On
12 February 2016, the European Union and Andorra signed an agreement aimed
at improving tax compliance by private savers.
The agreement
will contribute to efforts to clamp down on #tax_evasion, by
requiring the EU member states and Andorra to exchange information
automatically.
This will
allow their tax administrations improved cross-border access to information on
the #financial_accounts of
each other's residents.
"Tax
instruments can only work effectively where they do not leave loopholes that
can be used by tax planners to avoid taxation", said Jeroen Dijsselbloem,
minister for finance of the Netherlands and president of the Council.
"This agreement will enable remaining gaps in the exchange of information
for taxation purposes to be filled in, and will maintain consistency in the
applicable rules."
Upgrade
The agreement
upgrades a 2004 agreement that ensured that Andorra applied measures equivalent
to those in an EU directive on the taxation of savings income. The aim is to
extend the automatic exchange of information on financial accounts in order to
prevent taxpayers from hiding capital representing income or assets for which
tax has not been paid.
The text was
signed in Brussels:
on behalf of
the EU, by Jeroen Dijsselbloem, president of the Council;
on behalf of
Andorra, by Jordi Cinca Mateos, minister for finance.
The signature
took place in the presence of Pierre Moscovici, commissioner for economic and
financial affairs, taxation and customs, who also signed the document.
The Council
adopted a decision on 12 February 2016 to authorise
the signature on
behalf of the EU.
The EU and the
OECD
The agreement
ensures that Andorra applies strengthened measures that are equivalent to measures
in force in the EU. However, whereas the 2004 agreement was based on the
EU's taxation savings directive, that directive has now been repealed.
Directive 2003/48/EC was repealed on 10 November 2015 in order to
eliminate an overlap with directive 2014/107/EU, which includes strengthened
provisions to
prevent tax evasion.
The agreement
also complies with the automatic exchange of financial account information
promoted by a 2014 OECD global standard.
The EU signed
similar agreements with Switzerland on 27 May 2015, Liechtenstein on
28 October 2015, and San Marino on 8 December 2015. It approved the
conclusion of the agreements with Switzerland and Liechtenstein on
8 December 2015.
Coverage
The agreement
sets out to limit the opportunities for taxpayers to avoid being reported to
the tax authorities by shifting assets. Information to be exchanged concerns
not only income such as interest and dividends, but
also account
balances and proceeds from the sale of financial assets.
Tax
administrations in the member states and in Andorra will be able to:
identify correctly and
unequivocally the taxpayers concerned;
administer and enforce
their tax laws in
cross-border situations;
assess the
likelihood of tax evasion being perpetrated;
avoid
unnecessary further investigations.
The EU and
Andorra must now ratify or approve the agreement in time to enable its entry
into force. The parties will strive to enable entry into force on 1 January
2017.
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