Law 42/2014, Of 11 December, On The Modification Of The Law 5/2014, Of 24 April, The Tax On Income Of Individuals

Original Language Title: Llei 42/2014, de l’11 de desembre, de modificació de la Llei 5/2014, de 24 d’abril, de l’impost sobre la renda de les persones físiques

Read the untranslated law here: https://www.bopa.ad/bopa/026072/Pagines/lo26072002.aspx

lo26072002 law 42/2014, of 11 December, on the modification of the law 5/2014, of 24 April, the tax on income of individuals since the General Council in its session of December 11, 2014 has approved the following: Law 42/2014, of 11 December, on the modification of the law 5/2014 , 24 April, from the tax on the income of natural persons preamble the entry into force of the law 5/2014, of 24 April, the tax on income of individuals, applicable from the tax period that begins on January 1, 2015, is the introduction of a new tax figure in the tax system of the Principality of Andorra , which is expected to take a key significance in the economy and the Andorran society. With this tax completes the configuration of the fiscal framework of the country in the field of direct taxation and is moving forward in the process of economic opening of the Principality, by creating a tax approved in the countries of its environment.
Subsequent to the approval of the law 5/2014, of 24 April, the tax on income of individuals, and before the effective application of the tax, has been identified, in the framework of the process of the implementation of the tax and of the conversations with the social and economic agents affected by the new taxes, the need to introduce certain adjustments to the existing regulation , either in order to correct or clarify the technical aspects of the standard, or to grant to certain situations a more fair and consistent treatment with the purpose of the tax.
Formally, this law is divided into 10 articles and two final provisions, with the content below is summarized.
Article 1 amends article 12 of law 5/2014, of 24 April, the tax on income of individuals, by introducing a new letter h) in paragraph 1, as well as a new paragraph 3. The modification that incorporates article 1 aims, firstly, to clarify an aspect that was already implicit in the text of the law 5/2014, of 24 April, the tax on income of individuals, as is the fact that the contributions or contributions to certain business forecast systems made by the employer on behalf of its workers as labor income term fully subject to the tribute. On the other hand, establishes an express regulation of calculating the income of the work arising from the perception of benefits, when the contribution or contribution upon employment and income in alcoi has already has not been the subject of a reduction in the tax base, and is avoided in this way a new tax on the same income.
Article 2 rectifies a existing incorrectness in the drafting of paragraph 3 of article 26. In this sense, establishes that the value of the transmission of the assets is reduced, for purposes of determining the calculation of gains and losses, charges and taxes to which reference is made to the letter c) of section 1 of the same article, if they have been pleased by the "transmitent" and not to "the purchaser", as is erroneously indicated in the original wording of the article.
Article 3 modifies the article 35 of the law 5/2014, of 24 April, the tax on income of individuals, in order to recognize the need to provide a more favorable tax treatment to taxable which are in a situation of disability. It has been estimated should extend the benefits of an increased reduction not only to taxable with descendants or ancestors by people with disabilities, but also to those taxable that, themselves, suffer from this situation. At the same time, it has removed the age requirement of the descending or ascending it, being in charge of the tax required to be in a situation of disability, for the purpose of giving the right to increased reduction provided for in article 35.
Article 4 contains two amendments in the framework of the regulation of the reduction for contributions to social instruments established in article 39 of the law 5/2014, of 24 April, the tax on income of individuals. The first consists of the official rating for the development of the necessary requirements for such term contributions to the aforementioned reduction. The statutory remission covers thus the absence, at present, of a substantive legal and financial system regulation of pension plans in the Principality of Andorra and, therefore, is a necessity in order to give content to the tax benefit provided for in article 39. Finally, it enables the establishment of regulatory obligations for information by the promoters of these instruments and of the insurance entities with which it formalized, which guarantee the right of access with the tax administration in the information concerning these contributions and to control needed in management of the correct application of the tax benefit established in article 39.
Article 6 is intended to add, in paragraph 4 of the article 50 of the law 5/2014, of 24 April, the tax on income of individuals, a reference to the possibility of using forms with the Caixa Andorrana de Seguretat Social ("CASS") in the context of the Declaration of the deductions and payments on account on income from work. On the other hand, the new wording of this article gives legal cover to the transmission of information relating to such tax withholdings and payments on account for part of the tax administration in the CASS, within the framework and with the objective of their incorporation in the forms or models of statement.
