechanisms in Force. . . . . . . . 69
Annex 3: List of all Laws, Regulations and Other Relevant Material . . . . . . . 70
The Global Forum is charged with in-depth monitoring and peer review
of the implementation of the international standards of transparency and
exchange of information for tax purposes. These standards are primarily
reflected in the 2002 OECD Model Agreement on Exchange of Information
on Tax Matters and its commentary, and in Article 26 of the OECD Model
Tax Convention on Income and on Capital and its commentary as updated
in 2004. The standards have also been incorporated into the UN Model Tax
1.      This report summarises the legal and regulatory framework for trans-
parency and exchange of information in Andorra. The international standard,
which is set out in the Global Forum’s Terms of Reference to Monitor and
Review Progress Towards Transparency and Exchange of Information, is
concerned with the availability of relevant information within a jurisdiction,
the competent authority’s ability to gain timely access to that information,
and in turn, whether that information can be effectively exchanged with its
exchange of information (EOI) partners.
2.      The economy of the Principality of Andorra (Andorra) is heav-
ily dependent on tourism, in particular from its neighbouring countries,
Spain and France. Andorra’s per capita gross domestic product (GDP) of
USD 44 900 (2008) ranks among the highest in the world. Its tax system has
until recently been almost exclusively based on various indirect taxes. On
1 April 2011, a 10% tax on local-source income on non-resident companies
and individuals came into force. Further, in 2010 a corporation tax as well as
a tax on income from economic activities was adopted. These two latter taxes
will apply from the year following the entry into force of law introducing a
value added tax (which is currently before the Parliament).
3.       In March 2009, Andorra committed to the internationally agreed stand-
ard for exchange of information (EOI) in tax matters. In September the same
year, the Andorran Parliament passed a law which inter alia lifted the domestic
bank secrecy for EOI purposes. The Law on the Exchange of Information in Tax
Matters on Request entered into force on 21 September the same year. Andorra
has since then actively sought to extend its network of EOI arrangements: since
September 2009 it has signed 18 TIEAs providing – with one exception – for EOI
to the standard, of which 13 are currently in force and Andorra has completed
its process for ratification of 4 of the remaining 5 TIEAs. Andorran authorities
have informed the Global Forum that they are in advanced stages of negotiation
of TIEAs with four other jurisdictions, including OECD and G20 members.
4.      Andorran law requires that ownership information is maintained for
all Andorran companies, partnerships and foundations. This is in particular
thanks to the strict ownership and registration requirements for these entities,
as well as anti-money laundering legislation requiring a range of service pro-
viders to conduct customer due diligence. However, there is a general lack of
sanctions for not maintaining ownership information, other than some owner-
ship information held in accordance with AML and accounting obligations.
5.      Andorran law does not allow nominee ownership. Foreign compa-
nies which are centrally managed and controlled within Andorra through a
branch, are required to have information available on those persons who own
10% or more in the company.
6.       Andorran company and accounting law requires all commercial enti-
ties, including financial institutions, to keep accounting records, including
underlying documentation. This information has to be held for at least six
years by the entity or its successor or liquidator. The effectiveness of these
obligations is supported by a system of sanctions.
7.       In respect of banks and other financial institutions, the combination of
banking, accounting and AML legislation imposes appropriate obligations to
ensure that all records pertaining to customers’ accounts as well as related finan-
cial and transaction information are maintained and available to the authorities.
8.       Andorra’s competent authority, the Minister of Finance, has the neces-
sary powers to access accounting information held by companies, partnerships,
foundations and foreign branches. The competent authority can also access the
information, including ownership information, held in public registers and held
by public bodies. Further, it can access information regarding founders and
beneficiaries of foundations. However, Andorran legislation does not provide
the competent authority with powers to access ownership information held by
the entities themselves or by non-government third parties, except ownership
information held by banks and other financial institutions. Further, there are
no sanctions for such entities or their officers if they do not keep the ownership
information they are required to maintain.
9.      Until very recently, Andorran legislation suffered from a serious
shortcoming in that it required that all EOI requests include the name and
address of the taxpayer. Only the TIEAs with Germany and Liechtenstein
overrode this requirement as the Protocols to these two agreements explicitly
provide that the identity of the person under investigation can be established
by information other than name. On 1 June 2011, the Andorran Government
amended the relevant legislation which now allows for identification of the
taxpayer also through “any other kind of information necessary to determine
the identity of the person concerned so that no confusion can arise”.
10.      Andorra’s response to the determinations, factors and recommenda-
tions in this report, as well as the application of the legal framework to the
practices of its competent authority, will be considered in detail in the Phase 2
Peer Review of Andorra, which is scheduled for the second half of 2013.
Information and methodology used for the peer review of Andorra
11.      The assessment of the legal and regulatory framework of Andorra
information as described in the Global Forum’s Terms of Reference, and
was prepared using the Global Forum’s Methodology for Peer Reviews and
Non-Member Reviews. The assessment was based on information available
to the assessment team including the laws, regulations, notices and exchange
of information mechanisms in force or effect as of June 2011, Andorra’s
responses to the Phase 1 questionnaire and supplementary questions, infor-
mation supplied by partner jurisdictions, and other relevant sources.
12.     The Terms of Reference breaks down the standards of transparency
(B) access to information; and (C) exchange of information. This review
assesses Andorra’s legal and regulatory framework against these elements
determination is made that: (i) the element is in place; (ii) the element is in
place, but certain aspects of the legal implementation of the element need
improvement; or (iii) the element is not in place. These determinations are
accompanied by recommendations on how certain aspects of the system
could be strengthened where relevant. A summary of the findings against
those elements is set out on page 63 of this report.
13.      The assessment was conducted by a team, which consisted of two
expert assessors and one representative of the Global Forum Secretariat:
Ms. Sylvia Moses, Commissioner of Inland Revenue, British Virgin Islands
Inland Revenue Department; Mr. Juan Pablo Barzola, Tax Advisor, Argentina
Administracion Federal de Ingresos Publicos; and Mr. Beat Gisler from the
Global Forum Secretariat. The assessment team examined the legal and regu-
latory framework for transparency and exchange of information and relevant
exchange of information mechanisms in Andorra.
14.      Andorra is a landlocked country in south-western Europe, located
in the eastern Pyrenees mountains and bordered by Spain and France. It is
the sixth smallest nation in Europe having an area of 468 km2 (181 miles2)
with a population in 2010 of approximately 85 000 inhabitants, only 36.7%
of whom are Andorran citizens: 36.5% are Spanish, 13.0% Portuguese and
6.6% French citizens who are allowed to reside in the country under a quota
system.1 Only Andorran citizens have the right to vote and to hold political
office. The official language is Andorran Catalan.
15.       While not a member of the European Union, in 2002 the Euro was
adopted as Andorran currency. Andorra’s 2008 Gross Domestic Product (GDP)
was USD 4.22 billion (EUR 2.89 billion2).3 It is one of the wealthiest countries
in the world with a per capita income of USD 44 900 (EUR 30 737) in 2008.4
It is prosperous mainly because of its tourism industry which contributes over
80% of Andorra’s GDP.5 After several years of considerable growth, the econ-
omy experienced a contraction in 2007-2010. In 2009, real estate, renting and
business services accounted for 19.1% of GDP; wholesale and retail trade had
an 18% share; and finance was responsible for 15.7%.6 Andorra’s main trading
partners are France, Germany and Spain which together account for more than
80% of trade.7 Also, Andorran authorities advise that in 2009 and 2010 France
and Spain accounted for more than 80% of all foreign investment (FDI).
16.     Andorra limits foreign investment mainly due to concerns about the
impact it would have on its small economy. The Foreign Investment Act of
2008 increased the maximum possible foreign ownership from 33% to 49%.
for 235 designated economic sectors, including industrial, e-commerce,
and education and training there is no limitation on foreign capital;
1.    All data from CIA World Fact Book on Andorra (https://www.cia.gov/library/
publications/the-world-factbook/geos/an.html), accessed 16 March.
2.    USD 1 = EUR 0.68457 as at 25 April 2011.
3.    https://www.cia.gov/library/publications/the-world-factbook/geos/an.html,
accessed 16 March 2011.
4.    https://www.cia.gov/library/publications/the-world-factbook/geos/an.html,
5.    https://www.cia.gov/library/publications/the-world-factbook/geos/an.html,
6.    www.estandardsforum.org/system/briefs/227/original/brief-Andorra.
pdf?1293052938, accessed 16 March 2011.
7.    Figures for year 2000. www.nationsencyclopedia.com/Europe/Andorra-FOREIGN-
TRADE.html#ixzz1GwcWk31Y.
investments of non-Andorran nationals are considered Andorran capi-
tal and they can exercise business activities if they can certify twenty
years of effective and uninterrupted residence in Andorra, except for
French, Spanish and Portuguese nationals for whom the requirement
is 10 years for all activities other than liberal professions8; and
subject to prior authorisation by the Andorran Government, foreign
ownership of entities operating in the Andorran financial system can
reach 100% of the entities’ share capital or voting rights.
17.      Andorra is a member of the UN and the Council of Europe but not
the European Union. In 1990, it signed a customs union with the EU and in
2002, the Euro was adopted as Andorran currency. Previously, the Spanish
peseta and the French franc were both legal tender. Andorra is treated as an
EU member for trade in manufactured goods and as a non-EU member for
trade in agricultural products.
18.      Between 1278 and 1993, Andorra was governed under a co-princi-
pality arrangement with the head of state and the head of government being
the French President and the Spanish Bishop of Urgel. In 1993, the country
adopted its first Constitution and became a parliamentary democracy. The
French President and the Spanish Bishop of Urgel however remain the heads
of state as Co-Princes. Some of their functions include sanctioning and pass-
ing of laws, calling general elections; and calling referendums on topical
matters when requested to do so by the Head of Government and the major-
ity of the Andorran Parliament (Consell General – General Council). At the
local level, Andorra is divided into 7 self-governed parishes, subject to the
Andorran Constitution, the law and traditions (Art. 79 Constitution).
19.     The Prime Minister of Andorra is the head of government (Executive
Council) elected from and by the General Council, a unicameral legislature
with 28 members who are elected by popular vote for a four-year term.
20.     The judicial system comprises the following courts (Constitution,
chapters VII and VIII):
8.     “Liberal profession is understood as all activities that to be practised require,
because of their nature or because of legal requirements, the corresponding
specialised studies degree, granted by the General Council or by Bodies depend-
ent thereof.” (Andorra Development and Investment, www.adi.ad/en/node/381,
accessed 27 April 2011)
the Constitutional Tribunal, which interprets the Constitution, at the
highest level;
the High Court of Justice, which is the senior court and has three divi-
sions: the Civil Court, the Criminal Court, and the Administrative Court;
the District Court (Tribunal de Corts), which tries major offences in
the first instance; and
the Magistracy (Batllia of Andorra), which hears civil, administrative
and criminal cases in the first instance.
21.       The Andorran legal system is based on Roman law, with its civil
code based on the French and Spanish civil codes. There is no judicial review
of legislative acts. The Constitution of Andorra is the supreme law of the
Principality of Andorra. It was adopted on 2 February 1993 and given assent
by the Andorran people in a referendum on 14 March 1993. Treaties and
international agreements take effect from the moment of their publication in
the Official Gazette of the Principality of Andorra and override contradicting
domestic legislation (Art. 3(4) Constitution). Domestic legislation consists
of acts which are adopted by the Andorran Parliament. The Parliament may
delegate the exercise of the legislative function to the Government, by means
of a law. The law of delegation determines the matter delegated, the principles
and directives under which the corresponding legislative regulations of the
Government are to be issued, as well as the term of its exercise. A complete
list of all the relevant legislation and regulations is set out in Annex 3.
22.      Until recently, Andorra did not have any direct taxes (other than a
withholding tax based on an agreement with the EU regarding taxation of
savings, see below). However, as of April 2011, a 10% tax is levied on local-
source income of non-resident companies and individuals (Non-resident
Income Tax Act – Law 94/2010 of 29 December 2010). Further, Andorra
has adopted legislation regarding a corporation tax (Corporation Tax Act –
Law 95/2010 of 29 December 2010) as well as tax on income from economic
activities (Business Tax Act – Law 96/2010 of 29 December 2010). Both laws
came into force on 26 January 2011. However, these two laws will only apply
once the Parliament has adopted legislation introducing a value-added tax,
which will replace many of the present indirect taxes (Disposici&#243; final sisena
of Law 95/2010 and 96/2010). Andorran tax systems rely on access to owner-
ship information required to be registered in public registers and accounting
based on Andorran accounting law.
23.      The government’s main source of revenue, representing more than 86%
of the total in 2009, comes, with the exception of a capital gains tax on real estate
gains, from indirect taxes, particularly a tax on imports and consumption that
is paid by final consumers, mostly tourists.9 The Andorran tax administration
consists of a Customs Department and a Tax Department within the Ministry
of Finance responsible for import/export taxes and all other taxes respectively.
These two departments are about to be merged into a single Tax Agency.
24.      Andorra has entered into an agreement with the European Union
on Savings Taxation which provides for measures equivalent to those laid
down in Directive 2003/48/EC on Taxation of Savings Income in the Form
of Interest Payments (Savings Directive – SD). As a result, since 1 July 2005,
Andorra has imposed a withholding tax on the interest earned on savings
accounts held by EU residents in Andorra. As of 1 July this tax will rise to 35%.
