Law 18/2011, From 1 December, On The Modification Of The Law 94/2010 Of 29 December, On The Tax On Income Of Non-Tax Residents

Original Language Title: Llei 18/2011, de l’1 de desembre, de modificació de la Llei 94/2010, del 29 de desembre, de l’impost sobre la renda dels no-residents fiscals

Read the untranslated law here: https://www.bopa.ad/bopa/023080/Pagines/741F2.aspx

Law 18/2011, from 1 December, on the modification of the law 94/2010 of 29 December, on the tax on income of non-tax residents since the General Council in its session of December 1st of 2011 has approved the following: law 18/2011, from 1 December, on the modification of the law 94/2010, 29 December , of the income tax of non-tax resident exhibition of illustrations and the entry into force of the law on the tax on income of non-residents is the introduction of a new tax figure in the Andorran tax system, which has a special importance, both with regard to its economy internally and in international economic relations. However, since that applies have detected some technical deficiencies that should fix, to ensure a correct and efficient functioning in the tribute.

In particular, it fixes the mention that the tax does not have a personal nature but real, and is studied in the best way the cases of the responsibility for the payment of the tax, so they are removed when there is no obligation to retain and limited, in the case of the trustee or Manager of the property, only the income from its management.

On the other hand, and as the most important aspects, the law that regulates capital gains derived from the transfer of real property or rights over such goods who obtain non-residents without a permanent establishment mediation, only pay tax to the tax on capital gains on real estate transfer and not by this tax. So you get that there is no double taxation treaties and can keep the model of current taxation of profits derived from the assets or rights of this nature. This approach has required to modify the law 21/2006, of the tax on capital gains on the transfer of real estate, in the sense that the gains from real estate nature who have obtained non-residents without a permanent establishment are subject to the tax on capital gains, real estate and not to the tax on income of non-residents. It is a technical amendment which does not impact on the determination of the share of the tax on capital gains, the aim of which is to ensure that the incomes subject in this tribute did not stay on that one.

On the other hand, modifies the definition of investment income because the tax treatment is more clear. In this sense, the concept of Canon, defined according to the terminology that recommended the OECD, happens to be regarded as "other income" and subject to taxation by the tax on income of non-residents, although in a more reduced than the general. The basic reason to consider the fees subject to taxation lies in the fact that, in general, constitute a deductible expense of the income tax or the tax on the income from economic activities of the payer of such income. The principle of neutrality recommended that there is a minimum tax on this type of income to avoid empty of content are taxes that are the responsibility of the business income of the residents. In addition, the requirement of taxation of this income source with respect to non-residents follow the patterns of taxation at source recommended by the OECD, with respect to the distribution of powers to record them in the State in which they are charged. You should also bear in mind that this tax will top the tax fee that the State of the corresponding residence must meet the person who perceives this type of income, which does not imply any additional costs for the non-resident. So, this person should see recovered the Andorran tax tax fee that must be paid to the State where he lives.

It is important to note that the acquisitions to profit by mortis because they don't have to pay for this tax, as well as holding gains produced by the same name, since they are both exempt of taxes. It has also introduced some new cases of exemption, such as those relating to payments for pensions, the obtaining of prizes subject to taxation of the game, the gains from the transfer of shares is not significant in Andorran institutions, understood as a significant level of participation to the fact that this participation does not exceed 25 percent of the share capital of the company, as recommended to the OECD , among others.

As the last important points subject to modification by this law, we can make mention of the simplification of the treatment of non-residents operating through permanent establishment, from the subject to the tax from the remuneration of the directors and of the introduction of a general reduction in the determination of the tax base for the income of real estate capital, which are recorded by the communal taxes and that it is necessary to compensate for this reduction in the basis of taxation. In this sense, the rentals of real property are considered always income obtained without mediation of permanent establishment and are taxed according to the rules set out in chapter V of the law.

This law is made up of 22 articles, two additional provisions and a final provision.

Article 1 modifies the wording of article 1 of the law of personal income tax from non-resident tax, from 29 December 2010, which is worded as follows: "the tax on income of non-tax residents is a tribute of direct character that gravel, in the terms established by this law, the income obtained in the territory of the Principality of Andorra to the natural or legal persons tax non-residents in the area."