Article 7 introduces a new fourth additional provision in the law 5/2014, of 24 April, the tax on income of individuals. The purpose of this provision is to establish special rules for the computation of the income from certain financial products acquired or signed before the entry into force of the aforementioned law 5/2014, of 24 April, the tax on income of individuals, with the aim of preventing the returns associated with these products, generated before the effective application of the tax (and Therefore, at a time when there was no tax on the income of natural persons resident in Andorra), suffer from taxation by the tax at the time of their effective perception on the part of its owners.

Article 8 pursues the same goal that the provision mentioned in the previous paragraph, although exclusively in relation to the benefits derived from the CASS, when it has begun to make contributions before the initial time of application of the PERSONAL INCOME TAX. To this end, it introduces a new fifth additional provision, which establishes the rules for the calculation of the income corresponding to such benefits.
Article 9 gives legal coverage, through the introduction of a new sixth additional provision in the law 5/2014, of 24 April, the tax on income of individuals, in collaboration with the CASS in the process of determination of the retention rates and revenue into account applicable to the income of the work subject to the obligation to quote CASS and corresponding to the start of the first tax period in which the tax is applicable.
Finally, article 10 introduces a new fifth transitional provision in the law 5/2014, of 24 April, the tax on income of individuals, which aims to extend the scope of the exemption provided for in the letter j) of article 5 to dividends and other income derived from the participation in the equity of entities, when these come from profits obtained or of the heritage constituted before the first tax period of application of the tax on companies.
At the same time it introduces a modification with a new article that proposes to modify the article 46 of the law 5/2014, of 24 April, of the tax on the income of natural persons, in keeping with the modification mentioned in article 3, in order that the subsidy, in cases that have a recognized disability tax must take into consideration the increased reduction.
The first final provision pursues the same goal that the standard to which reference has been made in the previous paragraph, while the scope of the exemption of dividends and earnings for transfer of shares in the income tax, regulated in article 20. This provision seeks to consolidate the absence of taxation on the income of the resident entities that have obtained prior to the applicability of the income tax, and is avoided in this way, the burden of income prior to this tax.
Finally, the second final provision refers to the entry into force. In this sense, it is anticipated the retroactive application, from 1 January 2012, of the first final provision, which becomes necessary in order to give full effectiveness to its content, and allows your application to income generated from this date.
Article 1 modifies the article 12 of the law 5/2014, of 24 April, the tax on income of individuals, with the following wording: "Article 12 entire Income of the work 1. Have the qualification of labour income all compensation or utilities, whatever their denomination or monetary in nature, or in kind, which may arise, directly or indirectly, of the personal work or the employment relationship and do not have the character of income from economic activities. In particular, they have this consideration: a) wages and salaries.
b) involuntary unemployment ordinary financial benefits.
c) caps in concept of expenses of representation.
d) the DSA and travel expenses, when they are subject to the contribution obligation in accordance with the regulations of the Caixa Andorrana de Seguretat Social.
e) the stock options granted in the framework of an employment relationship.
f) The advance warning, the compensation, as well as any other compensation for dismissal or the termination of the employee.
g) The income received in merit of the exercise of public office and employment.
h) contributions or contributions are paid by employers to pension plans and other social instruments that have to the instrumentation of commitments for pensions and that give rise to income, to which reference is made in the letters c), d) and e) of paragraph 2 of this article, excluding the corresponding to the Caixa Andorrana de Seguridad Social as long as you carry in favour of beneficiary irrevocable way and from the moment, the right to receive benefits in the future.
2. In any case, they are considered income from work: a) the grants.
b) compensatory pensions received by spouses and the annuities for food.
c) The pensions and other similar benefits, public or private, derived from a previous job, when they are received by the same worker.
d) benefits received by beneficiaries of pension plans, when they are received by the participant in the plan.
e) benefits received by beneficiaries of insurance contracts pension commitments instrumentin groups, derived from a previous job, when they are received by the same worker.
f) The income from the delivery of courses, conferences, colloquia, seminars and other similar, except when considered to be income from economic activities.
g) perceived benefits in application of the rules of social and community health services. For these purposes, are not considered income benefits received in repayments satisfied by the Andorran Social security as well as for insurance companies, in order to cover medical expenses, medical, hospital, the internally, as well as the costs of travel and accommodation provided in the law of the Caixa Andorrana de Seguridad Social , as well as its regulations.
h.) the remuneration derived from the elaboration of scientific, artistic or literary works when it gives the right to its exploitation.