Under the terms of the directive, 75% of the withholding tax is remitted to the
relevant EU nation.
25.      At present, Andorra levies a variety of indirect taxes both at central
and local level. At the central level these include taxes on various goods and
services, registration taxes and real estate taxes. At the local level, these
include taxes on commercial, business and professional activities as well as
26.      In March 2009 Andorra committed to the internationally agreed stand-
ards for the exchange of information for tax purposes. At the same time it started
negotiating tax information exchange agreements (TIEAs) and passed legislation
to ease its bank secrecy.10 Andorra is now signatory to 18 TIEAs which provide
for exchange of information to the standard. Thirteen of these TIEAs are in
force. A complete list of the TIEAs which have been concluded by Andorra
is set out in Annex 2 to this report. TIEAs are signed by the Prime Minister
or Minister for Foreign Affairs, and then by the Government submitted to the
Parliament for approval according to Article 64(1) of the Andorran Constitution.
Once the agreement is approved, the Head of State signs the instrument of rati-
fication and the other contracting party is informed about the completion of the
Andorran internal ratification procedures. Andorra’s competent authority for
exchange of information for tax purposes is the Minister of Finance.
Overview of the financial sector and relevant professions
27.     The financial system is a primary source of economic activity, second
only to tourism. The banking sector employs more than 1 500 individuals
and manages assets that are equivalent to 500% of the country’s GDP. The
9.     www.estadistica.ad/serveiestudis/publicacions/Publicacions/St&amp;Po_historic/
St&amp;Po_2010_8.pdf.
10.    www.tax-news.com/news/Andorra_Announces_OECD_Cooperation____35600.
html, accessed 16 March 2011.
financial sector was responsible for 15.7% of the GDP in 2010.11 Collective
investment schemes (CIS) and life insurance businesses are of increasing
importance.12 These two sectors are regulated in the Law regulating Andorran
Collective Investment Undertakings of 12 June 2008 and the Law Regulating
Insurance Companies of 11 May 1989.
28.      Offshore financial activities are limited by legal restrictions on for-
eign capital in Andorran companies. Law 2/2008 on Foreign Investment per-
mits foreign capital of up to 100% in certain sectors of the economy. Subject
to prior authorisation by the Andorran Government, foreign ownership of
entities operating in the Andorran financial system can reach 100% of the
entities’ share capital or voting rights.
29.     On December 2010, the financial sector included 19 entities: 6 banks
(5 bank groups), 7 financial companies managing collective investment
schemes, 5 financial investment companies and 1 non-bank financial institu-
tion providing specialised loans. In addition there are two professional asso-
ciations: l’Associaci&#243; de Bancs Andorrans (ABA) and l’Associaci&#243; d’entitats
financeres d’inversi&#243; (ADEFI). In total, Andorran banking entities hold more
than EUR 8.8 billion.13
30.      The Andorran National Institute of Finance (Institut Nacional
Andorr&#224; de Finances – INAF) was founded in 1989 and is the financial regu-
latory authority. It supervises and controls financial entities, with the excep-
tion of insurance companies (that do not belong to banking groups), which
are currently supervised by the Ministry of Finance. The Andorran Financial
Intelligence Unit (FIU) or Unitat d’Intel&#183;lig&#232;ncia Financera (UIF), created
in 2000 (until 21 April 2009 known as UPB), is the Andorran anti money
laundering and financing of terrorism regulator.
31.     Following the MONEYVAL report published in 200714, Andorra made
changes to its AML system. Law 28/2008 of 11 December 2008 amended the
Andorran AML law of 29 December 2000. This legislation in particular
introduced a definition of beneficial ownership in line with EU standards,
requires financial institutions and designated non-financial businesses and
professions to have updated information on the client and beneficial owners
11.   www.estadistica.ad/serveiestudis/publicacions/Publicacions/St&amp;Po_historic/
St&amp;Po_2010_8.pdf, accessed 16 March 2011.
12.   www.imf.org/external/pubs/ft/scr/2007/cr0769.pdf.
13.   www.ccis.ad/ing/index.html, accessed 1 April 2011.
14.   www.coe.int/t/dghl/monitoring/moneyval/Evaluations/round3/MONEYVAL
(2007)14Rep-AND3_en.pdf, accessed 16 March 2011.
and their activities, and to conduct full identification and verification of clients
and beneficial owners. It also strengthened functional aspects of the FIU and
specified how regulated entities must comply with the law.
32.     A raft of changes to legislation has also been introduced in recent
years, notably:
2010: Banking Act, Financial Institution Authorisation Act and
Collective Investment Scheme Act;
2009: Foundation Register Regulation;
2008: Company Register Regulation, Foundation Act and Foreign
Investment Act; and
2007: Companies Act and Accounting Act.
33.      By decree of 23 February 2011 the Government introduced the EOI
Regulations, specifying the requirements to be fulfilled for exchange of infor-
mation in international tax matters, based on Law 3/2009 and the applicable
bilateral agreements. The regulations came into force on 23 February 2011. An
amended version was adopted 1 June and came into force 29 June 2011.
34.      Andorran authorities have indicated that they are presently negotiat-
ing TIEAs with several jurisdictions, including OECD members and G20
members, three of which are at an advanced stage.15 Negotiations are at an
early stage with 6 jurisdictions.16
35.     As of April 2011 Andorra applies a a witholding tax on Andorran
sourced income. Also, Andorra adopted two laws introducing a corporation
tax and a business tax. However, these two laws are not applied yet.
15.    Australia, Italy and Poland.
16.    Brazil, Czech Republic, South Korea. Ukraine, United Kingdom and Uruguay.
36.      Effective exchange of information requires the availability of reliable
and other stakeholders as well as accounting information on the transactions
carried out by entities and other organisational structures. Such information
may be kept for tax, regulatory, commercial or other reasons. If information
is not kept or the information is not maintained for a reasonable period of
time, a jurisdiction’s competent authority may not be able to obtain and pro-
vide it when requested. This section of the report assesses the adequacy of
Andorra’s legal and regulatory framework on availability of information.
37.      Ownership of Andorran companies and partnerships is strongly
regulated. With the exception of specific sectors, only Andorran citizens or
long-term residents can have a majority ownership. All ownership – initial or
subsequent – has to be notarised and registered with the Companies Register.
Companies have to maintain a shareholders register. Andorran branches of for-
eign entities also have to be registered with the Companies Register and are sub-
ject to Andorran accounting law (Art. 5(4) Companies Act). They must in their
annual accounts include the names of all persons who own 10% or more of the
company. As of 9 May 2011, no partnerships or foreign branches are registered.
38.     Bearer shares were abolished in 1983, with a 20 year transitional
period. The Andorran Government has recently initiated proceedings to ensure
full ownership information is available for the 18 companies that still have
bearer shares issued before 1983. Nominee ownership is forbidden in Andorra.
39.      Anti-money laundering obligations ensure the availability of informa-
tion on all settlors and also on beneficiaries with a minimum of 25% inter-
est in a trust established under foreign law (foreign trust) where Andorran
residents act in a professional capacity as trustees or trust administrators.
Andorra recently introduced the foundation concept in its legislation. The
Foundation Act of 2008 regulates public (government) and private (non-
profit) foundations whose purpose must be in the public interest and benefit
generic groups of people.
40.     With the exception of provisions of the anti-money laundering law,
Andorran law does not provide any sanctions for non-compliance with rules
regarding maintenance of ownership information for companies, partnerships
or foundations. Nor does it include any sanctions regarding filing of such
information to the Companies or Foundation Registers.
41.      Companies, partnerships and foundations with commercial purposes
are required to keep comprehensive accounting records, including underlying
documentation, for a minimum of six years. Annual accounts have to be sub-
mitted to the Companies Register. All foundations are required to send annual
accounting information to the supervisory authorities. However, Andorran legis-
lation does not ensure that reliable accounting records or underlying documenta-
tion are kept for foreign trusts with Andorra-resident trustees or administrators.
42.     In respect of banks and other financial institutions, the combination
of banking, accounting and AML legislation imposes appropriate obligations
to ensure that all records pertaining to customers’ accounts as well as related
financial and transaction information are available.
Companies (ToR17 A.1.1)
43.      The Companies Act 20/2007 of 18 October 2007 is the central piece
of legislation governing corporations in Andorra. This act provides for two
17.   Terms of Reference to Monitor and Review Progress Towards Transparency and
public limited company (societat an&#242;nima – SA); and
private limited company (societat de responsabilitat limitada – SL)
44.      Companies are defined as voluntary associations of individuals or
legally constituted bodies which – based on a memorandum of association –
contribute capital in order to co-operate in the carrying out of a business or
professional activity. The capital of an SA is divided into shares, while that
of an SL is divided into participations. The term “shares” is used for both
in this report. Both types of companies can be incorporated by one or more
individuals. They have their own legal personality, separate from that of their
members. Members of a limited company are only liable up to the limit of
their contributions or holdings in the company (Art. 19 Companies Act). The
minimum capital to form an SA is EUR 60 000, and for an SL, EUR 3 000.
(Art. 14 Companies Act).
45.     To come into existence both types of companies need to be registered
with the Company Register (Registre de Societats Mercantils – CR), super-
vised by the Ministry of Economy (Art. 101 Companies Act). As of 31 March
2011 there were 1 685 registered SAs and 5 209 registered SLs.18
46.      A foreign entity operating a branch (sucursal)19 within the territory
of Andorra has to register that branch with the Companies Register (Art. 5(3)
Companies Act). When registering, they have to provide documents cer-
tifying the existence of the foreign entity and the name of its officers and
thereafter all modifications of this information must similarly be notified to
the Companies Register. In addition, they have to provide information about
the branch itself, such as address, activities and the persons representing the
branch (Art. 5 law 20/2007). The branch is subject to Andorran legislation
(Art. 5(4) Companies Act). As of 9 May 2011, no branches of foreign enter-
prises are registered in the Companies Register.20
Company ownership and identity information to be provided to
47.    To come into existence, a company needs authorisation from the gov-
ernment, its Memorandum of Association has to be notarised by an Andorran
18.    Andorra Company Register statistics as of 1 April 2011.
19.    A branch (sucursal) is defined as an enterprise’s secondary establishment of
some permanent character and autonomy in management through which an
enterprise fully or partially runs its activities (Art. 5(1) Companies Act).
20.    Statistics provided by Andorran authorities on 9 May 2011.
notary and it must be registered with the Company Register (CR) (Art. 7
Companies Act). The application for permission to incorporate the company
has to include inter alia the notarised Memorandum of Association, proposed
articles of association, the list of founding members and the identity of all the
company officers. Once government permission to incorporate the company
has been obtained (either explicitly or, after three months, tacitly), the com-
pany can be registered with the CR.
48.     When registering with CR, the following information has to be provided:
the public deed;
list of founding members;
number and value of shares or participations of each member;
articles of association containing at least, name and address of the
company, the corporate purpose, share or participation capital,
number of shares or participation, duration, structure and powers of
the governing body; and
identity of the officers of the company.
49.      Change of ownership in a company has to be registered in the
Companies Register (Art. 10(e) and Art. 30 Companies Register Regulation).
The change has to be registered within 15 days of the date of the correspond-
ing notarised deed and must include the identity of the new shareholders
(Art. 30 Companies Register Regulation). Likewise, any change to the officers
of the company has to be registered with the Companies Register (Art. 10(c)
and Art. 28 Companies Register Regulation).
50.     Andorra also maintains a register of foreign investments. The Foreign
Investment Register includes the investor’s name and ID, the address as well
as the number of shares, the amount of the investment, the name of the Notary
Public and the number of the public deed for the investment (Art. 21 Foreign
Investment Act and Foreign Investment Regulations of 8 October 2008).
51.      Branches of foreign enterprises are subject to foreign investment leg-
islation. Their establishment or expansion has to be notarised by an Andorran
notary (Art. 5(2) Companies Act) and permission has to be acquired from the
Government (Art. 9(3) Foreign Investment Act). At least one of the persons
representing the branch has to be Andorran citizen or Andorran resident.
When registering a branch of a foreign enterprise, the following documents
have to be provided:
a document certifying the existence of the foreign company;
the articles of association; and
the list of directors.
52.     Andorran authorities advise that as a matter of practice and as a gov-
ernment authority, the Companies Register keeps registered information for
an unlimited time.
53.      Businesses have to be registered for various tax purposes (e.g. Art. 24
Non-resident Income Tax Act, Art. 47 Corporation Tax Act and Art. 27 Business
Tax Act). However, no ownership or accounting information has to be provided
as part of this registration. The Andorran tax systems rely on requirements
to register ownership information in the Companies Register and accounting
requirements in the accounting law.
Ownership and identity information held by companies
54.     Each company has to maintain a shareholder register (Arts. 20(1) and
21 Companies Act). 1The register has to contain the identities and addresses
of the members, as well as property rights or charges related thereto. Transfer
of company ownership has to be authenticated through notarisation by an
Andorran notary and registered.
55.      It is the duty of the company’s administration to maintain the share-
holder register (Art. 21(4) Companies Act). As the seat of the company has
to be in Andorra (Art. 4 Companies Act), there is an obligation according to
Andorran interpretation to keep the register within Andorra.
