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The European Union (EU) and Andorra have signed a deal to automatically exchange tax information, which will replace an agreement based on the recently repealed savings tax directive.
The agreement was signed on February 12. The previous agreement, signed in 2004, ensured that Andorra applied measures equivalent to those in the EU directive on the taxation of savings income. The directive was repealed in November 2015, to avoid overlap with a separate directive on the exchange of tax information on request.
The new agreement aims to limit the opportunities for taxpayers to avoid being reported to the tax authorities by shifting assets. The parties will automatically receive the names, addresses, tax identification numbers, and dates of birth of their residents with accounts in Andorra or an EU member state, along with other financial and account balance information.
The European Commission said that the agreement will allow tax authorities to identify correctly the taxpayers concerned, administer and enforce their tax laws in cross-border situations, assess the likelihood of tax evasion being perpetrated, and avoid unnecessary further investigations.
EU Tax Commissioner Pierre Moscovici commented: "[The] agreement will throw a powerful spotlight on those who try to escape taxation by hiding their money abroad. It also introduces a new level of openness and cooperation between Andorra and the EU in taxation. I warmly congratulate Andorra on the important step it has taken today."
Jeroen Dijsselbloem, President of the European Council, said: "Tax instruments can only work effectively where they do not leave loopholes that can be used by tax planners to avoid taxation. This agreement will enable remaining gaps in the exchange of information for tax purposes to be filled in, and will maintain consistency in the applicable rules."
The EU and Andorra intend the agreement to enter into force on January 1, 2017.
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