3. The full income of work corresponding to the pensions and other similar benefits, excluding the met by the Andorran Social Security Box, which relate the letters c), d) and e) of paragraph 2 above, will be reduced by the amount of the contributions and contributions made by the employer and charged tax advice to the person to whom it is linked to the performance , as well as in the amount of the contributions and contributions made by that person, unless you have reduced the tax base in accordance with what is stipulated in article 39.

For the purposes of computing the income of the whole work, in cases where the pension or benefit is received in the form of income, contributions or contributions that will have to reduce the income tax in accordance with the previous paragraph will be calculated by applying, on income received in each tax period, the percentage resulting from dividing the total contributions and contributions that may be reduced in accordance with the previous paragraph , for the amount of the mathematical provision to the date of Constitution of the income. The total reduction in force throughout the duration of the income may not exceed the total amount of the contributions and contributions that may be reduced in accordance with the preceding paragraph ".
Article 2 modifies the paragraph 3 of article 26 of the law 5/2014, of 24 April, the tax on income of individuals, with the following wording: "3. The value of the transmission is the actual amount paid, provided that normal value is not lower than that of the market, in which case the latter prevaldria. The value of the transmission is deducted the expenses and taxes to which reference is made to the letter c) of paragraph 1, if they have been satisfied by the transmitent ".
Article 3 modify the sections 1 and 2 of article 35 of the law 5/2014, of 24 April, the tax on income of individuals, with the following wording: "1. Reduction to minimum exempt staff Are taxable can reduce the general tax base, in concept of reducing to minimum exempt staff, in an amount of € 24,000. This amount is increased to 30,000 euros when the tax obligation is in situation of disability.
The amount of the reduction set out in the previous paragraph is increased to 40,000 euros when the spouse does not separate from the tax liable or his stable partner, as defined in the regulations of the stable partnerships, who lives with the required non-tax register any type of income that is to be included in the base of general taxation.
When the spouse does not separate or the partner of the tax income that is required to obtain integrated within their general tax base and the amount of this tax base won't allow it to fully apply the reduction provided for in the first paragraph of this section 1, the remaining amount of the reduction may be applied, if applicable, for the same tax obligation, without the joint amount of reduction applicable to both spouses or partners may exceed the amount of 40,000 euros.
2. Reduction for dependent family members Are taxable can reduce the base of general taxation in the following amounts: a) 750 euros for each descendant to be under 25 years of age at the date of accrual of the tax and that they live together with the required annual income tax and not dependent on time or over 12,000 euros.
b) 750 euros for each ascending 65 years whichever is greater than the date of accrual of the tax and that they live together with the required annual income tax and not dependent on time or over 12,000 euros.
The reductions provided for in the letters a) and b) is increased by application of a coefficient of 1.5 on the amount for each descending and ascending with disabilities who lives with the required tax law or depend on. For the application of this reduction increased will not demand the compliance with the age requirement set out in letters a) and b) above.
For the purposes of this tax, are considered "persons with disabilities" which are subject to the scope of application of the law on guarantees of the rights of persons with disabilities ".
Article 4 modifies the article 39 of the law 5/2014, of 24 April, the tax on income of individuals, with the following wording: "Article 39 discounts for contributions to social instruments and compensatory pensions Are taxable can reduce the tax base in the amounts corresponding to the following concepts: 1. The contributions and contributions to pension plans and other social instruments that meet the characteristics established by the regulations , both made by the same companies forced to tax in favour of their employees. The maximum amount deductible may not exceed the lesser of the following amounts: a) the 30 to 100 of the sum of the net income of the work and of the economic activities.
b) 5,000 euros a year.
The regulations will establish the obligation, by the promoter of the plan or instrument or, depending on the case, the insurance company or financial which formalize, to inform the Ministry in charge of Finance on the amount of contributions or contributions and the identity of the taxable benefit of who made them.
2. compensatory pensions satisfied in favour of the spouse and the food shows satisfied both in accordance with the civil legislation of application or in compliance with a court order or in execution of a regulatory agreement legally approved or by protocol·litzat ".