56.      Nominee ownership is forbidden in Andorra (Art. 10 Parliamentiary
Decree of 10 October 1981). Breach of this prohibition can be sanctioned by
a fine of pesetas 50 000 to 100 000 (EUR 300 to 600). This fine is doubled if
the offence is repeated (Art. 11).
Ownership and identity information held by service providers
57.     Article 49 and 49 bis AML Act 2008 require regulated entities to per-
form customer due diligence. These measures include establishing the purpose
of the business relationship and customer identification including:
for an individual (including an individual with the power to represent
a legal person): identity, address and professional activity (an official
identity with photograph is required, a copy of which must be kept); and
for a legal person: an authenticated document showing name, legal
form, registered office and the purpose of the entity.
58.     The AML Act requires identification of both the customer and the
beneficial owner(s) of the customer. Article 41(g) of the AML Act defines
beneficial owners (or true right holders) as individuals who ultimately control
the customer and/or individual on whose behalf a transaction or activity is
being conducted. Regulated entities must identify those beneficial owners
who, directly or indirectly own or control 25% of the shares or voting rights
(in the case of a company) or the funds (in the case of other legal entities,
contractual fiduciary arrangements and other fiduciary structures which
administer and distribute funds).21
59.     Information must be collected and maintained so that the customers
can be correctly identified when establishing the business relationship or car-
rying out a relevant transaction (Art. 49(1)(e) AML Act). The extent to which
information is collected has to be based on a risk assessment given the type
of customer, business relationship, product or transaction. In low risk situ-
ations the customer and the beneficial owner may be verified after the first
business transaction if this is necessary in order not to place obstacles to the
carrying out of the transaction.
60.      Regulated entities have to keep documents including information
on the customer’s identity, the nature and date of the transaction, the cur-
rency, the amount of the transaction, and the purpose and intention of the
commercial relationship with the customer. They are required to ensure that
documents, information and any other details requested from their custom-
ers in order to comply with the AML Act are accurate. Without prejudice to
accounting rules, such information must be kept a minimum period of five
years. (Art. 51 AML Act)
61.      According to Article 45(1) of the AML Act, CDD obligations are
applicable to “natural and legal persons bound by the obligations set out in
this Law and belonging to any of the following categories: i) operative com-
ponents of the financial system; ii) insurance companies authorised to oper-
ate in the life assurance sector; and iii) money remittance institutions (Art. 41
AML Act). The AML Act also covers “other natural and legal persons who,
in the exercise of their professions or business activity, undertake, control
or advise on transactions involving money, securities or other assets which
could be used for money laundering or terrorism financing”. The following
persons are mentioned in particular with regards to these activities:
professional external accountants, tax advisers, auditors, economists
and business agents (gestories);
21.   Based on the third EU AML/CFT Directive: http://eur-lex.europa.eu/LexUriServ/
LexUriServ.do?uri=OJ:L:2005:309:0015:0036:EN:PDF, accessed 25 April 2011.
notaries, lawyers and members of other independent legal profes-
sions22; and
suppliers of services to companies, contractual fiduciary arrange-
ments ( fideicomisos) or any other legal structure not referred to in
any other section of this article.
62.     Article 45 mentions in addition sellers of high value goods, gambling
establishments and real estate agents carrying out activities related to buying
63.     Persons mentioned in the first two bullet points in the above list are
exempted from AML obligations with regard to information they receive
from or obtain on their clients when this information is gained in the course
of ascertaining the legal position for their client or performing their task
of defending or representing that client in, or concerning judicial proceed-
ings, including advice on instituting or avoiding proceedings, whether such
information is received or obtained before, during or after such proceedings
(Art. 45(2)).
Information held by directors and officers
64.      As mentioned above, the company is obliged to maintain a shareholder
register. It is the duty of the company’s officers to ensure that the company
complies with this obligation (Art. 49 Companies Act).23
65.      A foreign entity operating a branch within the territory of Andorra
has to register that branch with the Companies Register (Art. 5(3) Companies
Act) but there is no obligation to submit information regarding the owners of
22.    With regards to these professions the law specifically mentions their taking part in
assisting the planning or execution of transactions for their customers in the frame-
work of the following activities: (i) Buying and selling real property or business
entities; (ii) managing of customer money, securities or other assets; (iii) opening
or management of bank, savings or securities accounts; (iv) organisation of con-
tributions necessary for the creation, operation or management of companies; and
(v) creation, operation or management of companies, contractual fiduciary arrange-
ments ( fideicomisos) or similar structures; or when acting for their customers in
financial or real estate transactions.
23.    A previous requirement that at least one of the officers of a company had to be
Andorran resident (Art. 46(3) Companies Act) was abolished as of January 2011
through Article 10 of the Law 93/2010 on Economic Promotions Measures and
Social Activity, and Rationalization of Administrative Act.
the company. Further, there are no provisions in Andorran law that require
a foreign incorporated company that is effectively managed in Andorra to
register or otherwise provide ownership information. However, a company
effectively managed in Andorra, giving rise to a branch, will be subject to
Andorran accounting law (Art. 5(4) Companies Act). As such, in its annual
accounts, it will have to include the name of all persons who own 10% or
more of the company (General Accounting Plan of 2008 Chapter 2 Section 2
Nr.12). The General Accounting Plan is an integrated part of the Andorran
accounting law. Non compliance with its provisions is subject to the sanctions
in Chapter 5 of the Accounting Act.
66.      The establishment of Andorran companies is strongly regulated.
Founding members and subsequent owners of a company have to be regis-
tered in a shareholder register kept by the company and this information has
to be submitted to the Companies Register. Andorran law prohibits nominee
ownership. The availability of information identifying owners of foreign
companies with effective management in Andorra is required for persons
with an ownership of 10% or more.
67.      While Andorran law previously allowed bearer shares24, the current
legislation requires that all shares be issued as nominal shares (Art. 15(3)
Companies Act). Bearer shares were disallowed by the Companies Regulation
of 1983. The regulation provided a 20 year transitional period by the end
of which, or earlier if there is a transfer or change in the company’s capi-
tal structure, bearer shares have to be transformed into nominal shares.
Companies which still have bearer shares by the end of the 20 year period
will be deprived of legal personality and deleted from the Companies
Register. (Final Provision Companies Regulation 1983).
68.      According to Andorran authorities, there remain only 18 companies
with bearer shares with a total share capital of EUR 2.62 million. Andorran
authorities advise that these are old companies with no economic activity and
only two of them currently have government authorisation to conduct business.
69.     Mid May 2011, the Andorran Government has contacted each com-
pany, directly where possible or (in 12 cases) via edict issued by the Minister
of Economy and published in the Official Gazette, asking them to contact
the Companies Register within two months in order to notify the Registrar
24.   www.coe.int/t/dghl/monitoring/moneyval/Evaluations/round3/MONEYVAL
(2007)14Rep-AND3_en.pdf, p.142, accessed 16 March 2011.
of the identity of the holders of their bearer shares. If they do not comply, a
preventive note will be entered in the Companies Register and the company
will not be eligible to obtain a government authorisation to perform eco-
nomic activities until that preventive note is removed. Andorran authorities
inform that 5 out of the 18 companies already have contacted the Companies
Register, including one of the two companies which currently has govern-
ment authorisation to conduct business in order to inform that the company
70.      It should be noted that the financial intelligence unit (FIU), which
is also the Andorran AML regulator, has established an agreement with the
Foreign Investments Register, dated 7 April 2009, by virtue of which the
FIU checks in its databases the potential existence of criminal records or any
other information regarding foreign investors. In practice the FIU does not
grant a favourable opinion on foreign investors that have issued bearer shares,
except if the control structure and beneficial owners are clearly identified and
71.      While very few companies still have capital in bearer form and only
two of these are authorised to conduct economic activity, it is recommended
that the Andorran Government continue with its current program to obtain
full ownership information on these companies or, alternatively, ensure they
are unable to conduct business in Andorra. The success of this program will
be considered further in Andorra’s phase 2 review.
72.     Andorra law does not recognise limited partnerships. It only rec-
ognises one type of partnership: Societat colectiva, SCR.25 This is a general
partnership regulated by the Companies Regulation 1983 (First Supplementary
Provision of Companies Act of 2007). An SCR is defined as a voluntary
association of two or more individuals or legally constituted bodies which
– based on an agreement among them – contribute means in order to co-
operate in the carrying out of a business or professional activity. The partners
in an Andorran SCR are universally and jointly liable for the partnerships
debts. Each partner has equal right to manage the business and has the right
to conduct transactions on behalf of the business (Art. 13(1) Companies
Regulation 1983).
25.    Even though, in Andorran terminology it is referred to as “company”, Art. 1(2)
Companies Regulations 1983.
73.      Only individuals of Andorran nationality or foreigners with at least
20 years of residence in the Principality can participate in a partnership.
There is an exception for Spanish, French and Portuguese nationals where the
requirement is 10 years of residence. However, this exception does not apply
to liberal professions where the requirement for these nationals is 10 years of
residence. Where two or more persons run a business together, all of them
need a government authorisation and all of them are separately responsible
for their liabilities, including tax liability.
74.      The name of the officers and any other persons with power to rep-
resent the partnership must be registered in the Company Register (Art. 9(2)
and Art. 14(4)).
75.     While a few SCRs existed and were registered in the Companies
Register in the past, they have been liquidated or transformed into SLs or SAs.
As of 15 April 2011, no SCRs are registered.
76.    Foreign partnerships establishing a branch in Andorra are subject to
the same provisions as for companies, described earlier in this report.
Ownership and identity information on partnerships to be provided to
77.      The creation of an SCR is regulated in Article 4(1) of the Companies
Regulation 1983. As for companies, the creation requires a public deed author-
ised by a notary based on an authorisation by the Andorran Government.
To obtain the said authorisation, the partners must inter alia present to the
Government an application with copies of the projected Articles of Association.
The authorising notary submits a copy of the deed to the Companies Register
when registering the SCR. Legal personality will be acquired from the time of
this registration. Amendments of the Articles of Association are subject to the
same procedure. Both the application to the Government and the notarised deed
have to include identity information on all the founding partners (Art. 4(1)).
78.     Ownership in a SCR cannot be transferred without prior, unanimous
agreement of all other partners (Art. 13(2) Companies Regulation 1983).
Further transfers of ownership must be registered in the Companies Register
(Art. 7(6) Companies Regulation 1983). Thus, information regarding the
incorporators and subsequent owners of an SCR will have to be filed with the
Companies Register.
79.     Andorran tax legislation does not require an SCR to keep or provide
ownership information as the tax systems rely on registrations the Companies
Ownership information held by service providers
80.     The CDD requirements of the Andorran AML Act, described for com-
panies above, apply ipso facto in respect of services provided to partnerships.
81.       Andorran law does not recognise trusts and Andorra is not a party
to the Convention on the Law Applicable to Trusts and on Their Recognition
1985.26 However, there is no law prohibiting that an Andorran resident acts as a
trustee, administrator or similar of a foreign a trust. Nor is there any other leg-
islation in Andorra specifically addressing matters related to trusts or trustees.
82.      There are no trust law or tax law based obligations in Andorra requir-
ing an Andorran resident trustee to hold information regarding settlor and
beneficiaries of a foreign trust or to file such information with government
authorities. However, the trustee may be under obligations imposed under
the laws of the jurisdiction governing the trust. Further, an Andorran trustee
would be subject to Andorran legislation to the extent that such legislation is
applicable to a trustee relationship. Notably, there may be fiduciary obliga-
tions that are applicable.
83.      Further, there are AML obligations requiring regulated entities to
perform CDD when dealing with trusts. Regulated entities include natural or
legal persons who in their professional capacity undertake, control or advise on
transactions involving cash or securities movements which could be used for
money laundering or terrorism financing (Article 45 AML Act).27 Article 45(1)
refers in particular to legal professionals involved in inter alia creation, opera-
tion or management of companies, contractual fiduciary arrangements ( fide-
icomisos) or similar structures. When dealing with a foreign trust, entities with
AML obligations have to inter alia identify the customer (e.g. the settlor)
26.    www.hcch.net/index_en.php?act=conventions.text&amp;cid=59, accessed 25 April 2011.
27.    CDD obligations are on “financial parties under obligation”, i.e. operative components
of the financial system, insurance companies authorised to operate in the life assur-
ance sector and money remittance institutions (Art. 41 AML Act). The AML Act
also covers “other natural and legal persons who, in the exercise of their professions
or business activity, undertake, control or advise on transactions involving money,
securities or other assets which could be used for money laundering or terrorism
financing”. The following persons are mentioned in particular: (i) professional exter-
nal accountants, tax advisers, auditors, economists and business agents; (ii) notaries,
lawyers and members of other independent legal professions when they take part
in assisting the planning or execution of transactions for their customers in certain
circumstances; and suppliers of services to companies, contractual fiduciary arrange-
ments or any other legal structure not referred to in any other section of this article.
and the beneficial owner on whose behalf a transaction or activity is being
conducted. The beneficial owner is the individual or individuals who own or
control more than 25% of the assets or funds of the trust (Art. 41 AML Act).
84.       Trustees can be unregulated persons if they are acting in that capacity
other than by way of their professional business. In those circumstances, the trust
will still be subject to Andorra’s AML/CFT framework when trustee: (i) opens
an account or establish a relationship related to the trust with an Andorran bank
or other licensed fiduciaries subject to the AML/CFT framework; or (ii) pur-
chases or sells any real property for the trust via a lawyer or other professional
who would also be subject to the AML/CFT framework. A potential narrow gap
remains of those trusts which have a non-professional trustee and none of the
aforementioned activities in Andorra. Andorra should monitor this gap to ensure
it does not in any way hamper the effective exchange of information in tax mat-
ters. This will be considered further in Andorra’s Phase 2 review.