Article 2 modifies the wording of article 4 of the law on the tax on the income of non-resident tax, from 29 December 2010, which is worded as follows: "are taxable in this tax natural persons and legal persons tax non-resident in the Principality of Andorra who obtain income which, in accordance with this law, are considered to be generated in this area.

To this effect, are considered to be tax-resident in the Principality of Andorra legal persons defined in article 7 of the law on the tax on companies and individuals defined in article 8 of the law on the tax on the income from economic activities. "

Article 3 modifies the wording of article 5 of the law on the tax on the income of non-resident tax, from 29 December 2010, which is worded as follows: "responsible for


1. Respond in solidarity tax debt corresponding to the returns that have satisfied or the income of the estate or the deposit or the management of which has been entrusted to, respectively: a) the payer of income accrued in favor of taxable that operate without mediation of permanent establishment, or b) the trustee, the head or the Manager of the property or rights of taxable that operate without mediation of permanent establishment.

This responsibility does not exist when there is an obligation to withhold and pay to the account referred to in article 34, without prejudice to the responsibilities which derived from the condition of water absorbent.

2. not to be understood that a person or an entity meets a performance when is limited to make a simple mediation of payment. It is understood by "simple mediation of payment" the payment of an amount per account and order of a third party.

3. Notwithstanding the provisions of the previous section, are responsible for managing people rents or solidarity rights over immovable property of which is non-tax residents. This liability is limited to the rents or the compensation for the rights they manage.

4. in the case of the payer of income accrued without mediation of permanent establishment by the taxable non-tax residents, the actions of the Ministry in charge of finances can be understood directly with the person in charge, which is enforceable tax debt. The same procedure is applicable in the case of the trustee, the head or the Manager of the property or rights of the taxable non-tax residents, not intended for a permanent establishment.

5. income tax debts severally Respond pertaining to permanent establishments of non-tax resident taxable persons who, in accordance with the provisions of article 6, are their representatives.

6. When the lack of income tax debt of the tax attributable to the non-resident tax required to be actions and omissions of persons to whom this precept considered responsible, their behavior can be subject to corresponding sanctions, so that it may require the person in charge, along with the tax debt corresponding to the non-resident tax, the corresponding sanction.

7. The requirement of liability provided for in this article require a prior administrative act of Declaration of non-compliance with the compulsory tax should be notified in the manner provided in article 55 of the law on the bases of the Tax Ordinance, from 19 December, 1996. "

Article 4 modifies the wording of article 6 of the law of personal income tax from non-resident tax, from 29 December 2010, which is worded as follows: "1. The taxable tax non-residents are required to appoint a natural or legal person with residence in Andorra, to represent the Ministry in charge of finance in relation to their obligations to this tax when obtain income by means of permanent establishment or when , due to the amount or characteristics of the income obtained in the territory of Andorra to the tax required by the Ministry, thus forced in charge of finance.

2. The required non-resident tax attorney, or his representative, are required to communicate to the Ministry in charge of finances for the appointment, duly accredited, in the period of one month from the date of this appointment. When it is at the request of the Ministry responsible for finance, the appointment must be make and communicate within a period of one month from the notification of this obligation. The communication must be accompanied of the express acceptance of the representative.

3. In the case of breach of the obligation to the appointment provisions of the preceding paragraph, the Ministry in charge of finance may be considered representative of the permanent establishment who appears as such in the register of Companies or, if not there, those who are empowered to enter into contracts on behalf of the non-resident tax required tax. "

Article 5 modifies the wording of article 8 of the law of personal income tax from non-resident tax, from 29 December 2010, which is worded as follows: "Fact Generator 1. Constitutes the fact generator for the production of income, monetary or in kind, in the territory of Andorra, on the part of taxable of that tax, in accordance with what is established in the following articles.

2. Are not subject to this tax the interest and other income earned by the assignment to third parties of own capital referred to in the agreement between the Principality of Andorra and the European Community concerning the establishment of measures equivalent to those provided for in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments , approved by the law 11/2005, of June 13.