Article 5 modifies the article 46 of the law 5/2014, of 24 April, the tax on income of individuals, with the following wording: "Article 46 bonus for obtaining income from work, economic activities or the real estate capital the tax income forced labour who have gained, income from conducting economic activities or real estate capital income is deducted from the share of taxation a bonus of 50 percent of the amount that is to apply the tax rate of the tax on the amount of the basis of taxation of the required tax reduced in the amount corresponding to the reduction provided for in the first paragraph of section 1 of article 35 to what may be entitled.
This bonus may not exceed the amount of € 800. "
Article 6 modifies the section 4 of the article 50 of the law 5/2014, of 24 April, the tax on income of individuals, with the following wording: "4. The Ministry in charge of finances or the organization or the administrative organ that it deems will determine the percentage to apply the concept of the deductions and payments on account on the incomes of the work subject to the obligation to quote to the Caixa Andorrana de Seguretat Social in the terms and conditions to be determined by the regulations.

The regulations will determine the procedure that the tax obligation or the obligation to practice the retention on the income from work must continue in order to provide to the Ministry in charge of finance circumstances decisive for the calculation of the percentage to be applied by way of withholding or paying on account, as well as any changes in these circumstances. The entrance to the Ministry in charge of the finances of the deductions and payments on account on income from work, is done through the Caixa Andorrana de Seguretat Social, in the terms and conditions to be determined by the regulations, which may include the possibility of using forms or models of joint statement. For this purpose, the Ministry in charge of finance will inform the Andorran Social Security Box of retention rates or payment on account corresponding to taxable, so that these percentages are added to these forms or models of Joint Declaration, in which all the data included in the joint forms will be accessible and will be used solely and exclusively for the purposes of taxation for the management of this tax and compliance with social security regulations ".
Article 7 introduces a fourth additional provision in the law 5/2014, of 24 April, the tax on income of individuals, with the following wording: "fourth additional provision. Determination of income derived from certain financial assets, contracts of insurance, pension plans and social instruments, acquired or signed before the first day on which this is applicable law 1. For the purposes of determining the full income derived from financial assets acquired before the first day on which this Act is applicable, is taken as the value of the acquisition value of the asset market on 31 December 2014. For the determination of normal value in this market, the following rules apply: a) in the case of financial assets traded on an official market values, takes its value from the stock market to date of December 31, 2014.
b) in the case of financial assets representing non-capital raising, which are not included in the letter a) above, for the purposes of determining the total income generated in relation to these assets, it is understood that this has been generated in a linear fashion and, therefore, to determine the normal value of the market as of December 31, 2014 linealitza is the total income taking into consideration the time elapsed between their acquisition and the day of December 31, 2014.
c) in the case of financial assets arising from participation in the own funds of entities that are not included in the letter to) before, or in the area of the first additional provision, you take the theoretical accounting value resulting from the balance sheet for the last financial year of the company closed before the start of the first tax period in which it is to apply this law. The theoretical accounting value is the result of the annual accounts deposited, if appropriate, in the corresponding register of societies, and formulated in accordance with the accounting regulations and commercial law in force in the Principality of Andorra.
2. For the purposes of determining the amount of the full income from investment operations of capitalisation and life insurance or disability contracts signed before the first day on which this Act is applicable, will be calculated only the portion of such income to be generated from the first of January 2015.
To comply with what is predicted in the previous paragraph, the following rules shall be applied: a) in the case of the income to which reference is made in the letters) and d) of paragraph 3 of article 22, it shall be deemed that the part of the total income was generated before the first of January of 2015 will be the difference between the value of the mathematical provision at 31 December 2014 and the amount of the premiums up to that date.
b) in the case of the income to which reference is made in the letters b) and c) of paragraph 3 of article 22, made before the first day on which that tax is applicable, shall apply, for the purpose of determining the percentage applicable in order to determine the investment income, with the following rules: i. in relation to annuities , will take into account the age of the recipient of income to 1 January 2015.
II. In connection with temporary income, will be taken as to the duration of the period of time between the 1 January 2015 and the end date of your income tax return.
3. For the purposes of determining the amount of the full income from work from pensions and other similar benefits, excluding the met by the Andorran Social Security Box, what will referred to the letters c), d) and e) of paragraph 2 of article 12, derived from instruments signed before the first day on which this Act is applicable, will be calculated only the portion of such income to be generated from the 1st January 2015.