85.      The Foundation Act of 2008 introduced the foundation as a legal
entity in Andorran law. It regulates both private and public sector foundations.
Private foundations can be founded, inter vivos or mortis causa, by Andorran
individuals or legally resident foreigners or by Andorran legal persons (Art. 2
Foundation Act). The initial assets have to be a minimum of EUR 100 000
(Art. 5(1)). At least two thirds of the total net annual income of a foundation
has to be applied in accordance with the foundation’s purpose within three
years. Andorran public sector foundations are foundations where public and
quasi-public entities provide more than 50% of the assets and at least one third
of these assets come from an Andorran public or quasi-public entity.
86.      Private foundations are non-profit entities, with assets or rights
irrevocably attached to the fulfilment of the foundation’s purposes (Art. 1(2)
Foundation Act). The purposes of all foundations must be in the public inter-
est and its activities must benefit generic groups of people (Art. 4). Neither
foundations for personal interest nor family foundations can be established
(Additional Provision Foundation Act). A private foundation can be formed
for an indefinite or fixed duration.
87.     A private foundation acquires legal personality on registration of
the formation deed in the Foundations Registry (Art. 6 Foundation Act). The
formation deed must inter alia include:
identity of the founders;
the foundational will;
the foundation’s constitution;
the initial endowment; and
identity of the members of the Foundation Council (Art. 7 Foundation
88.      Prior to registration, the founder of a private foundation has to obtain
authorisation from the Government to register the foundation. The applica-
tion to the Government has to include a draft of the foundation charter and an
explanatory memorandum setting out inter alia the activities envisaged or the
action programme, justifying its contribution to the public interest. Once the
Government authorisation is obtained, either explicitly or tacitly after three
months, the authorising notary sends the formation deed to the Foundation
Register (Art. 3 Foundation Act).
89.      The Foundation Council is the governing body of the foundation
and has to have at least three members. Individuals acting as or on behalf of
council members have to be Andorran citizens or foreigners legally resident
in Andorra (Art. 12 Foundation Act). The president of the Foundation Council
must be Andorran (Art. 13(1)). Foundations are supervised by a Foundation
Protectorate which is operated by the Ministry of Justice. The Protectorates’
task is inter alia to make sure that foundations act in accordance to their
foundational purposes.
90.     Andorran Authorities advise that as of 4 April 2011, 23 foundations
are registered in the Foundations Register.
Information to be submitted to the Foundations Register
91.      The first registration of a foundation in the Foundation Register must
inter alia include the following information (Art. 29 Foundation Regulation):
identifying details28 of the founders and the donors (where different
from the founders);
the foundation charter;
details of the members of the first foundation council.
28.    Name, surnames, age and civil status of the founders, if individuals; the trading
or company name, if legal persons; with their respective nationality and address
92.     Appointment, replacement and suspension of foundation council
members have to be registered including inter alia their details and identity
including nationality, address and passport number and identity number
(Arts. 21 and 32 Foundation Regulations). The register also has to show any
powers of attorney which have been issued (Art. 34). Further, the liquidation
of a foundation has to be registered, including the destination of the assets
and rights resulting from it (Art. 38).
93.    The Andorran authorities advise that as a matter of practice, the
Foundation Register keeps information for an indefinite period of time.
Information to be held by council members and service providers
94.     There are no specific provisions within Andorran foundation
law directly requiring the council members to hold information about the
foundation’s founder(s) or the beneficiaries. However, the Andorran AML
law requires foundations to keep records of the identity of all persons that
receive funds from the foundation for five years (Additional Article AML
Act). Further, as members of the governing organ of the foundation (Art. 12
Foundation Act), the council members have to be familiar with the founda-
tion charter which inter alia has to mention the founder(s) and describe the
beneficiaries or classes of beneficiaries (Art. 7). Also, foundations must keep
their accounting in accordance with the nature of their activities and in such
a way as to enable a follow-up of their operations and the preparation of the
annual financial statements (Art. 22(1)). This would include keeping infor-
mation that allows assessment of whether the foundation’s means have been
applied in accordance to the purpose of the foundation. They are required to
keep as a minimum a journal (daybook) (Art. 22(2)).
95.     Also, foundation council members are jointly and severally liable for
loss and damage caused by actions contrary to law or the Foundation Charter,
or by non-compliance with their obligations through guilt or negligence
(Art. 15(1) Foundation Act). According to Andorran authorities, this results
in the council members keeping underlying documents for the foundation’s
various transactions.
96.      Further, Andorran AML obligations require financial institutions and
other obliged entities to keep information identifying the beneficial owners
of their customers. In addition, sufficient information has to be kept to prove
that the means of the foundation have been applied according the purpose of
the foundation. Thus, when dealing with a foundation, Andorran AML law
requires council members acting in a professional capacity to perform CDD
and inter alia identify the beneficiaries. For legal structures that administer and
distribute funds, such as foundations, the beneficial owner is the individual or
individuals who own or control more than 25% of the funds (Art. 41 AML Act).
97.      Foundation charters must identify the founders and foundation
council members and this information must be submitted to authorities as
part of registration. In terms of beneficiaries, the foundation charter has to
describe the generic group of people who shall benefit from the foundation.
In addition, all beneficiaries who have received payment must be identified
and foundation council members (plus service providers) must identify those
beneficiaries with at least a 25% interest in the foundation. Given the fact
that the purpose of an Andorran foundation has to be in the public interest,
benefiting generic groups of people, this gap is considered of limited con-
cern. Andorra should monitor this to ensure it does not in any way hamper
the effective exchange of information in tax matters. This will be considered
further in Andorra’s Phase 2 review.
98.     There are no sanctions for companies or their officers for not maintain-
ing a register of shareholders. Nor are there specific sanctions for companies
or partnerships for not submitting changes in ownership to the Companies
Register. Further, Andorran authorities advise that in cases where the
Companies Register is aware of required information not being registered, it
has no means to force registered entities to provide information to the Register.
99.      Foundation council members are jointly and severally liable to the
foundation for any loss or damage caused by actions contrary to law or to
the foundation charter, or by non-compliance with their obligations through
guilt and negligence (Art. 15 Foundation Act). This is very broad and would
likely apply to a situation where the foundation failed to maintain or register
information as required by law. However, there are no sanctions for non-
compliance with formal requirements as such.
100.    Non-compliance with AML CDD obligations is considered a “seri-
ous offense”. Such offences can be sanctioned with prohibition on carrying
out certain types of financial or commercial activities and/or the temporary
suspension between one and six months of directors of the entity or the
professional in question and a fine between EUR 6 000 and EUR 60 000. A
repetition of such non-compliance is considered a “very serious offense” and
can be sanctioned with the suspension of the directors of the entity or of the
professional involved for up to three years and a fine of between EUR 60 000
and EUR 600 000 (Arts. 58 and 59 AML Act).
101.      The lack of enforcement provision in Andorran company and founda-
tion law may lead to relevant information not being available in Andorra and
it is recommended that Andorra remedy this. The effectiveness of Andorra’s
provisions to provide ownership information and the associated enforcement
provisions will be considered as part of the Phase 2 Peer Review.
The element is in place, but certain aspects of the legal implementation
of the element need improvement.
recommendations                              Recommendations
With the exception of obligations to        In so far as they are not currently
maintain some information under             provided, effective sanctions should
AML law and accounting law,                 be introduced for legal and natural
Andorra does not provide sanctions          persons which fail to comply with
for non-compliance by companies,            requirements to maintain and file
partnerships or foundations with            information on their owners.
obligations to maintain ownership
information or to submit such
information to government authorities.
There is no obligation requiring            Andorra should establish clear
identification of beneficiaries with less   provisions in its laws to ensure
than a 25% interest in those foreign        availability of information on all
trusts which have Andorran trustees         beneficiaries of foreign trusts which
or which are administered in Andorra.       are administered in Andorra or have
an Andorran trustee.
Issuance of bearer shares was               Andorra should progress its action to
prohibited in 1983 and action is in         ensure availability of full ownership
progress to ensure the availability         information for these 18 companies as
of full ownership information for the       quickly as possible.
18 remaining companies with bearer
Jurisdictions should ensure that reliable accounting records are kept for all
relevant entities and arrangements.
102.      A condition for exchange of information for tax purposes to be effec-
tive, is that reliable information, foreseeably relevant to the tax requirements
of a requesting jurisdiction is available, or can be made available, in a timely
manner. This requires clear rules regarding the maintenance of accounting
records. The obligations to maintain reliable accounting records are found in
the laws governing the various types of entities covered by this report, and in
the Accounting Act.
Company and accounting law
103.     All Andorran limited companies have to maintain accounting books
and records that record all transactions chronologically, and have to create
annual accounts (Art. 70 et seq. Companies Act). Accounting records include
inter alia balance sheet; profit and loss account; and statements of income,
asset and cash flow (Art. 71). An annual report, including annual accounts,
has to be filed with the Companies Register (Art. 74).
104.    Articles 70 and 71 of the Companies Act states that Andorran compa-
nies are under the obligation to keep and retain accounting records, prepare
and sign their annual accounts, as well as the proposed distribution of profits.
Further, they must submit these annual accounts to audit if two of the follow-
ing circumstances prevail during two consecutive years:
total assets exceed EUR 3 600 000;
net sales exceed EUR 6 000 000; and
the company has more than 25 employees (Art. 72).29
105.     Foreign businesses with branches in Andorra have to keep books
according to Andorran accounting law (Art. 5(4) Companies Act). They
have to file annual accounts with the Companies Register that are prepared
according to the laws of the country in which they are incorporated, provided
these laws set an equivalent standard to that of the Andorran accounting law
(Arts. 5(5) and 5(6)).
29.    However, Andorran authorities advised that audit obligations established by the
Companies Act will not apply until the Audit Law is in force.
106.    The Accounting Act of 20 December 2007 introduced a general
requirement to keep accounting records for all Andorran businesses irre-
spective of their legal form. The provisions of this act apply to companies,
partnerships and business activities of foundations. The Act requires all busi-
nesses to keep accounting records according to their business activities and in
accordance with the provisions of the act (Art. 1). The accounts must allow a
chronological follow-up of all transactions and the periodical preparation of
mandatory accounting documents (Art. 2).
107.    The accounts must correctly explain the assets, financial position
and profit of the business in accordance with recognised accounting prin-
ciples (Art. 18 Accounting Act). Accounting records include a journal and
the inventory and annual accounts. Annual accounts include inter alia a bal-
ance sheet with opening balances and year-end inventory as well as a profit
and loss account (Art. 16). Annual accounts have to be submitted to the
Companies Register (Art. 36(3)). The journal must register all daily business
operations in chronological entries.
108.      Detailed rules for accounting are described in the “General Accounting
Plan” which is based on International Accounting Standards and International
Financial Reporting Standards (IAS and IFRS). All operations must be
recorded. Thus, accounting records will reflect (i) details of all sums of money
received and expended and the matters in respect of which the receipt and
expenditure takes place; (ii) all sales and purchases and other transactions; and
(iii) the assets and liabilities of the relevant entity or arrangement.
109.  Accounts have to be kept in the offices of the company (Art. 11
Accounting Act) which has to be in Andorra (Art. 4 Companies Act).
110.    There are sanctions for non-compliance with accounting obligations.
Andorran accounting law makes a distinction between minor, serious and
very serious breaches of accounting law (Arts. 41 to 44 Accounting Act as
amended). The sanctions for these offences vary between fines from EUR 90
to 12 000 depending on the seriousness of the offence and the size of the
enterprise. In addition, the business can be banned from public contracts for
a period of three years (Art. 43(1)). Further, while in default to file annual
accounts to the Companies Register, no other entries will be allowed to be
made regarding the entity in question (Art. 43(2)).
111.    Andorran accounting law applies to foundations to the extent they are
carrying out a business (Art. 1(2)(c) Accounting Act).
112.    Further, Andorran foundation law includes accounting rules appli-
cable to all foundations. These rules are not as detailed as the rules in the
Accounting Act. Nevertheless, all foundations must keep accounting records
in accordance with the nature of their activities and in such a way as to
enable follow-up of their operations and preparation of the annual financial
statements. They must keep as a minimum a subsidiary journal (daybook),
inventory book and annual statements. The annual financial statements must
include a balance sheet and profit and loss account (Art. 23 Foundation Act).
Accounts must be approved by the Foundation Council (Art. 23(3)) and sub-
mitted to the Foundation Protectorate (Art. 24(1)).
113.    A foundation’s annual financial statements have to be audited by
an external auditor if either or both the total value of assets or the total
amount of ordinary annual income exceeds EUR 1 million and EUR 500 000
respectively. The audit report must be submitted to the Protectorate (Art. 27
Foundation Act).
114.    The registered office of a foundation has to be in Andorra (Art. 10(1)
(d)). According to Andorran authorities, a foundation’s accounting records
have to be available at its registered office.
