living in Andorra guide on residency relocation advice

Another bombshell that Antoni Martì dropped on Andorra on 19th september 2011 was the proposal to implement an income tax on high salary earners in Andorra by the end of this Parliament. It has been well known that Income tax on Andorran companies will be in place from 1st January 2012, with a tax on profits in excess of € 50,000.

it has always been my contention that you can't have corporation tax without personal tax as you simply pay yourself a fat salary. Well this then is the natural progression. There remains one flaw though again in all these proposals, that of banking secrecy. the Government has no access to accounts held in the banks here (criminal process excepted), so that part of the jigsaw should be watched. Enforcement is another matter which probably has not dawned on the authorities here:

• When they bought in a services tax some years ago, many companies did not even bother to file a return. we have since heard that no action will be taken!

• In 2010 company accounts were required to be filed at Goverment. the law forgot to put a sanction on those that did not. This has now been rectified but for a country that never required any accounts whatsoever in one swoop all companies are required to file most complicated accounts returns, which to be honest are never going to be looked at let alone questioned.

So how is all this going to affect passive residents? I think it will strengthen the appeal as passive residents are outside all of these regulations. There is absolutely no suggestion of declarations nor taxes for passive residents under the current scheme, changes are being proposed though to the passive residency scheme so please keep an eye on this website for first hand information as and when it happens.

Election results and what they mean for the future of Andorra.

Toni Martin at the head of Democrats for Andorra (DA) has achieved an overwhelming majority with 55.15% of votes in the national list and a win in all parishes. The Social Democratic Party (PS) headed by the ousted Head of Government, James Bartumeu was left with 34.80% losing six seats and with the share of the vote down ten points compared to 2009. Eusebi Nomen APC has been left out of the General Council with a 6.71% and the Greens Andora Isabel Lozano returned 3.35%.

Toni Martí, therefore, will be the next Head of Government for the next four years.

The outgoing Head of Government of the Social Democrats Party, James Bartumeu, acknowledged they were aware of the difficulty of governing in times of crisis and the economic policies that have led to unpopularity such as information sharing or tax reform. The Party lost 10% of their vote, and have lost territorial representation in all parishes.

Democrats for Andorra won a landslide victory, taking every parish in which they stood and winning the national vote, giving them 21 out of the 28 General Council's seats, the biggest victory in the country's history.[7] The Social Democrats lost all their parish seats and held only five national seats, while Lauredian Union returned to the General Council, winning the parish of Sant Julià de Lòria. Andorra for Change lost all their seats, and the Greens finished last, gaining no seats..

The new policy towards the EU states:-

"Europa ha de ser una oportunitat i no una amenaça per als ciutadans d’Andorra"
" Europe has to be an opportunity and not threaten the citizens of Andorra"

The party promises to be open and review accords made by the outgoing party. The party is good for business, tourism and above all immigration. One of the corner stones of their policy is to not only allow foreign investment here but to attract such investment.

This is an extract of an article focusing on why early elections were called for 3rd April 2011.

By RAPHAEL MINDER
Published: February 11, 2011

MADRID — Andorra, which grew prosperous in large part because of its tax-haven status, will call early elections to break a political deadlock over tax and budget planning.

The center-left government, which came into office in 2009 and was not expected to call elections until 2013, is preparing in the coming week to call the elections after failing to win Parliament’s approval for its plan to adopt a value-added tax for the first time. The elections will probably be held in April, Pere López, the economy and finance minister, said Thursday in Madrid.

Without an absolute parliamentary majority, the governing Social Democratic Party has been pressured to cut short its four-year term because it needs another party’s lawmakers to endorse its tax and budget plans. In a separate vote in Parliament this month, opposition parties also blocked the government’s latest budget proposal.

The government has argued that Andorra, a tiny principality wedged between France and Spain, needed to overhaul its tax system immediately to improve public finances and as part of broader efforts to be more integrated in the European economy. The government has also been under international pressure to shed banking secrecy and help combat tax evasion and financial fraud.

Mr. López said that Andorra’s political deadlock was “a serious blow for economic reform and for the absolutely vital changes that we needed to make in order to align more with the rest of Europe.”

The forthcoming elections, he argued during an interview, “will decide whether Andorra continues on the path toward greater openness or instead falls back in the hands of the protectionist forces that have traditionally dominated our country.”

The government’s proposed value-added tax, at 4.5 percent, would have been far below that of almost every other Western country. But amid concerns over a decline in Andorra’s economic competitiveness and revenue from tourism, opposition parties blocked the VAT plan, thereby also shelving the introduction of other recent fiscal changes, including a corporate levy that would have allowed the government to collect its first-ever direct taxes.

The government wanted to implement the tax overhaul as early as this year. Opposition parties, meanwhile, have called for more gradual change.

Mr López insisted that the stalemate would not jeopardize recent agreements signed by Andorra to collaborate with its neighbors and other countries on cross-border fraud investigations. As a result of these commitments, the Organization for Economic Cooperation and Development removed Andorra in 2009 from its list of “uncooperative tax havens.”

Andorra’s anti-fraud cooperation agreement with Spain took effect this past week. Since the start of the financial crisis, the government in Madrid has intensified efforts to combat fiscal fraud and recoup money hidden in offshore accounts in order to plug its budget deficit.

Mr López said that Andorra had “no evidence of an unusual outflow of money from our banks” by Spanish and other foreign clients who might have wanted to pre-empt the implementation of Andorra’s anti-fraud cooperation agreements.
A version of this article appeared in print on February 12, 2011, in The International Herald Tribune.

Below is the state of the parties after the April 2009 elections. Although another election was not due until 2013, an early one was called for 3rd April 2011 due to political stalemate.