New Tax Treaty between Spain and Andorra

Posted on Posted in Publications, Tax

The Official Gazette (BOE) has published on December 9th, 2015 the agreement between Spain and Andorra to avoid double taxation (CDI) with respect to taxes on income and to prevent tax evasion. The agreement will enter into force on 26 February 2016.

The content of the Treaty follows the OECD model convention. It incorporates references to the treatment of dividends, interest, royalties and capital gains, equivalent to those existing in the agreement Franco-Andorran Tax Treaty. Likewise, the Treaty includes various anti-abuse provisions in relation to its implementation.

Banking information

In addition, the agreement includes an article on tax information extending the effects of the tax information exchange agreement signed by both countries in January 2010. The article included in the agreement will allow improve the exchange of information regarding financial products. Thus, it will allow, not only the request of individual information (as has been done so far) but progress on issues such as “group requests” or identification of the subject on which information is required.

This circumstance represents a substantial improvement over the current situation. For example, Spain may request information from Andorra on a group of Spanish residents who have signed the same financial product at an Andorran bank and that has not been disclosed to the Spanish Tax Office. The request for information may be made in respect of tax periods in which the previous agreement for exchange of tax information was already in force.

Steps to “automatic” exchange of information

In addition, the Commission extends the exchange of information to other forms cooperation as the automatic exchange or joint tax audits. As for the automatic exchange of information, The Treaty refers to the  meeting of the Global Forum on Transparency and Exchange Information held in Berlin in October 2014 where more than fifty countries and jurisdictions agreed to exchange “Automatic” tax information, financial account in 2017, modeled on the Declaration of the OECD June 2014.

Andorra is one of the countries and territories have committed to making the automatic exchange from  2018.

Spain is very active on the international scene, defending the principles of transparency and exchange of information. In recent years, Spain has concluded numerous international conventions and agreements to ensure the exchange of tax information. Among these conventions there are the ones signed with Canada, Uzbekistan, Oman, Nigeria, Senegal, Dominican Republic, Cyprus, UK and Argentina, as well as the agreements signed with Andorra, US and India, or the conversations initialed with Qatar and Austria in this respect. Likewise, agreements for the exchange of tax information have been initialed with Monaco and Macao, and recently such agreements have been concluded with Jersey, Guernsey and Isle of Man (British Crown Dependencies).