115.     In case of non-compliance with the accounting and filing rules, the
Foundation Protectorate may demand compliance with the obligation to
keep accounting records. Also, obtaining subsidies and public aid is subject
to the submission of the financial statements. (Art. 24 Foundation Act). If
a foundation fails to submit its financial statements for two consecutive
years, the Protectorate must ask the Ministry of Justice to order a temporary
intervention. Such an intervention would include the Protectorate assuming
provisional administration of the foundation (Art. 34).
116.     No specific accounting rules exist for foreign trusts administered by
Andorran trustees. However, business activities of the trust will be subject to
Andorran accounting obligations if these activities are carried on in Andorra.
Also, a professional Andorran trustee will be subject to the previously
described Andorran accounting rules regarding his own business activities
as a trustee (Art. 1 Accounting Act).
117.    Andorran tax law does not currently contain any specific require-
ments to keep accounting records or underlying documents. However,
the newly adopted tax acts refer to obligations under the Accounting Act
(Art. 23 Non-resident Income Tax Act, Art. 11 Business Tax Act and Art. 54
Corporation Tax Act).
118.     Andorran AML law requires regulated entities to keep documents
with inter alia information on the nature and date, the currency and the
amount of transactions carried out for occasional customers, as well as infor-
mation on the purpose and intention of the commercial relationship with their
customer (Art. 51 AML Act). Non-compliance with these provisions is sanc-
tioned as a serious infringement (Art. 58(2)(c)) with a prohibition on carrying
out certain types of financial or commercial transactions and/or the temporary
suspension of directors of the entity or the professional in question of between
one and six months and a fine of between EUR 6 000 and EUR 60 000
(Art. 59(1)).
119.     Companies, partnerships and foundations are required to keep compre-
hensive accounting records and to submit annual accounts to the Companies
Register. However, while Andorran law requires the potential subset of Andorra-
resident administrators or trustees of foreign trusts who have obligations under
the AML Law to keep financial transaction records, no further accounting
records must be kept for those trusts with the exception of a foreign trust’s busi-
ness activities.
120.     Accounting records to be kept by companies, partnerships, branches
of foreign entities (see Art. 5(4) Companies Act) and those foundations which
run businesses include underlying documentation, such as documents, cor-
respondence, documentation and receipts (Arts. 7 and 10 Accounting Act).
Andorran authorities advise that, although it is not specifically stated, this
also includes invoices and contracts. Further, under the AML legislation,
regulated entities are under obligation to keep records and supporting evi-
dence of transactions and CDD.
121.    Foundations not running a business are not subject to Andorran
accounting law. The Foundation Act does not include any particular provi-
sions regarding underlying documents. However, some limited accounting
records (inventory of assets and other accounting records corresponding to
their activities) have to be kept according to Article 28 of the Associations
Act which applies to Foundation (First additional provision AML Act).
Further, the council members are jointly and severally liable for loss and
damage caused by actions contrary to law or the Foundation Charter, or by
non-compliance with their obligations through guilt or negligence. Therefore,
they will endeavour to keep underlying documents for the foundation’s
accounts in case a complaint is made.
The 5-year retention standard (ToR A.2.3)
122.    All businesses (including branches of foreign entities and foundations
which conduct business) have to keep accounting records, including underly-
ing documentation, for a minimum of six years. This obligation also applies
to a successor or liquidator in the case of transfer or liquidation of a business
(Art. 70 Companies Act and Arts. 7 and 8 Accounting Act). Non-compliance
is considered a serious offense and it is sanctioned with a fine between
EUR 601 and 2 000 (Arts. 41(2)(a) and 42(2) Accounting Act). In addition,
the business can be banned from public contracts for a period of three years
(Art. 43(1)).
123.     As stated above, a foundation has to keep accounting records and
underlying documentation for its business activities in accordance with the
Accounting Act. Thus these accounting records have to be kept for six years.
Also, the accounting records and underlying documentation a foundation
has to keep according to the first additional provision in the AML Act, have
to be kept for 5 years. Further, where the role of foundation council member
is exercised as part of the council member’s professional capacity, the AML
requirements outlined below apply. The Foundation Act has no specific reten-
tion rules.
124.    No specific accounting record retention requirements exists for for-
eign trusts with Andorran trustees or administrators.
125.    Andorran authorities advise that, as government authorities and as a
matter of practice, the Foundation Protectorate and the Companies Register
keep information, including annual financial statements submitted by foun-
dations, for an indefinite period of time.
126.     Andorran AML law requires regulated entities to keep relevant
documents for a minimum period of five years (Art. 51(1) AML Act). This
includes documents with information on the customer’s identity, the nature
and date of the transaction, the currency, the amount of the transaction, and
the purpose and intention of the commercial relationship with the customer
(Art. 51(2)). Non-compliance with these provisions is considered a serious
infringement (Art. 58(2)(c)). As such it can be sanctioned with a prohibition
on carrying out certain types of financial or commercial transactions and/
or the temporary suspension of directors of the entity or the professional in
question of between one and six months and a fine of between EUR 6 000
and EUR 60 000 (Art. 59(1)).
127.     Andorran company and accounting law requires companies and
partnerships to keep accounting records, including underlying documenta-
tion, for a minimum of six years. The same obligations apply to foundations
for their business activities. The retention period for accounting records that
have to be kept by foundations for non-business activities is five years. Any
gap concerning foundations’ accounting obligations is considered immaterial
as private foundations have to be non-profit entities acting in the public inter-
est and their activities must benefit generic groups of people. However, no
specific retention requirements exist for any activity of a foreign trust with an
Andorran trustee. Nevertheless, if the function of a trustee or administrator
of a foreign trust is exercised in a professional capacity, records and docu-
ments regarding AML-relevant transactions have to be kept for a minimum
recommendations                             Recommendations
Andorran legislation does not ensure       All administrators and trustees of
that reliable accounting records or        foreign trusts should be required to
underlying documentation are kept          maintain reliable accounting records
for foreign trusts with an Andorran-       for the trusts including underlying
resident administrator or trustee.         documentation. These records should
be kept for a minimum of 5 years.
128.    Financial institutions must keep records of all types of transactions
and investment services and other services rendered by them in a way that
allows to verify their compliance with the rules and regulations under the
Banking Act – Law No. 14/2010 of 13 May 2010 (Art. 29(1)). The Act requires
financial institutions to keep detailed records and accounts regarding transac-
tions with and for clients (Art. 27(2)(b)). Further, financial institutions must
produce annual accounts as defined in Article 16 Accounting Act (Art. 5).
This includes inter alia a balance sheet, a profit and loss account and a cash
flow statement. The records have to be kept for at least five years (Art. 29(2)).
129.   The AML Act states that “anonymous accounts and anonymous pass-
books are prohibited” (Art. 49(4)).
130.    Any breach of provisions in the Banking Act is subject to sanctions
determined by the Financial System Disciplinary Regime Act of 27 November
1997 (Seventh additional provision Banking Act). According to this act,
offences can be minor, serious or very serious and are sanctioned with fines
between EUR 300 and 300 000 or 3% of the minimum required capital for the
financial institution in question (Art. 18 Disciplinary Regime Act).
131.     The Andorran AML Act requires regulated entities to identify each
customer and their customer’s beneficial owners (Art. 49) and keep docu-
ments related to CDD as well to the nature and date of transactions, the cur-
rency, the amount of the transactions, and the purpose and intention of the
commercial relationship with the customer (Art. 51). Non-compliance with
these provisions is sanctioned as a serious infringement (Art. 58(2)(a)). It can
be sanctioned with a prohibition on carrying out certain types of financial or
commercial transactions and/or the temporary suspension of directors of the
entity or the professional in question of between one and six months and a
fine of between EUR 6 000 and EUR 60 000 (Art. 59(1)).
132.    A variety of information may be needed in a tax inquiry and jurisdic-
information held by banks and other financial institutions as well as infor-
mation concerning the ownership of companies or the identity of interest
holders in other persons or entities, such as partnerships and trusts, as well
as accounting information in respect of all such entities. This section of the
report examines whether Andorra’s legal and regulatory framework gives to
the authorities access powers that cover relevant persons and information, and
whether the rights and safeguards that are in place would be compatible with
133.    Andorran legislation provides the competent authority, the Minister of
Finance, with the necessary powers to access ownership and accounting infor-
mation held by banks and other financial institutions. Ownership information
can also be obtained from public registries, including the Companies Register,
to which substantial ownership information regarding companies, partnerships
and foundations has to be filed. However, there are no legal powers to directly
access ownership information held by the entities themselves. The competent
authority has the power to access accounting information held by all types
of businesses or may obtain this from public registries. None of these access
powers depend on the existence of a domestic tax interest.
134.     Until recently, the Andorran competent authority’s powers to access
accounting information and information held by banks could only be exer-
cised where the international request for information (EOI request) speci-
fied the name and address of the taxpayer who is the subject of the inquiry.
However, on 1 June 2011 the Andorran Government amended the relevant
legislation and this comes into force on publication of the amendment in the
Official Gazette in June 2011. This legislation came into force after publica-
tion in the Offical Gazette on 29 June 2011.
135.    Where the competent authority acts on an international request for
information, both the taxpayer and the information holder have – without
any exception – to be notified and have the right to appeal to the competent
authority as well as to the courts. To require in all cases that prior notification
be given to the affected parties of the international request for information
may unduly prevent or delay the effective exchange of information.
136.     Article 4(4) of Law 3/2009 on Exchange of Information in Tax Matters
on Request (EOI Act) provides the power to access – for the purpose of inter-
national exchange of information in tax matters (EOI) – all kinds of informa-
tion held by financial entities. This provision came into force on 21 September
2009 and reads:
If the requested State is the Principality of Andorra, the latter
retains the authority to obtain and transmit, in reply to a prior
request, the information available to the banking and financial
entities with their headquarters or a legally authorised premises
on its territory. Sending this information within the framework of
the procedures regulated by this Law does not involve or constitute
a breach of professional secrecy nor infringe the restrictions on
information disclosure and, consequently, does not involve any kind
of liability, of either a general or contractual nature. Its authority
also includes requests for information to public bodies or registers.
137.     Thus the provision states that in the case of a request for exchange of
information in tax matters, the government of Andorra has the authority to
obtain and submit, in reply to such a request, information held by banks or
other financial entities with their headquarters or branches in Andorra. The
EOI Act specifically states that “any legal provisions of equal or lower stand-
ing that are affected by this Law are derogated, […]”. As such, this law clearly
overrides, for EOI purposes, any bank secrecy in Andorra.
138.     With respect to joint bank accounts, the information provided will
be that related to the person who is the subject of the request only, and each
account holder is considered to have an equal interest in the account unless
otherwise indicated (Art. 9(2) EOI Regulation). The practical implications of
this for EOI will be considered during Andorra’s Phase 2 review.
Access to ownership information held in public registers
139.     Andorran authorities advise that the last sentence in Article 4(4) of
the Andorran EOI Act (see text above) provides the Ministry of Finance with
powers to access information held in any public register or by any central or
local public body for the purpose of EOI. This includes inter alia informa-
tion contained in the Companies Register, the Foreign Investment Register
and the Foundations Register as well as information held by the Foundation
Protectorate. Due to requirements to register detailed information on all
initial and subsequent ownership with the aforementioned registers, this pro-
vides access to detailed ownership information for companies, partnerships
Access to ownership information held by relevant entities
140.     Article 4(4) of the EOI Act only refers to information held by finan-
cial institutions and public registers or bodies. Andorran authorities advise
that there are no provisions in Andorran legislation that provide powers to
directly access ownership information held by Andorran companies, partner-
ships, foundations, branches of foreign enterprises or persons who administer
or act as trustees for foreign trusts. However, the Andorran competent author-
ity has access to accounting information of all Andorran businesses irrespec-
tive of their legal form for EOI purposes (see section B.1.2, below) and will
thus have access to the information regarding ownership provided in these
accounts; i.e. information identifying those persons who own 10% or more
of an entity. Further, Andorran authorities point out that there are strict rules
that require Andorran entities to provide public registers with ownership
information and that the Competent Authority will have access to information
Name and address of the taxpayer
141.     The abovementioned powers to access bank and ownership informa-
tion as well as the powers to access accounting information depend on the
EOI request being ‘valid’. The EOI Act states that, as a minimum, a request
for information has to include “the identity of the person concerned in the
request” (Art. 4(1)(a)). This requirement is further specified in Article 4(1)
(a) of the EOI Regulation which previously stated that “the data relating to
the identity of the person concerned includes the names and surnames or
business name, address or domicile, as well as any other kind of informa-
tion necessary to determine the identity of the person concerned so that no
confusion can arise” (emphasis added). Andorran authorities advised that
this constituted an absolute requirement that both the name and the address
of the taxpayer have to be provided by the requesting jurisdiction.30 However,
on 1 June 2011 the Andorran Government amended the relevant legislation.31
Article 4(1)(a) of the EOI Regulation now requires that “the data relating to
business name, address or domicile, or any other kind of information neces-
sary to determine the identity of the person concerned so that no confusion
can arise” (emphasis added). This provision is now in line with the interna-
tional standard.
142.     Andorran law does not include an absolute requirement to provide
the name or address of the holder of the information. The EOI Regulation
states that the name of the person believed to hold the information has to be
provided “to the extent known” (Art. 4(f)).