3. Either are not subject to this tax capital gains derived from the transfer of real estate property or rights over these assets to tax non-resident persons who act without mediation of permanent establishment, provided that they are subject to the tax is regulated by the law 21/2006, of 14 December, on the tax on capital gains on the transfer of real estate.

4. Will boast paid, except in the contrary, benefits or transfers of goods, services and rights that can generate income subject to this tax. "

Article 6 modifies the terms of paragraph 7 of article 11 of the law on the tax on the income of non-resident tax, from 29 December 2010, which is worded as follows: "7. The income from rents or transfers of use of real property are not understood obtained through permanent establishment and are taxed separately in accordance with the rules set out in chapter V of this law."

Article 7 modifies the wording of paragraph 2 of article 12 of the law on the tax on the income of non-resident tax, from 29 December 2010, which is worded as follows: "2." also are considered income from employment pensions and other similar benefits, when derived from a given occupation in Andorran territory or when they are met by a person or entity tax resident in the territory of Andorra or to a permanent establishment located in the area. Caps are considered to be public or private pensions met by reason of a previous employment, regardless that they are perceived by the worker or by another person. "

Article 8

Modifies the wording of article 13 of the law of personal income tax from non-resident tax, from 29 December 2010, which is worded as follows: "investment income are considered income in the Andorran territory investment income the following: a) dividends and other income derived from the participation in the equity of tax residents in Andorra. In particular, the term dividends, in the sense of this precept, includes the income of actions, the actions or the good of enjoyment, the stakes, the parts of the founder or other rights, except those of credit, which allow them to participate in the utilities of an entity to the status of partner, shareholder, partner or participant. This concept includes the proceeds from the sale of these securities.

b) interests, meaning that this term adopted in article 6 of law 11/2005 of 13 June, on the application of the agreement between the Principality of Andorra and the European Community concerning the establishment of measures equivalent to those provided for in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments When they are paid by persons or entities tax residents in Andorra or when to pay benefits of capital used in the Andorran territory.

c) yields from capitalization transactions and contracts of life insurance or disability contracted with institutions or entities tax residents in Andorra.

of) The income from participations in any organism of collective investment governed by law 10/2008, of 12 June, regulating collective investment bodies of Andorran law. This concept includes capital gains derived from the transfer of shares in this type of body. "

Article 9 modifies the wording of article 14 of the law on the tax on the income of non-resident tax, from 29 December 2010, which is worded as follows: "Other income 1. They are considered as income in Andorra yields derived, directly or indirectly, of real property located in the territory of Andorra or of rights relating to such property.

2. Also considered income in Andorran territory the satisfied by persons or entities tax resident in the territory of Andorra or by permanent establishments situated in that territory, or that are used in the territory of Andorra. Have the consideration of standards the amounts of any kind paid by the following concepts:-any concession or authorization of use or assignment or license of rights on patents, designs, models and industrial drawings, trademarks, domain names and other distinctive signs of the company, as well as other industrial property rights;

-any concession or authorization of use or assignment or license of rights on plans, formulas or secret procedures, of rights to information concerning industrial, commercial or scientific experience, including the techniques and methods of business, marketing or the concession of use of industrial, commercial or scientific equipment;

-any concession or authorization of use or transfer or license of copyright on literary, artistic or scientific works, including audiovisual productions and programs, applications and computer systems, as well as the neighboring rights of copyright;

– payments for the use of image rights.

3. Also considered income in Andorran territory the utilities or the contributions, whatever their name or nature, money or in kind, coming, directly or indirectly, of assets, goods or rights, the ownership of which corresponds to the required tax and that are not intended for economic activities carried out by this tax must, or derived, directly or indirectly , personal property or rights located in the Andorran territory.

4. Also considered income in Andorran territory holding gains arising from personal property situated in Andorra, of securities issued by persons or entities tax resident in the territory of Andorra or of rights that must be met or trainers in the Andorran territory. Specifically included in this section are capital gains from transfer of shares or participations in companies of Andorra.

5. Also considered income in Andorran territory remuneration paid to managers or to the members of the governing bodies of organizations of Andorra.

