Law 19/2011, from 1 December, on the modification of the law 96/2010, of 29 December, of the tax on the income from economic activities since the General Council in its session of December 1st of 2011 has approved the following: Law 19/2011, from 1 December, on the modification of the law 96/2010 , 29 December, of the tax on the income from economic activities preamble the approval of the law on the tax on income of economic activities implies the introduction of a new tax figure in the Andorran tax system which has a great significance both in terms of the internal economy as international economic relations. However, it should be borne in mind that this affects tribute to a very direct in the business fabric of the Principality, which forces you to pay attention that no negative form will result in the growth of the Andorran economy. On the other hand, some technical deficiencies have been detected in the text of the law should be addressed in order to ensure the correct operation and efficient tribute.
The object of this Bill is to amend the law that regulates the tax on the income from economic activities, in particular modify some technical aspects in correlation with the changes it introduces the law on modification of the law 95/2010, of 29 December, on the tax on companies.
The most significant changes are the following: first, it clarifies the concept of economic activity to grant more legal security and define when you should consider economic activity the activities of lease and sale of real estate, fixing quantitative limits with respect to the amount of the rent and the object of sale, respectively. Since the law on modification of the law on the tax on companies determines that the remuneration of the directors or the members of the governing bodies of the organizations of Andorra are benefits derived from a commercial relationship, these payments have to integrate as an economic activity income. So, when the articles of Association determine the obligation of remuneration of the management body, this compensation must always be deductible from the corporate tax, and to follow the principle of neutrality in the tribute, this reward of commercial nature is considered to be an income from an economic activity subject to this tax, when the recipient is an individual.
Secondly, and in the same way it is done with the income tax, it introduces a special scheme of taxation base objectively in replacement of the simplified scheme. The reason is clear, while the simplified system establishes that the presentation of the Declaration of the income tax simpler, objectively system truly simplifies the calculation to determine the base of taxation and establishes a estimativo percentage of costs for small businesses, a fact that helps to determine the taxable taxes and the Administration in order to control them. This scheme is voluntary, and to avoid improper use it is anticipated that the exercise of the option corresponding to the required a minimum tax for three years, with the exception that does not comply with the conditions required by law.
Thirdly, significant incentives are introduced with respect to the creation of jobs and new investments, the aim of which is to encourage the growth of the business fabric of the Andorran companies.
Fourth, simplifying the regulation of payment on account and establishes the obligation of payment in the time when they do not have to make the payment of taxes. It also regulates the obligation to make a payment on account in the first year of application of the tax. This payment, which does not have a base or share of taxation of the previous year, is calculated on a percentage that is applied to the result of the immediately preceding accounting year. For taxable that is host to the special scheme for the determination of the tax base, the percentage of calculation is different for each type of activity and is applied to the figure of income corresponding to the last year.
Last modified, which has a special significance, established by the same regime that the provisions of the income tax in respect of the capital gains from real estate nature. Thus, the capital gains arising from the transfer of real property or of rights over the same goods are subject to the tax on capital gains. However, the determination of the basis of taxation on the tax on the income from economic activities makes it necessary to integrate in the basis of taxation of the benefits that come from the transfer of property or of rights on the same goods for economic activities, the fact that capital gains arising from these assets shall be subject to both taxes at the same time. In order to avoid the double taxation that occurs due to this fact, the amount of the fee paid to the tax on capital gains is entirely up to the share of the tax on the income from economic activities, even in cases where the payment of the first tribute to be superior to the one that corresponds to the gain in the second, the tribute of the income tax. So, in that there is no double taxation treaties and can keep the model of current taxation of profits that come from the property or rights of this nature.
This law is made up of 9 articles and a final provision.
Article 1 modifies article 5 of law 96/2010 of 29 December, on the tax on the income from economic activities, which is worded as follows: "Article 5 economic activities 1. Are economic activities which involve the Organization for its own account of human and material factors of production or of any of these factors of production, in order to intervene in the production or distribution of goods or the provision of services.
2. The activity of the lease of real property only has the consideration of economic activity when the gross income from the rents exceed the figure of 40,000 euros a year for the entirety of the properties that rent the required tax law.
3. The activity of sale of property on their own behalf only has the consideration of economic activity from the moment on what will make more than five real estate transfer tax for the period.