143.      Accounting records are normally considered confidential (Art. 9
Accounting Act). However, they have to be disclosed to the Ministry of
Finance and the INAF, to the extent this information is required by them in
order to carry out the duties assigned to them (Art. 10). Andorran authorities
confirm that this also applies to access by the Ministry of Finance in conduct
of its role as competent authority for the purpose of EOI. Thus, the Andorran
competent authority has access to accounting information of all Andorran
businesses irrespective of their legal form for EOI purposes.
144.   Not providing access to the information is considered to be a “seri-
ous accounting violation” (Art. 41(2)(b)) and can be sanctioned with a fine
between EUR 600 and 2 000 (Art. 42(3)). In addition, the business can be
banned from public contracts for a period of three years (Art. 43(1)).
30.   It should be noted here that the requirement to provide the name of the taxpayer
did not apply to exchange of information with Germany and Liechtenstein as the
Protocols to the TIEAs with these two jurisdictions state that the identity of the
person under investigation can be established by information other than name.
31.   This will come into force when the amendment is published in the Official
Gazette in June 2011.
145.      The concept of domestic tax interest describes a situation where a
contracting party can only provide information to another contracting party
if it has an interest in the requested information for its own tax purposes.
146.    Andorran law does not have any provisions limiting access to infor-
mation to those circumstances where Andorra has an interest in the requested
147.     The EOI Act provides the legal basis to access information which
is held by financial entities, contained in public registers or held by public
entities. If such holders of information do not provide documentation, data or
information within the terms set out in the request, the following sanctions
apply (Art. 10 EOI Act):
in case of non-compliance with the first request: a fixed fine of
in case of non-compliance with the second request: a fixed fine of
EUR 1 500; and
in case of non-compliance with the third request: a proportional fine
of 2% of the business’ turnover for last year (with a minimum of
EUR 10 000 and a maximum of EUR 100 000), or, for persons who
do not carry out economic activities, a fine of EUR 10 000. If the
demand is wholly met before these sanction procedures end, the fine
is EUR 5 000.
148.     Refusing to provide accounting documentation on the terms provided
in Articles 10 and 11 of the Accounting Act, is considered to be a serious
violation (Art. 41(2)(b)) and can as such be sanctioned with a fine of between
EUR 601 and 2 000. In addition, the business can be banned from public
contracts for a period of three years (Art. 43(1)). If a business has been sanc-
tioned for a “serious violation” and the same violation occurs the following
accounting year, it can be sanctioned for a “very serious violation (Art. 41(3)
(c)) with a fine between EUR 2 001 and 6 000 (Art. 42(3)).
149.    There is no legislation in place that would allow Andorra’s authorities
to access information through search and seizure for the purposes of interna-
tional administrative co-operation.
150.     Andorran bank secrecy is legislated in the AML Act. Article 48(2)
of this act states: “The managers, directors and employees of the financial
parties under obligation must keep secret all information affecting their
customers within the context of their activity. To this end, they must adopt
all prudent and precautionary measures that are appropriate with a view to
safeguarding customer confidentiality. A breach of the duty of professional
privilege or secrecy in the employment context without legal cause is a crime
in the terms defined in the Criminal Code.” However, the AML act includes
exceptions for AML purposes. The aforementioned provision cannot be used
as grounds to refuse FIU access to bank information (Art. 48(5)).
151.     The Andorran EOI Act states that in order to respond to a request
for exchange of information in tax matters based on an EOI agreement, the
government of Andorra has the authority to obtain and submit, in response
to the request, all kinds of information (including ownership information)
held by banks or other financial entities with their headquarters or authorised
establishments in Andorra regarding their customers (Art. 4(4) EOI Act). The
152.     Andorran law permits the authorities to decline an international
request for information when it imposes the obligation to provide informa-
tion that would disclose any trade, industrial or professional secret or trade
process, or if disclosure of the information would be contrary to public policy
(Art. 5(1)(c) EOI Act).
153.     Article 5(2) of the EOI Regulations specifies that the competent
authority for international tax matters is not obliged to obtain and provide
information which could reveal confidential communications between a
client and a lawyer or other admitted legal representative where such com-
munications: (i) are produced for the purposes of seeking or providing legal
advice; or (ii) are produced for the purposes of use in existing or contem-
plated legal proceedings
154.     Andorran authorities advised that the above legal privilege is limited
to legal representatives and does not apply to other professions such as tax
advisors and accountants.
155.     Legal privilege is also codified in Article 11 of the Criminal Procedure
Act, which states that: “Lawyers have to respect professional secrecy, under-
stood as a moral and legal principle that puts the obligation and the right not to
reveal any essential fact or document that they have knowledge by reason of
their function, and cannot be forced to testify about them.” It is not clear that
this privilege defined in the Criminal Procedure Act is limited to information
obtained in the course of providing legal advice or legal representation.
156.     On the face of it, it is likely that the provision in the EOI Regulation
concerning legal professional privilege, a more specific law which was enacted
after the Criminal Procedure Code32, takes precedence over the Criminal
Procedure Act provision. This is a question of implementation in practice which
will be considered during the Phase 2 review of Andorra.
While the competent authority can             The competent authority should be
obtain information on the ownership of        granted the well-defined powers to
relevant entities from other government       obtain all relevant information in the
authorities, Andorran legislation does        possession or control of all persons
not provide the competent authority           within Andorra’s territorial jurisdiction
with powers to access ownership               for the purpose of exchange of
information held by third parties or by       information.
the entities themselves, except from
32.    Leges posteriores priores contrarias abrogant: Subsequent laws repeal those
before enacted to the contrary.
48 – COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION
157.    The Terms of Reference provides that rights and safeguards should
not unduly prevent or delay effective exchange of information. For instance,
notification rules should permit exceptions from prior notification (e.g. in
cases in which the information request is of a very urgent nature or the
notification is likely to undermine the chance of success of the investigation
conducted by the requesting jurisdiction).
158.    Once the Andorran competent authority has decided to act on an
international request for information, the “person concerned and the person
in possession of the information” have to be notified of that decision and the
request. Andorran authorities advise that the person concerned includes both
the taxpayer and the person to whom the information held by the informa-
tion holder relates to (e.g. an accountholder). In cases where these two are not
identical, both have to be notified. Where the competent authority has the
information in its possession, only the persons concerned have to be notified.
159.     Further, Andorra’s TIEA with Liechtenstein (see Section C.4 of this
report) specifically provides that rights and safeguards secured to persons by
the laws or administrative practices of the requested party remain applicable
in all cases. Further, provision in the protocol to the same agreement obliges
the requesting jurisdiction to inform the taxpayers of its intention to make a
request (see Section C.3). The compulsory notification from both requesting
and requested jurisdiction without certain exceptions from prior notification
has the potential to unduly prevent or delay effective exchange of informa-
tion and also may undermine the chance of the success of the investigation
conducted by the requesting jurisdiction. It is recommended that suitable
exception from notification be provided.
160.     Once notified, the persons concerned and the information holder have
the right to appeal to: (1) the competent authority; then (2) the Magistrates’
Court; and finally (3) to the High Court. Each time the appellants have 13 days
after notification of a decision in which they may appeal to the next author-
ity. The appeal courts are also given 13 days to hear the parties involved and
decide on the appeal. Thus, in a case where all appeals have been used, twelve
weeks (six times two weeks) will pass from the date when the involved per-
sons were notified of the initial decision by the competent authority to access
COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 49
information to respond to an international request until the date when a formal
notice to provide the information can be issued.
161.     An appeal by any party does not suspend the information holder’s
obligation to provide information to the Ministry of Finance (Art. 9(1) EOI
Regulation). However, the competent authority cannot exchange the informa-
tion as long as an appeal is pending (Art. 8(6) EOI Act).
162.    As Andorra’s TIEAs are relatively new, these rights available to tax-
payers as well as statutory deadlines and their effect on the effective exchange
of information have not yet been tested in practice. This matter is a question
of implementation in practice which will be considered during the Phase 2
review of Andorra.
Factors underlying recommendation                        Recommendation
To require in all cases that prior            It is recommended that certain
notification be given to the affected         exceptions from prior notification be
parties of the international request          permitted, e.g. in cases in which the
for information may unduly prevent            information requested is of a very
or delay the effective exchange of            urgent nature or the notification is
information in urgent cases.                  likely to undermine the chance of the
success of the investigation conducted
by the requesting jurisdiction.
COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION – 51
163.     Jurisdictions generally cannot exchange information for tax purposes
unless they have a legal basis or mechanism for doing so. In Andorra, the legal
authority to exchange information is derived from tax information exchange
agreements after the same are ratified by the Parliament. These agreements
hold the status of domestic law. This section of the report examines whether
Andorra has a network of information exchange arrangements that would
allow it to achieve the effective exchange of information in practice.
164.     Since its endorsement of the internationally agreed standard for
exchange of information for tax purposes in March 2009, Andorra has signed
18 Taxation Information Exchange Agreements (TIEAs), of which 13 are in
force. With the exception of a threshold provision regarding the tax at stake
as well as the lack of an exemption for rights and safeguards that unduly
prevent or delay effective EOI in one agreement (with Liechtenstein), all
agreements are in line with the internationally agreed standard for exchange
of information in tax matters. Further, Andorra is actively working to expand
its network of agreements, currently negotiating TIEAs with Australia, Italy
and Poland as well as having initiated negotiations with a number of other
jurisdictions. Andorra has not yet signed any DTCs. However, there are no
provisions within its law preventing it to do so.
165.     Andorra’s international agreements have not been given full effect
through domestic law as there are some limitations on the availability of
information and on the authorities’ powers to obtain necessary information
for the purpose of information exchange.
166.     Andorra is taking important steps to develop its information exchange
network, including with its key economic partners and other relevant jurisdic-
tions. It should continue to develop this network with all relevant partners,
should ensure that negotiations commence and progress effectively, and
should continue to work to bring concluded agreements into force as quickly
52 – COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION
167.    The Agreement between Andorra and the European Union on
Savings Taxation, effectively applied since 1 July 2005, provides for measures
equivalent to those laid down in Directive 2003/48/EC on Taxation of Savings
Income in Form of Interest Payments (Savings Directive – SD). Andorra
therefore applies a withholding tax on certain savings income to individuals
resident in EU member states. Article 12 of the Agreement also provides that
tax authorities of the Principality of Andorra and of EU Member States shall
exchange information concerning the income covered by the Agreement on
conduct constituting a crime of tax fraud or the like under the laws of the
168.      Andorra has TIEAs in force with the following 13 jurisdictions:
Austria, Denmark, the Faroe Islands, Finland, France, Liechtenstein, Monaco,
the Netherlands, Norway, Portugal, San Marino, Spain and Sweden. In addition
it has signed TIEAs with 5 other jurisdictions: Argentina, Belgium, Germany,
Greenland and Iceland. All of these agreements provide for exchange of infor-
mation to the international standard. Given the fact that Andorra until recently
did not have a direct tax system, it has not yet signed any DTCs. However, the
legislation specifically relates to both TIEAs and DTCs (Art. 1 EOI Act).
169.     Andorran authorities advise that three EOI requests have so far been
received. Andorra has so far not sent any EOI requests. Its oldest agreements
in force are the TIEAs with Austria, France, Monaco and San Marino which
entered into force in December 2010.
170.    The international standard for exchange of information provides
that the competent authority of the contracting states shall exchange such
information as is foreseeably relevant to secure the correct application of the
provisions of the convention or of the domestic laws of the contracting states.
The commentary to Article 26(1) of the OECD Model Tax Convention pro-
vides that the standard of “foreseeable relevance” is intended to provide for
exchange of information in tax matters to the widest extent possible. It does
not allow “fishing expeditions”.
171.    Andorra’s TIEAs provide for the exchange of information that is
foreseeably relevant for carrying out the provisions of the Convention or of
the domestic tax laws of the Contracting States.
COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION – 53
172.     However, the agreement with Liechtenstein provides in Article 7(1)
(d) that the requested State may decline a request if the amount of tax or
duty in question does not exceed the threshold of EUR 25 000. Although
this agreement allows an exception to this rule when the case is ‘deemed to
be extremely serious by the applicant party’, there is no guidance as to what
constitutes an ‘extremely serious’ case. It is also unclear how the requested
party will determine the tax amount, as often the amount of tax involved can
only be determined after information has been exchanged, and how this rule
would be applied in a group of cases, where in each case the tax amount is
less than the threshold but the overall tax effect might be large. As this agree-
ment does allow an exception to the rule however, the practical effects of
this rule are a matter to be examined in Andorra’s Phase 2 review. However,
Andorra in its futures negotiations may wish to consider whether such a
requirement is consistent with the international standard.
173.    All of the TIEAs require the requesting jurisdiction to provide
detailed information when making a request. The requested party may decline
to provide the information if the request is not made in conformity with the
agreement. These safeguards ensure that the “foreseeably relevant” require-
ment can be implemented by the jurisdictions.
174.     For exchange of information to be effective it is necessary that a
jurisdiction’s obligations to provide information is not restricted by the resi-
dence or nationality of the person to whom the information relates or by the
residence or nationality of the person in possession or control of the infor-
mation requested. For this reason the international standard for exchange of
information envisages that exchange of information mechanisms will provide
for exchange of information in respect of all persons.