6. Are also considered income in Andorran territory all other income is not defined in the previous articles that come from satisfied services benefits to legal entities or individuals, who are entrepreneurs or professionals resident in Andorra, with the exception that the income corresponding to rights or benefits contracted, made and used outside the territory of Andorra.

7. It is not considered to be obtained in the territory of Andorra yields the following: a) are satisfied by reason of international sales of goods, including the mediation commissions on these sales, as well as the accessorial fees and related;

b) are satisfied to persons or entities not tax resident in Andorra to permanent establishments located abroad, charged to these establishments, when the corresponding benefits are linked with the activity of the permanent establishment abroad. "

Article 10 modifies the wording of article 15 of the law on the tax on the income of non-resident tax, from 29 December 2010, which is worded as follows: "exempt Income Are exempt from the following income: a) in the case of natural persons tax non-residents:-salaries and wages received by workers hired for non-tax resident companies established or resident in the Principality of Andorra , which refers to article 12, when they are subject in their entirety to the social security scheme of the Principality of Andorra and to remain in this scheme.

-All kinds of pensions met by the Caixa Andorrana de Seguridad Social.

-The benefits met by Andorran institutions, which are the result of retirement plans or social systems that have their origin in contributions made by direct debit to income from work or business or professional activities carried out in Andorra.


-The compensation as a result of civil liability for personal injury, legal or recognized in the amount legally. The same treatment is applicable to the compensation paid by the Government of Andorra for personal injury as a result of the functioning of public services.

-Compensation for dismissal made improperly, unfair or unjustified of the worker, in the amount established with mandatory in law 35/2008 of 18 December, of the code of labour relations, in its regulations or, where applicable, in the regulations on the execution of sentences.

-The benefits recognized in the non-resident tax required by the social security tax of Andorra or the entities that the overriding as a consequence of absolute permanent disability or severe disability.

-Public grants received for regulated studies, both in Andorra as abroad, at all levels and degrees of the educational system with the limits to be determined by the regulations.

-Literary, artistic or scientific awards relevant, with the conditions to be determined by the regulations.

-The proceeds of heritage that are set out due to a lucrative transmission mortis causa.

b) all investment income, which refers to article 13.

c) gains from transfers of shares, participations or rights in the capital of entities tax residents in Andorra, as long as the tax has been forced not a greater than 25 percent of the share capital or voting rights in the preceding twelve months at the time of the transmission.

d) gains derived from the transfer of the shares or shares in collective investment undertakings regulated by law 10/2008, of 12 June, regulating collective investment bodies of Andorran law, excluding the management entities of this type.

e) non-resident natural persons who receive awards that come from the game, provided that they are subject to taxation on the game established in the law of the game of bingo, from the 28th of November 1996.

f) acquisitions in the lucrative title of assets, titles or values to which you refer this article and also of the deposits, accounts and other financial products.

g) yields derived from the provision of investment services and payment, the main operational entities, authorized and auxiliary of the Andorran financial system. To this effect are investment services and auxiliary services which are defined in the law 13/2010, 13 may, on the legal regime of the investment banks and management companies of collective investment institutions.

h.) The income obtained in Andorran territory arising from financial operations referred to in paragraph (2) of the sixth additional provision of law 14/2010, of the 13 of may of the legal regime of the banking entities and basic administrative regime of the operating entities of the financial system, not referred to in the previous paragraphs. "

Article 11 modifies the wording of article 16 of the law of personal income tax from non-resident tax, from 29 December 2010, which is worded as follows: "forms of subjection and related-party operations 1. The taxable tax non-residents who obtain income through a permanent establishment situated in the territory of Andorra are taxed by the whole of the income attributable to that establishment, whatever the place of their obtaining, in accordance with the provisions of this law and the law on the tax on companies.

The taxable tax non-residents who obtain income without mediation of permanent establishment are taxed separately for each full or partial accrual basis of income subject to taxation, without it being possible to any compensation between these incomes, in the terms provided for in articles 25 to 35.

2. the transactions carried out by taxable tax non-residents with persons or entities linked to the application of the provisions of article 16 of the law on the tax on companies.