4. Also considered economic activities the remuneration you get individuals to be administrators or members of the governing bodies of companies or of other entities. "
Article 2 modifies article 11 of law 96/2010 of 29 December, on the tax on the income from economic activities, which is worded as follows: "Article 11 determination of the basis of taxation 1. The basis of taxation is determined by the direct method of determining, by the system of determination objective and, moreover, by the indirect method of determining, in accordance with the provisions, in the latter case, article 29 of the law on the bases of the Tax Ordinance, from 19 December 1996.
2. in the direct method of determining the basis of taxation is calculated according to the provisions of article 12 of this law.
3. In the system of the tax base is calculated objectively applying the rules laid down in article 13 of this law. "
Article 3 modifies section 1 of article 12 of law 96/2010 of 29 December, on the tax on the income from economic activities, which is worded as follows: "1. The determination of the income from economic activities in the form of direct estimation is done in accordance with the rules of the income tax, without prejudice to special rules laid down in this law."
Article 4 modify the articles 13 and 20 of the law 96/2010 of 29 December, on the tax on the income from economic activities, which is drawn up, respectively, as follows: "Article 13 special scheme of taxation base objective determination 1. Are taxable in that its turnover in the preceding financial year does not exceed 300,000 euros, will be host to the special regime provided in this article.
2. Notwithstanding the preceding paragraph, that described in for cases of taxable to develop professional activities, the turnover to which it referred in the previous section, so that they can benefit from this special scheme is 150,000 euros.
3. In the case of the previous year has a duration of less than 12 months, for calculation of the limits mentioned above, must take into account the turnover corresponding to the period of 12 months.
4. The option of hosting this objectively scheme is voluntary, but if you do so, this regime will be mandatory for all economic activities that make the tax required. The required tax law that will want to benefit from this scheme you must notify the Ministry responsible for Finance before the end of the previous year which have to take effect, in the terms to be determined by the regulations. Once you have opted for this scheme, it should be kept during a minimum period of three years, and to leave it there needs to be give up through a communication to the Ministry in charge of Finance before the end of the previous year which is to take effect. In the case of start of activity, the option to qualify for this scheme must be made during the month following the date of commencement of activity. For the first year of application of this law, the deadline to apply for this scheme is two months from the entry into force of this law.
5. The determination of the basis of taxation in the form of objective determination is done by the sum of the net performance of the activity and the result, positive or negative, of the extraordinary results obtained for the transmission of fixed assets in the activity.
6. The performance of the activity is calculated by the difference between the revenues that come from the same, calculated in accordance with the rules established by the income tax, and the percentages estimatius of the expenses listed below, depending on the type of economic activity that takes place, applied to the amount of income from the activity. The figure does not include the income from the transfer of fixed assets used in the activity, which is additional to the result of the performance of the activity.
7. The percentages of applicable expenses are as follows: a) in the case of activities that are strictly commercial, deductible expenses is quantified in 80 percent of the income figure.
b) in the case of remuneration to administrators or members of the governing bodies, the deductible expenses was quantified in 2 percent of the amount of the remuneration.
c) in other activities the deductible expenses is quantified in the 40 percent of the income figure.
These effects are strictly those business activities which consist in the delivery of the goods without that they have been the subject of previous transformation.
8. In the event that the tax must develop diverse activities, the calculation is done by activity activity and are integrated into a single payment by each tax liable.
9. Are included in the basis of taxation of this regime, the acquisition of property or rights affects the activity, acquired in profit.
Article 20 Attribution of the temporary income and expenditure that determine the income to be included in the basis of taxation in the form of direct determination and in the form of objective determination is allocated in accordance with the regulations of the general accounting plan. "
Article 5 modifies article 23, of the law 96/2010, of 29 December, of the tax on the income from economic activities, which is worded as follows: "Article 23 settlement Payment and deduction to eliminate internal and international double taxation 1. The settlement is the result of subtracting the tax fee deduction for internal and international double taxation regulated by this article and the deduction for investments and the creation of jobs that regulates the following article. The settlement fee cannot be negative and as a minimum is zero amount deposited.
2. The payment of taxation is reduced accordingly to the amount of the tax fees met by the tax obligation to the communal tax on income from tenants, to the communal tax on the moment of commercial activities, business and professional, and the tax on capital gains on the transfer of real estate corresponding to incomes that have been integrated into the tax base of this tax.
3. When in the basis of taxation of the income tax law required integrated and recorded abroad, is deducted from the payment of tax the least of the two following amounts: a) the cash amount paid abroad for reasons of burden of similar characteristics to this tax that has to be subject to taxation the tax required.
b) the amount of the tax that would have been paid in the Principality of Andorra to the above-mentioned income if they had obtained in Andorran territory.
