Andorra Moves Towards Transparency in Banking Sector
Andorra’s banking sector has undergone significant changes in recent years. Historically, the country was a popular destination for foreigners looking to park and earn income on their money without being detected by their home governments. However, following a brief stint on the OECD’s list of non-cooperative tax havens, Andorra is now moving towards a model of transparency with the global economy.
Automatic Exchange of Information and Common Reporting Standard
In 2014, Andorra signed on to the Declaration on Automatic Exchange of Information in Tax Matters, joining over 100 other jurisdictions. The intention behind this declaration is to combat tax evasion and facilitate tax compliance by implementing the Common Reporting Standard (CRS).
The CRS requires jurisdictions to collect financial information from their banks and other financial institutions and exchange this information with other jurisdictions automatically.
How are Residents Exposed to AEOI?
Andorra’s banking privacy remains in place for resident bank accounts, meaning that financial institutions are not required to share information about these accounts with Andorran authorities. However, given the Automatic Exchange of Information is a reciprocal agreement, residents should assume that Andorran authorities will be aware of their accounts abroad.
What Information is Shared?
Information shared on non-resident individuals and entities includes:
- Account number
- Taxpayer ID number
- Name
- Address
- Date of birth
- Income (interest, dividends, insurance income, etc)
- Sale proceeds
- Account balances
- Ultimate beneficiary owners (UBOs) for company accounts
When Did Reporting Begin?
Andorran institutions began collecting information in 2017 and reporting began in 2018. Andorra currently reports using a Narrow Approach, which means its banks will only collect and share information for tax residents of jurisdictions in the .
Challenges and Opportunities
The 2015 money laundering scandal involving Banca Privada d’Andorra (BPA) combined with CRS has placed significant pressure on the Andorran banking system. However, the worst is now over, and the country’s banking system is open for business once again.
Despite a financial secrecy score of 66/100, Andorra ranks 105 on the Financial Secrecy Index due to its small size and impact on the global economy. The government and financial industry are moving towards transparency without being greedy, with taxation remaining low and fair but requiring compliance from both non-resident and resident individuals and entities.
Stay Up to Date
To stay informed about Andorra’s banking regulations and other developments in the principality, keep an eye on this page or contact us for more information.