For that purpose, are deemed to be individuals or entities associated with those mentioned in paragraph 1 of article 16 of the law on the tax on companies. In any case, it is understood that there is a link between a permanent establishment situated in the territory of Andorra with its parent company, along with other permanent establishments of the aforementioned parent and with other persons or entities related to the parent company or its permanent establishments, whether they are located in the territory of Andorra as abroad. "

Article 12 modifies the wording of article 19 of the law of personal income tax from non-resident tax, from 29 December 2010, which is worded as follows: "determination of the basis of taxation The tax base of the permanent establishment shall be determined in accordance with the provisions of the income tax Act, without prejudice to the provisions of the following letters : a) for the determination of the basis of taxation are not tax deductible payments that the permanent establishment run to the parent company or any of its related entities or permanent establishments in fees, interest, commissions, paid in consideration for technical assistance services or for the use or transfer of assets or rights.

But what has been prepared previously, are tax deductible interest paid by permanent establishments of foreign banks to their parent company or to other permanent establishments, for the realization of its activity.

b) for the determination of the basis of taxation, is the reasonable part of the deductible expenses and general management of administration that correspond to the permanent establishment, and to correspond with the use of factors made by the permanent establishment, so are the rules of application provided for in article 16 of the law on the tax on companies on related-party operations. "

Article 13 modifies the wording of article 24 of the law of personal income tax from non-resident tax, from 29 December 2010, which is worded as follows: "Payments on account of permanent establishments Are taxable to act through a permanent establishment are subject to payment on account of the tax law on companies."

Article 14 modifies the wording of article 25 of the law of personal income tax from non-resident tax, from 29 December 2010, which is worded as follows: "basis of taxation


1. In general, the tax base of the tax corresponding to the yields obtained are taxable without mediation of permanent establishment is made up of the total amount of accrued income.

2. The tax base for the income of real estate capital is reduced by 20 percent.

3. The tax base corresponding to the income derived from operations of reinsurance is constituted by the amounts of the premiums ceded to reinsurance, non-tax resident, reassegurador.

4. The basis of taxation for capital gains arising from the transfer of property or rights located in Andorran territory is determined by applying to each asset impairment occurs, the rules set out in articles 26, 27 and 28.

5. In the event of the transfer of a right or right arising from an acquisition in profit, is left-luggage office as normal value acquisition value of market of the item purchased on the date on which they have purchased.

6. In the event of the transfer of a right or a right to profit, is left-luggage office as transmission value the market value of the goods or of the right at the time of the transmission. "

Article 15 modifies the wording of article 27 of the law of personal income tax from non-resident tax, from 29 December 2010, which is worded as follows: "rules of evaluation of economic gains in the transmission charges for 1. The value of the acquisition is made up of the sum of: a) the actual amount by which has carried out the aforementioned acquisition;

b) the cost of the investments and improvements made in the goods purchased and the expenses and taxes related to the acquisition, excluding the interests that have satisfied the acquirer.

2. The value of the transmission is the real amount by which has effected the transfer. This value must be deducted the expenses and taxes that are required in the transmission referred to in the letter b) of paragraph 1 when are pleased to transmitent. For real amount of the value of alienation takes the indeed satisfied, if not is lower than the normal market value, in which case this value prevails. "

Article 16 modifies the wording of article 29 of the law of personal income tax from non-resident tax, from 29 December 2010, which is worded as follows: "share of taxation The tax share is obtained by applying to the tax base determined in accordance with article 25 the following tax rate: a) in general , the 10 to 100;

b) in the case of income derived from operations of reinsurance, the 1.5 to 100;

c) in the case of income paid in concept of Canon, the 5 per cent. "

Article 17 modifies the article 30 of the law on the tax on income of non-resident tax, from 29 December 2010, which is worded as follows: "The settlement fee matches the share of taxation. However, cases of transmission of social investments or actions, subject effectively to this tax, it has been bumped off the tax on capital gains on the transfer of real estate settlement fee of this tax will be reduced by the amount of the settlement quota met by the tax on capital gains on the transfer of real estate. "

Article 18 deleted article 31.