175.     All of Andorra’s TIEAs contain an Article dealing with jurisdictional
scope which is in line with Article 2 of the OECD Model TIEA. Therefore,
all of Andorra’s agreements provide for exchange of information with respect
176.    Jurisdictions cannot engage in effective exchange of information if
they cannot exchange information held by financial institutions, nominees or
persons acting in an agency or a fiduciary capacity. Both the OECD Model
Tax Convention and the OECD Model TIEA which are primary authoritative
sources of the standards, stipulate that bank secrecy cannot form the basis for
declining a request to provide information and that a request for information
cannot be declined solely because the information is held by nominees or
54 – COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION
persons acting in an agency or fiduciary capacity or because the information
relates to an ownership interest.
177.     All TIEAs signed by Andorra include the provision contained in
Article 5(4) of the OECD Model TIEA, which states that a contracting State
may not decline to supply information solely because the information is held
by a bank, other financial institution, nominee or person acting in an agency
or a fiduciary capacity or because it relates to ownership interests in a person.
178.   As previously described in Part B.1 of this report, Andorra can obtain
and exchange bank information for the purpose of responding to requests
made under a prescribed arrangement. However, there are some limitations
in Andorra’s laws with respect to access to ownership information.
179.      The concept of domestic tax interest describes a situation where a
if it has an interest in the requested information for its own tax purposes. A
refusal to provide information based on a domestic tax interest requirement
is not consistent with the international standard. EOI partners must be able
to use their information gathering measures even though invoked solely to
obtain and provide information to the requesting jurisdiction.
180.     All of Andorra’s TIEAs contain the wording of Article 5(4) of the OECD
Model TIEA, obliging the contracting parties to use information-gathering meas-
ures to exchange requested information without regard to a domestic tax interest.
181.     The principle of dual criminality provides that assistance can only be
provided if the conduct being investigated (and giving rise to the information
request) would constitute a crime under the laws of the requested country if
it had occurred in the requested country. In order to be effective, exchange of
information should not be constrained by the application of the dual criminal-
182.   None of the EOI agreements concluded by Andorra applies the dual
criminality principle to restrict the exchange of information.
183.   All of the EOI agreements concluded by Andorra provide for the
exchange of information in both civil and criminal tax matters.
184.    All of Andorra’s TIEAs contain specific provisions stating that the
competent authority of the requested Party shall provide information to the
extent allowable under its domestic laws, in the form of depositions of wit-
nesses and authenticated copies of original records.
185.     For effective exchange of information a jurisdiction must have
exchange of information arrangements in force. Where exchange of informa-
tion agreements have been signed, the international standard requires that juris-
dictions must take all steps necessary to bring them into force expeditiously.
186.     Andorra has signed 18 TIEAs. Thirteen of these agreements are in
force, with: Austria, Denmark, the Faroe Island, Finland, France, Liechtenstein,
Monaco, the Netherlands, Norway, Portugal, San Marino, Spain and Sweden.
On average it has taken slightly more than one year for the agreements to be
ratified. The longest period between signing and ratification was 16 months
(agreement with Portugal).
187.     Not yet in force are the TIEAs with Argentina, Belgium, Germany,
Greenland and Iceland. All these six agreements were signed on 22 April
2010 or later. Andorran authorities advise that Andorra has finalised the rati-
fication process for all of these agreements, with the exception of the agree-
ment with Germany which has been submitted to Parliament.
188.    For information exchange to be effective the parties to an exchange
of information arrangement need to enact any legislation necessary to comply
with the terms of the arrangement. Andorra has through its EOI Act 2009 and
its EOI Regulation 2011 enacted domestic legislation33, that:
lifts bank secrecy in cases where information accessed by Andorran
authorities for EOI purposes; and
appoints the Minister of Finance as competent authority for exchange
33.    The EOI Act entered into force 21 December 2009. Its “Second Final Provision”
states that “[t]his Law is applicable for information requests filed under the infor-
mation exchange agreements or double taxation agreements granted after its entry
into force and referring to the tax financial years beginning after the date of signa-
ture of the said instruments or tax obligations created from the same date.” All of
Andorra’s TIEA’s are ratified post 2010 and thus the EOI Act applies to all of them.
189.    However, as detailed in sections A.1, A.2 and B.1 of this report, there
are some limitations in the availability of information in Andorra and access
to information by Andorran authorities. Thus, Andorra cannot be considered
to have given full effect to these arrangements through domestic law.
Andorra’s arrangements providing for       Andorra should ensure that its
international exchange of information      domestic laws allow for effective
have not been given full effect through    exchange of information.
domestic law as there are some
limitations on the authorities’ powers
to obtain necessary information for the
purpose of international information
One of Andorra’s 18 signed                 It is recommended that Andorra
agreements does not provide for            bring this arrangement up to the
exchange of information to the             international standard.
190.      Ultimately, the international standard requires that jurisdictions
cannot be concluded only with counterparties without economic significance.
If it appears that a jurisdiction is refusing to enter into agreements or negotia-
tions, in particular with those jurisdictions that have a reasonable expectation of
requiring information in order to properly administer and enforce its tax laws, it
may indicate a lack of commitment to implement the standards.
191.     The assessment team noted that the Andorran economy is par-
ticularly dependent on banking and finance, and that this sector ranks high
among the largest sectors of activity in Andorra accounting for 15.7 % of its
GDP in 2009.34 In terms of foreign trade, Andorra’s main trading partners are
(in order) Spain, France, Germany and Italy. TIEAs are in force with Spain
and France, about to be ratified with Germany and discussions are at an early
stage with Italy. These four countries alone cover almost 88% of Andorra’s
total trade35 and more than 90% of direct investments into the country36. In
terms of Andorra’s population, in 2005 only 36.7% of the 77 000 inhabitants
were Andorran citizens. About 36.5% were Spanish, 13% Portuguese and
6.6% French.37
192.    Before its March 2009 endorsement of the international standard for
EOI, Andorra did not have any international agreement for the exchange of
information in direct tax matters, with the exception of an agreement with the
EU on savings taxation.38 Since then, Andorra has signed 18 TIEAs, of which
13 are in force, with; Austria, Denmark, the Faroe Island, Finland, France,
Liechtenstein, Monaco, the Netherlands, Norway, Portugal, San Marino,
Spain and Sweden. Agreements have been signed with Argentina, Belgium,
Germany, Greenland and Iceland. With the exception of the agreement with
Germany, Andorra has finalised the ratification process for all of these eight
agreements. Andorra’s 18 signed agreements cover:
10 members of the European Union;
12 OECD members;
2 G20 members; and
16 members of the Global Forum.
193.     In addition, Andorra is actively working to expand its TIEA network.
It is in negotiations to establish TIEAs with Australia, Italy and Poland.
Negotiations have also been initiated with a number of other countries includ-
34.    www.estandardsforum.org/system/briefs/227/original/brief-Andorra.
35.    Figures for 2000. Source: www.nationsencyclopedia.com/Europe/Andorra-
FOREIGN-TRADE.html#ixzz1GwcWk31Y, accessed 16 March 2011.
36.    Figures for 2009 and 2010. Source: Andorran authorities.
37.    www.ceps.eu/ceps/download/1398, accessed 16 March 2011.
38.    Article 12 of the Agreement between Andorra and the European Union on
Savings Taxation provides that tax authorities of the Principality of Andorra and
of EU Member States shall exchange information concerning the income covered
by the Agreement on conduct constituting a crime of tax fraud or the like under
Andorra should continue to develop its
EOI network with all relevant partners.
Information received: disclosure, use and safeguards (ToR C.3.1)
194.      Governments would not engage in information exchange without the
permitted under the exchange mechanism and that its confidentiality would be
preserved. Information exchange instruments must therefore contain confiden-
tiality provisions that spell out specifically to whom the information can be dis-
closed and the purposes for which the information can be used. In addition to the
protections afforded by the confidentiality provisions of information exchange
instruments, countries with tax systems generally impose strict confidentiality
requirements on information collected for tax purposes. Confidentiality rules
should apply to all types of information exchanged, including information
provided in a request, information transmitted in response to a request and any
background documents to such requests.
195.     All agreements concluded by Andorra meet the standards for con-
fidentiality including the restrictions on the disclosure of the information
received and also use thereof by a contracting party. The agreements provide
that any information received by a Contracting Party under the Agreement
shall be treated as confidential and may be disclosed only to persons or
authorities (including courts and administrative bodies) in the jurisdiction
of the Contracting Party concerned with the assessment or collection of, the
enforcement or prosecution in respect of, or the determination of appeals in
relation to, the taxes imposed by the Contracting Party. The agreements also
provide for the restriction on disclosure of information received and these
provisions comply with the requirements of the international standards.
196.   The confidentiality requirements of the global standard are imple-
mented in Andorran law through Article 6 of the EOI Act which states that:
Any information sent to the applicant State under this Law
remains confidential, in the same way that the information
obtained under the internal laws of that State can only be dis-
closed to persons and authorities, including courts and adminis-
trative bodies, concerned with the assessment or collection of the
taxes defined in the information exchange agreement or relevant
double taxation agreement, in respect of the proceedings relating
to these taxes or for the claims or the determination of appeals
These persons or authorities shall use such information only for
such purposes. Nevertheless, they may disclose this information
in public court proceedings or in judicial decisions.
197.   Andorran authorities have indicated that this provision also applies to
information received by Andorra.
198.     In addition, provisions in Andorra’s TIEAs override contradicting
domestic legislation. Therefore Andorra’s authorities are required to keep con-
fidential all information received as part of a request or as part of a response
to a request regardless of any provisions in other laws.
199.     The confidentiality provisions in Andorra’s agreements use the stand-
ard language of Article 8 of the OECD Model TIEA or language comparable
to that Article and do not draw a distinction between information received in
response to requests and information forming part of the requests themselves.
As such, these provisions apply equally to all requests for such information,
background documents to such requests, and any other document reflecting
such information, including communications between the requesting and
requested jurisdictions and communications within the tax authorities of
either jurisdiction.
The exchange of information mechanisms should respect the rights and
safeguards of taxpayers and third parties.
200. The international standard allows requested parties not to supply
information in response to a request in certain identified situations. Among
other reasons, an information request can be declined where the requested
information would disclose confidential communications protected by attor-
ney-client privilege. Attorney-client privilege is a feature of the legal systems
201.     All of the agreements concluded by Andorra incorporate wording
modelled on Article 7 paragraphs 2 and 3 of the OECD Model TIEA, provid-
ing that requested jurisdictions are not obliged to provide information which
would disclose any trade, business, industrial, commercial or professional
secret or information which is the subject of attorney-client privilege/legal
privilege or information the disclosure of which would be contrary to public
policy. All of Andorra’s agreements are therefore to the standard in this
202. As previously described in B.1, it is not clear that the attorney-client
privilege defined in the Criminal Procedure Act is limited to information
However, on the face of it, the provision in the EOI Regulation concerning
legal professional privilege, a more specific law which was enacted after the
Criminal Procedure Code, takes precedence over the Criminal Procedure
Act provision. This is a question of implementation in practice which will be
considered during the Phase 2 review of Andorra.
203.     The 2002 Model TIEA states in Article 1 that “the rights and safe-
guards secured to persons by the laws or administrative practice of the
requested Party remain applicable to the extent that they do not unduly prevent
or delay effective exchange of information”. This provision is included in all of
Andorra’s TIEAs with the exception of the agreement with Liechtenstein. In
this agreement, the last part of the sentence “to the extent that […]” is omitted.
The absence of this additional provision has the potential to prevent or delay the
exchange of information by Andorra due to broad rights available to taxpayers
under Article 8 EOI Act, as discussed in Part B of this report. Therefore, also
in this respect, the agreement with Liechtenstein may not be to the standard.
Notification of taxpayers
204. The Protocol in Andorra’s agreement with Liechtenstein contains a
provision stating that:
With respect to Article 5 paragraph 1, it is understood that the taxpayer is to
be informed about the intention to make a request for information.
205.     This obliges the requesting jurisdiction to inform the taxpayer of their
intention to make a request. There is no exception from notification in the
TIEA. Further, the notification must be made in civil as well as in criminal
cases. In the absence of an exception, there is a possibility of jeopardising
the success of investigations, and to this extent this agreement is not to the
standard, and accordingly, Andorra is advised to provide for exceptions in all
of its agreements.
The absence of exceptions to the              It is recommended that the TIEA with
requirement in the TIEAs with                 Liechtenstein be updated to allow
Liechtenstein to notify taxpayers has         exceptions to the requirement to notify
the potential to prevent or delay the         taxpayers
exchange of information by Andorra.
206.     In order for exchange of information to be effective, the information
needs to be provided in a timeframe which allows tax authorities to apply it to
the relevant cases. If a response is provided but only after a significant lapse of
time the information may no longer be of use to the requesting authorities. This
is particularly important in the context of international co-operation as cases in
this area must be of sufficient importance to warrant making a request.
207.    There are no provisions in Andorra’s agreements pertaining to the
timeliness of responses or the timeframe within which responses should be
provided. As such, there appear to be no legal restrictions on the ability of
the competent authority to respond to requests within 90 days of receipt by
providing the information requested or by providing an update on the status
of the request. Further, Art. 4(2) of the EOI Act provides for the competent
authority to confirm receipt of the request and to carry out all necessary
actions to provide the requested information as promptly as possible.
208.     As noted above, the TIEA with Liechtenstein’s has a protocol which
inter alia provide that “it is understood that the taxpayer is to be informed
about the intention to make a request for information”. Further, there are
broad rights available to the taxpayer and the holder of information. This has
the potential to prevent or delay effective exchange of information (see Part
B.1 of this report). This issue will be the subject of analysis in the Phase 2
review of Andorra’s exchange of information practices.