For the purposes of the calculation of this amount, the tax base corresponding to the foreign income is determined in accordance with the rules of this tax, and are solely attributable to this basis of taxation expenses specifically connected with the generation of income mentioned.
4. The amount of the tax paid abroad is included in income in accordance with the provisions of the preceding paragraph and, likewise, is part of the basis of taxation, although is not fully deductible.
5. When the required income tax on the tax period has obtained several overseas, the deduction will be calculated jointly for all.
6. The amounts not deducted for lack of payment of taxation can be deduced in the three tax periods that subsequently have been completed.
For this purpose, the tax obligation to prove the origin and the amount of the deduction that intend to carry out by the display of appropriate documentary, regardless of the period in which originated the right to deduction.
7. Without prejudice to the established in the previous sections of this article, when in previous tax periods tax rents NET has obtained the required negative through a permanent establishment abroad that have been integrated in the basis of taxation of the entity, the deduction referred to in paragraph 3 only applies later in respect of income obtained for the permanent establishment mentioned from the moment in which it exceeds the amount of these negative incomes.
8. The provisions of this article do not apply in relation to profits or gains arising from collective investment institutions referred to the law 10/2008 of 12 June, regulating collective investment bodies of Andorran law or non-tax resident organizations of similar nature in the regulated by this law. "
Article 6 modifies the article 24 of law 96/2010, of 29 December, of the tax on the income from economic activities, which is worded as follows: "Article 24.
educció for creation of jobs and investments 1. Are taxable can diminish the share of taxation the following amounts: a) the result of multiplying the amount of 3,000 euros per person increase means annual fixed template that has the required tax law. For this purpose only calculated the labour contracts signed in Andorra and subject to labour legislation in Andorra. For the determination of the average increase of staff, it is estimated the average staff prorratejant the number of people by the days of the year that are contracted in employment relationship for the required tax and compares to the average staff of the previous year, determined in the same way. This increase means of staff must be kept in the year subsequent to the closing of the financial year. In the case that does not meet this increase means template, the tax must have to enter the amount of the deduction applied, together with the late payment penalty.
b) The result of applying the 5 per cent to the value of the new investments made in Andorra of fixed assets to the affected business activity. These assets must be keep for a minimum of five years from the time they purchase. In the event that does not comply with the maintenance of the investment for the minimum period of five years, the tax must have to enter the amount of the deduction applied, together with the late payment penalty.
c) deductions provided for in this article, not applied for insufficient fee, can be deducted from the share of taxation of the three subsequent exercises. "
Article 7 modifies article 25 of law 96/2010 of 29 December, on the tax on the income from economic activities, which is worded as follows: "Article 25 payment on account 1. The month of September are taxable must be made a payment on account of the liquidation corresponding to the tax period which is in progress the first of September.
2. The payment on account will be calculated by applying the percentage of 50 percent on the settlement of the immediately preceding financial year. In the case that the previous period has a duration of less than twelve months, the payment on account will be made taking into account the proportional part of the settlement of previous periods to complete a period of twelve months.
3. The payment on account has the consideration of tax debt in accordance with the provisions of article 33 of the law on the bases of the Tax Ordinance. "
Article 8 of the transitional provision modifies the Law 96/2010, of 29 December, on the tax on the income from economic activities, which is worded as follows: "transitory provision. Payment on account during the first year of application of the tax for the first year of application of the tax, is required to pay that is calculated by applying the rate of 2.5 per cent on the previous year as a result of the accounting tax period, determined according to the rules provided in law 30/2007, of December 20, the accounting for entrepreneurs.
However, the taxable hosted the special scheme should objectively determine the payments to the account for the first year of application by applying on the number of ordinary income of the activity the following percentages: a) in the case of commercial activities, the 0.5 percent.
b) in the case of remuneration to administrators or members of the governing bodies, the 2.45 percent.
c) in all other activities, the 1.5 percent. "
Article 9 derogates the fourth final provision of law 96/2010 of 29 December, on the tax on the income from economic activities, which is without effect.
Final provision. Entry into force this law enters into force the day after being published in the official bulletin of the Principality of Andorra and is of use to the exercises that will start from January 1, 2012.
Casa de la Vall, December 1, 2011 Vicenç Mateu Zamora Syndic General
We the co-princes the sancionem and promulguem and let's get the publication in the official bulletin of the Principality of Andorra.
Nicolas Sarkozy Joan Enric Vives Sicília and President of the French Republic and the Bishop of Urgell Co-prince of Andorra Co-prince of Andorra