According to the stipulated in the previous paragraph, in order to carry out the calculation of the full income according with the provisions of paragraph 3 of article 12, the pension or benefit received will be reduced by the value of the mathematical provision for the person to whom you link the instrument on the date of December 31, 2014.
4. capital losses or negative returns to be generated in relation to the assets, operations, contracts, instruments or plans mentioned in the previous sections, and to be determined by applying the rules specified above, may not exceed the amount of the loss or negative performance which total result of applying the General provisions of the law ".
Article 8 introduces a fifth additional provision of law 5/2014, of 24 April, the tax on income of individuals, with the following wording: "fifth additional provision. Determination of the income corresponding to the benefits received from the Caixa Andorrana de Seguretat Social in relation to previous contributions on the first day on which this Act is applicable

1. For the purposes of determining the full income of work corresponding to the pensions and other similar benefits met by the Caixa Andorrana de Seguretat Social taxable who have begun to make contributions before the first day on which this Act is applicable, the amount of the pension or benefit is reduced in each tax period in which they are received, in a percentage of 1 percent for each year contributed before the first day on which it is to apply this Ley. To determine this percentage, the fractions of year will elevate to a year.
2. for the application of this reduction will take into account the following rules: a) the reduction will only be applied to taxable which, at the time of start to perceive the corresponding pension or benefit, have paid contributions to the Caixa Andorrana de Seguretat Social for a minimum period of 15 years.
b) the amount of the reduction applicable in each tax period may not exceed 30% of the pension or benefit received in the tax period in question ".
Article 9 introduces a new sixth additional provision in the law 5/2014, of 24 April, the tax on income of individuals, with the following wording: "sixth additional provision. Collaboration of the Caixa Andorrana de Seguretat Social determination of the retention rates and revenue to the Caixa Andorrana de Seguretat Social will collaborate in the process of determination of the retention rates and revenue to applicable account on the incomes of the work subject to the obligation to quote in this Case Andorra of Social Security, corresponding to the beginning of the first tax period in which it is to apply the tax on income of individuals , in the terms to be determined by the regulations. To this end, the Caixa Andorran Social Security will be able to use the information to open in his power and that may be relevant in order to determine these percentages ".
Article 10 is inserted a new fifth transitional provision in the law 5/2014, of 24 April, the tax on income of individuals, with the following wording: "fifth transitional provision. Dividends satisfied with charge to profits obtained before the application of the law 95/2010, of 29 December, of the income tax exemption provided for in the letter j) of article 5 is equally applicable to dividends and other income derived from the participation in equity, to which reference is made in paragraph 1 of article 22, satisfied by resident entities tax Principality of Andorra or Andorran law collective investment undertakings , charged to profits distributed not obtained or heritage items made before the first tax period in which it has been applied the law 95/2010, of 29 December, on the tax on companies ".
First final provision is introduced a new third transitory provision to the law 95/2010, of 29 December, on the tax on companies, with the following wording: "the third transitional provision. Exemption of dividends and income from entities residing in the Principality of Andorra tax charged to profits obtained before the application of this law shall be considered fulfilled the requirement established in the letter a) of paragraph 1 of article 20 in relation to dividends or shares in the profits from tax-resident companies the Principality of Andorra, which are subject to and not exempt from the income tax even though they have been satisfied with charge to profits distributed not obtained or heritage items made before the first tax period in which this law has been applied.
When you obtain an income from the transfer of a share or the dissolution of an entity owned or of separation as a partner, which is derived from the participation in a company tax resident in the Principality of Andorra acquired before the first tax period in which it has been applied this law, shall be considered fulfilled the requirement established in the letter a) of paragraph 1 of article 20 in respect of the holding period prior to the start of the first tax period in which has been to apply this law. "
Second final provision this law comes into force the day after being published in the official bulletin of the Principality of Andorra and is applicable to the tax periods that are started from the 1 January 2015.
However, the first final provision is applicable to dividends distributed or shares in the profits received from January 1, 2012, and the income from the transfer of shares or the dissolution of affiliated entities or of separation as a partner, when these operations have been formalized from 1 January 2012.
Casa de la Vall, 11 December 2014 Vicenç Mateu Zamora Syndic General Us the co-princes the sancionem and promulguem and let's get the publication in the official bulletin of the Principality of Andorra.
François Hollande Joan Enric Vives Sicília and President of the French Republic and the Bishop of Urgell Co-prince of Andorra Co-prince of Andorra