209.     Andorra enacted Law 3/2009 on the exchange of information on tax
matters upon request and passed the corresponding Regulation to implement
Law 3/2009 on the exchange of information on tax matters upon request. This
created a domestic framework for implementing the obligations arising out of
the international exchange of information agreements signed by Andorra.
210.    Article 3(a) of the EOI Act provides that the Minister of Finance is
the competent authority for international administrative assistance pursuant
to a DTC or TIEA. The Minister of Finance accepts requests from foreign
competent authority. A review of Andorra’s organisational process and
resources will be conducted in the context of its Phase 2 review.
211.   There are no aspects of Andorra’s agreements or its laws that appear
to impose additional restrictive conditions on the exchange of information.
The assessment team is not in a position to evaluate whether this element
is in place, as it involves issues of practice that are dealt with in the
Phase 2 review.
SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS – 63
and Factors Underlying Recommendations
Determination                  recommendations                      Recommendations
and arrangements is available to their competent authorities. (ToR A.1)
The element is in             With the exception of                In so far as they are not
place, but certain            obligations to maintain some         currently provided, effective
aspects of the legal          information under AML law            sanctions should be
implementation of             and accounting law, Andorra          introduced for legal and
the element need              does not provide sanctions           natural persons which fail to
improvement.                  for non-compliance by                comply with requirements to
companies, partnerships or           maintain and file information
foundations with obligations         on their owners.
to maintain ownership
There is no obligation requiring     Andorra should establish
identification of beneficiaries      clear provisions in its
with less than a 25% interest        laws to ensure availability
in those foreign trusts which        of information on all
have Andorran trustees or            beneficiaries of foreign trusts
which are administered in            which are administered in
Andorra.                             Andorra or have an Andorran
Issuance of bearer shares            Andorra should progress its
was prohibited in 1983 and           action to ensure availability
action is in progress to             of full ownership information
ensure the availability of full      for these 18 companies as
ownership information for the        quickly as possible.
18 remaining companies with
64 – SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS
Determination                recommendations                      Recommendations
and arrangements. (ToR A.2)
The element is in           Andorran legislation does            All administrators and
place, but certain          not ensure that reliable             trustees of foreign trusts
aspects of the legal        accounting records or                should be required to maintain
implementation of           underlying documentation             reliable accounting records
the element need            are kept for foreign trusts          for the trusts including
improvement.                with an Andorran-resident            underlying documentation.
administrator or trustee.            These records should be kept
for a minimum of 5 years.
The element is in
of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
The element is in           While the competent authority        The competent authority
place, but certain          can obtain information on            should be granted the well-
aspects of the legal        the ownership of relevant            defined powers to obtain all
implementation of           entities from other government       relevant information in the
the element need            authorities, Andorran                possession or control of all
improvement.                legislation does not provide         persons within Andorra’s
the competent authority with         territorial jurisdiction for
powers to access ownership           the purpose of exchange of
information held by third            information.
parties or by the entities
themselves, except from banks
SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS – 65
(ToR B.2)
The element is in             To require in all cases that         It is recommended that
place, but certain            prior notification be given          certain exceptions from prior
aspects of the legal          to the affected parties of           notification be permitted,
implementation of             the international request            e.g. in cases in which the
the element need              for information may unduly           information requested is
improvement.                  prevent or delay the effective       of a very urgent nature or
exchange of information in           the notification is likely to
urgent cases.                        undermine the chance of the
success of the investigation
conducted by the requesting
(ToR C.1)
The element is in             Andorra’s arrangements               Andorra should ensure
place, but certain            providing for international          that its domestic laws allow
aspects of the legal          exchange of information have         for effective exchange of
implementation of             not been given full effect           information.
the element need              through domestic law as there
improvement.                  are some limitations on the
authorities’ powers to obtain
the purpose of international
One of Andorra’s 18 signed           It is recommended
agreements does not provide          that Andorra bring this
for exchange of information to       arrangement up to the
the international standard.          international standard.
partners. (ToR C.2)
The element is in                                                  Andorra should continue to
place.                                                             develop its EOI network with
to ensure the confidentiality of information received. (ToR C.3)
66 – SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS
taxpayers and third parties. (ToR C.4)
The element is in           The absence of exceptions to         It is recommended that the
place.                      the requirement in the TIEAs         TIEA with Liechtenstein be
with Liechtenstein to notify         updated to allow exceptions
taxpayers has the potential to       to the requirement to notify
prevent or delay the exchange        taxpayers.
of information by Andorra.
manner. (ToR C.5)
ANNEXES – 67
Annex 1: Jurisdiction’s Response to the Review Report39
Andorra sincerely appreciates the excellent work carried out by the
assessment team in evaluating the Andorran legal and regulatory framework.
We acknowledge that the Andorran legal and regulatory framework still
contains some deficiencies and the Andorran Government will give care-
ful consideration to the recommendations for improvement included in this
report, and will ensure that the OECD standards of exchange of information
are complied with and applied correctly.
We would like to emphasize that the peer review of Andorra was given
high priority in the Andorran Government. During the evaluation process
Andorra had early elections and the entry of the new Government was on 16th
May. Even so, on the 1st June it made necessary amendments to the Exchange
of Information Regulation which was published on the 29th of June in the
Andorran Official Gazette and entered into force the day after its publication.
During the last two years, Andorra has been strongly committed to a
process of greater transparency. Following the Paris Declaration of 10th March
2009, the Principality implemented a process for adopting the OECD’s inter-
national standards for exchange of information and began a process of legisla-
tive reform to modify the bank secrecy legislation for exchange of information
purposes in compliance with Article 26 of the OECD Convention.
A process was subsequently initiated to bring Andorra into line with
other OECD countries.
On 7th September 2009 the General Council of Andorra adopted the
Law 3/2009 for the Exchange of tax information upon prior request. Following
the ratification of the law, between September 2009 and November 2010, the
Government of Andorra has signed 18 bilateral agreements and, in order to
expand its TIEAs network, is now actively working with Australia, Italy,
Poland, South Korea and has initiated negotiations with other jurisdictions,
members of the OECD and of the G20, such as the USA, the United Kingdom,
Ukraine, the Czech Republic, Canada and Brazil.
39.    This Annex presents the jurisdiction’s response to the review report and shall not
be deemed to represent the Global Forum’s views.
68 – ANNEXES
It is important to remark that Andorra has already signed agreements
with its most relevant partners which are: France, Spain and Portugal (all of
them already in force) and is going to negotiate DTCs.
Furthermore Andorra is going to amend the Agreement signed with
Liechtenstein within a short period of time to provide for exchange of infor-
mation to the international standard.
We would like to point out that Andorran legislation does not recognise
the concept of trust and the Foundation Act, in its Additional provision, states
that “While there is no law which expressly regulates them, no foundations of
personal interest or family foundations may be formed”. Andorran legislation
on corporations only allows the creation of companies and legal entities under
the Andorran legislation.
Regarding the abolished bearer shares it is important to note that from the
remaining 17 companies only one has Government authorisation to conduct
business. Mid-May this year, the Andorran Government contacted each com-
of Economy and published in the Official Gazette, asking them to contact the
Companies Register within two months in order to notify the Register of the
identity of the holders of the bearer shares. To ensure that they comply, on
the 20th July a preventive note has been entered in the Companies Register
and the companies are not eligible to obtain a Government authorisation to
perform economic activities until that preventive note is removed.
We inform you that some of the recent actions of the Government have
been related to further banking regulation, AML regulation and the signature
of the Monetary Convention with the European Union last June.
Additionally to that explained above, during the next months the Andorran
Government will focus on further adjustments, improvements and extensions
of the Andorran legislation, further signing of MoUs by the supervisory body
of the Andorran financial sector (INAF) with other countries, a greater eco-
nomic openness with the application of the corporation tax as well as the tax
on income from economic activities that will enter into force at the beginning
of 2012. Also, a Value Added Tax Bill will be introduced to Parliament by
September this year. The law is expected to enter into force in January 2013.
This new legal framework will allow the Andorran Government to initiate
negotiations of double tax conventions with its relevant partners.
This report demonstrates that Andorra is fully committed to the interna-
tional standards for transparency and exchange of information and that the
Andorran Government will continue to improve its legal framework while
ensuring the level playing field.
ANNEXES – 69
Treaty partner            arrangement             Date signed              Date in force
1     Argentina                          TIEA                26-10-2009               Not in force
2     Austria                            TIEA                17-09-2009               10-12-2010
3     Belgium                            TIEA                23-10-2009               Not in force
4     Denmark                            TIEA                24-02-2010               13-02-2011
5     Faroe Islands                      TIEA                24-02-2010               18-06-2011
6     Finland                            TIEA                24-02-2010               12-02-2011
7     France                             TIEA                22-09-2009               22-12-2010
8     Germany                            TIEA                25-11-2010               Not in force
9     Greenland                          TIEA                24-02-2010               Not in force
10 Iceland                               TIEA                24-02-2010               Not in force
11    Liechtenstein                      TIEA                18-09-2009               10-01-2011
12 Monaco                                TIEA                18-09-2009               16-12-2010
13 Netherlands                           TIEA                06-11-2009               01-01-2011
14 Norway                                TIEA                24-02-2010               18-06-2011
15 Portugal                              TIEA                30-11-2009               31-03-2011
16 San Marino                            TIEA                21-09-2009               07-12-2010
17 Spain                                 TIEA                14-01-2010               10-02-2011
18 Sweden                                TIEA                24-02-2010               11-02-2011
70 – ANNEXES
Companies Act (Llei 20/2007)
Companies Register Regulation (Reglament 26.03.2008)
Companies Regulation (Reglament 21.12.1983)
Witholding Tax Act (Llei 94/2010)
Corporation Tax Act (Llei 95/2010)
Business Tax Act (Llei 96/2010)
Accounting Act (Llei 30/2007)
General Accounting Plan (Decret 23.07.2008)
Accounting Register Regulation (Reglament 09.06 2010)
Foundation Act (Llei 11/2008)
Foundation Register and Protectorate Regulation (Reglament 01.042009)
ANNEXES – 71
AML and financial regulation law
Anti Money Laundering Act (Llei 28/2008)
Anti Money Laundering Regulation (Reglament 13.05.2009)
Bank Secrecy and AML Act (Llei 11.05.1995)
Banking Act (Llei 14/2010)
Collective Investment Scheme Act (Llei 10/2008)
Financial Entities Authorisation Act (Llei 35/2010)
Financial System Disciplinary Regime Act (Llei 27.11.1997)
Foreign Investment Act (Llei 2/2008)
Foreign Investment Regulation (Reglament 08.10.2008)
Andorran National Institute of Finance (INAF) Act (Llei 14/2003)
Investment Bank and CIS Management Act (Llei 13/2010)
Information Exchange for Tax Purposes law
Exchange of Information Act (Llei 3/2009)
Exchange of Information Regulation (Reglement 29.06.2011)
Parliamentiary Decree of 10 October 1981
Andorran Constitution (1993)
Economic promotion, etc. Act (Llei 93/2010)
Penal Code (Llei 9/2005)
Association Act (Llei 29.12.2000)
Penal Procedure Act (Llei 10.12.1998)
Public Finances Act (Llei 19.12.1996)
Andorran legislation is available at: www.bopa.ad/bopa.nsf/home?Open
FrameSet under “Tractats internacionals i Lleis”.
(23 2011 34 1 P) ISBN 978-92-64-11759-4 – No. 58583 2011
PEER REVIEWS, PHASE 1: ANDORRA
multilateral framework within which work in the area of tax transparency and exchange
of information is carried out by over 100 jurisdictions which participate in the work of the
Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the
implementation of the standards of transparency and exchange of information for tax
purposes. These standards are primarily reﬂected in the 2002 OECD Model Agreement
on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the
OECD Model Tax Convention on Income and on Capital and its commentary as updated in
2004, which has been incorporated in the UN Model Tax Convention.
party. “Fishing expeditions” are not authorised, but all foreseeably relevant information
must be provided, including bank information and information held by ﬁduciaries,
regardless of the existence of a domestic tax interest or the application of a dual
criminality standard.
All members of the Global Forum, as well as jurisdictions identiﬁed by the Global Forum
as relevant to its work, are being reviewed. This process is undertaken in two phases.
Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for
the exchange of information, while Phase 2 reviews look at the practical implementation of
that framework. Some Global Forum members are undergoing combined – Phase 1 plus
Phase 2 – reviews. The ultimate goal is to help jurisdictions to effectively implement the
international standards of transparency and exchange of information for tax purposes.
All review reports are published once approved by the Global Forum and they thus
represent agreed Global Forum reports.
For more information on the Global Forum for Transparency and Exchange of
Information for Tax Purposes and for copies of the published review reports, please visit
www.oecd.org/tax/transparency and www.eoi-tax.org.
OECD (2011), Global Forum on Transparency and Exchange of Information for Tax Purposes
Peer Reviews: Andorra 2011: Phase 1: Legal and Regulatory Framework, Global Forum on
Transparency and Exchange of Information for Tax Purposes: Peer Reviews, OECD Publishing.
ISBN 978-92-64-11759-4
23 2011 34 1 P        -:HSTCQE=VV\Z^Y:
"Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Andorra 2011"
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