Article 19 article 32 of the law is modified the income tax of non-tax residents, from 29 December 2010, which is worded as follows: "accrual basis 1. The tax is paid: in) if it comes to yields, when are required or on the date of payment if this date is earlier.

b) in the case of property gains, when took place the patrimonial alteration or transmission.

c) In all other cases, when the corresponding income are required. "

Article 20 article 33 of the law is modified the income tax of non-tax residents, from 29 December 2010, which is worded as follows: "Declaration 1. The taxable non-tax residents who obtain incomes in the Andorran territory without mediation of permanent establishment are required to submit a declaration, with the determination and payment of the corresponding tax due, for this tax in the form, the site and the terms established by the regulations.

2. You can also make the statement and the payment of debt responsible for solidarity defined in article 5.

3. Not required in the taxable non-tax residents to submit the Declaration corresponding to the income in respect of which he had practiced the retention or would have made the payment on account you refer the articles 34 and 35.

4. There is No obligation to declare the income that are exempt under the provisions of letters a), b), d), f) and h) of article 15 of this law. "

Article 21 modifies the wording of article 35 of the law on the income tax of non-tax residents, from 29 December 2010, which is worded as follows: "revenue and retention policies to account 1. The subjects required to retain retain or enter the account an amount equivalent to the result of applying the arrangements provided for in this law to determine the tax debt corresponding to the taxable tax non-residents without a permanent establishment.

2. The subjects required to retain or to enter account must assume the obligation to make the payment to the Ministry in charge of finance, without the breach of this obligation are I can excuse.

3. You don't have to practice the retention or payment on account in respect of: a) the income that are exempt by virtue of the provisions of article 15 or an agreement to avoid double taxation which is applicable, b) income satisfied or paid to taxable non-tax residents without a permanent establishment, when establishing the payment of the tax by the tax liable or responsible for solidarity.


4. The subject required to retain and practice income account must submit the statement and the payment have to be made to the Ministry in charge of finances in the place, the way and the deadlines laid down, of the amounts retained or the payments on account made, or negative declaration when appropriate. In addition, you must submit an annual summary of the withholding tax and the revenue to the content to be determined by the regulations. However, there is no obligation to declare the income that are exempt under the provisions of letters a), b), d), f) and h) of article 15 of this law.

The subject required to retain and practise payments on account are required to keep the relevant documentation and to issue a certificate proving the withholding tax or payments on account made. The scope of these formal obligations has been to establish the regulations. "

Article 22 transitional provision is deleted from the law of income tax of non-tax residents, from 29 December 2010.

First additional provision introduces the following changes to the law 21/2006, of 14 December, on the tax on capital gains in the real estate conveyances: deleted the section 4 of article 3, Fact Generator, of law 21/2006, of 14 December, on the tax on capital gains on the transfer of real estate.

Second additional provision modifies article 9, tax rate, of the law 21/2006, of 14 December, on the tax on capital gains on the transfer of real estate, which is worded as follows: "tax rate is the tax rate below, depending on the years in which the estate has been in the property of the tax obligation : a) A rate of 15% up to a year.

b) A rate of 14% from a year and a day and 2 years.

c) a type of 13% between 2 years and one day and 3 years.

d) A rate of 12% for 3 years and a day and 4 years.

e) A rate of 10% from 4 years and one day and 5 years.

f) A rate of 8% between 5 years and one day to 6 years.

g) A rate of 6% between 6 years and one day and 7 years.

h) A rate of 4% from 7 years and one day and 8 years.

I) a type of 2% from 8 years and one day and 9 years.

j) a type of 1% between 9 years and 1 day-10 years.

k) a type of 0% from 10 years ago.

The number of years is determined, and adjusts for excess, date date on which the property or the right of the property tax has been forced. To this end, the investments calculated with the same age that the property. "

Final provision this law comes into force the day after being published in the official bulletin of the Principality of Andorra apply from 1 January 2012.

Casa de la Vall, December 1, 2011 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.

Joan Enric Vives Sicília Nicolas Sarkozy President of the French Republic and the Bishop of Urgell Co-prince of Andorra Co-prince of Andorra