Act 7/2006, of 21 June, amending the law on the tax on real estate transfers since the General Council in its session of June 21, 2006 has approved the following: Act 7/2006, of 21 June, amending the law on the tax on real estate transfer preamble the property transfer tax real estate approved on 29 December 2000, does not need major changes or modifications in the course of his life. But after nearly five years since its entry into force, have been springing up some issues that have been reflected in the administrative doctrine that, throughout this time, has been broadcasting, and that has allowed us to establish a correct application of the tribute. These issues have been around the interpretation and management of taxes, which recommended to review and adapt the text of the law to the needs and to the demands posed these questions.

The first amendment refers to the transfer of shares and shares of certain types of companies, including that by reason of the transmission holds a minimum proportion of the share capital, in order to be able to take from this threshold there is something equivalent to a transfer of real property in nature. The non-existence of this least implies that any transfer of shares and/or of shares of this type of entities is subject to taxation, to record certain types of savings, channelled through real estate investment companies.

Another modification is the relative to the promises of sale where it is expected to pay a price higher than 20 per cent of the total price that has been agreed. In this case, the tax is required in its entirety as if it were the transmission of the property irrespective of the moment in which takes place the formalization of the sale.

On the other hand, modifies significantly the article 4 on exemptions, both from the point of view of formal content. Of all the exemptions should highlight the following: the inclusion of cases of exemption on real estate property transfer made in favor or parapublic entities of public law, and in favor of the Church; the inclusion of tax exemptions in favor of stable partnerships to equalize them to exist for cases of marriage, as established by law 4/2005 amending the stable partnerships, from 21 February; the exemption of real estate transmissions made in favour of non-profit entities and their associations; and also the inclusion of a new event that affects certain acquisitions that should constitute the first residence for people with a limited income, as long as the price of the apartment does not exceed a threshold. In order to allow an update of the values and criteria of this exemption, is delegated this authority to the law of the general budget. It also modifies the wording of the text relating to the contributions of property or rights to real estate companies, and limited the application of the exemption to specific cases. This law also contains exemptions that were introduced in the law 6/2004 of specific amendment of the law on the tax on real estate transfers, on 14 April, and thus derogates the content of the latter law.

In addition, the law provides some technical changes in the articles of incurrence and basis of taxation for the purpose of adjusting these articles with the new changes introduced.

Finally, it includes a new event of infringement by defrauding that takes into account those cases in which the difference of values exceeds certain thresholds between the declared value and the actual value checked by the administration. Likewise, updates the amount of penalties and converted to euros.

This Act consists of seven articles that modify some aspects of the tax, of a transitional provision, of a repeal and final provision.

Article 1 1. The letter a of paragraph 2 of article 3, Fact Generator, is drafted as follows: "the transmission of shares or of shares of companies, as well as the establishment or transfer of real rights on these shares or shares when at least 50 percent of the assets of these companies are made up of real estate property or property rights about the same and that as a result of the transfer of shares or of shares, or the establishment or transfer of property rights about the same, the acquirer will have more than one fifth of the share capital of the company or of its voting rights. "

2. Paragraph 4 of article 3, Fact Generator, is modified in the following way: "for the purposes of this law, on the promises of sale where it is expected to pay a price higher than 20 per cent of the total price that has been agreed upon, it will clear off all of the real estate transfer tax as if it were of the transmission of the property irrespective of the moment in which takes place the formalization of the sale.

At the time of the signing of the definitive contract of sale will report the document proving the payment of this tax. "

Article 2 in article 4, Exemptions, is worded as follows: "Are exempt from the tax: 1. The transmission of real estate and the constitutions and transfers of real rights on the same goods, made in favor of the General Council, of the Government, of the common, quarts or parapublic entities of public law, as well as those made in favour of the co-princes acting heads of the State.

Semi-public bodies or public law are defined in article 3 of the general law on public finance.

2. The transfer of real estate and the constitutions and transfers of real rights on the same goods made in favor of the Church.

3. The transmission of real estate and the constitutions and assignment of rights made by the spouses to the marital community, which perform any of the spouses to the other within the framework of the amendment of the conjugal community and, in general, the awards of property and rights that are carried out within the framework of the dissolution and liquidation of the economic regime of marriage.

4. The constitutions or transfers of real rights guarantee.

5. The free transfer of real property as well as the constitutions or transfers of real rights on the same, carried out between spouses, between


people who make up the stable partnerships, regulated by law 4/2005, of 21 February, qualified the stable partnerships, or those made between individuals who have a degree of kinship by blood or adoption in downline, ascending and/or collateral up to third grade.

6. The free transfer of shares or of shares of companies in which more than 50 percent of the assets is comprised of real estate property or property rights about the same, carried out between spouses, between people who integrate the stable partnerships, regulated by law 4/2005, of 21 February, qualified the stable partnerships , or those made between individuals who have a degree of kinship by blood or adoption in downline, ascending and/or collateral up to third grade.

7. The contributions of real estate or real rights on the same societies in which all shareholders have between them a kinship by blood or adoption in downline, ascending and/or collateral to the third grade or are spouses or are people who integrate the stable partnerships, regulated by law 4/2005, of 21 February amending the stable partnerships.

8.1. in transmissions of real estate between societies in which all its members have between them a kinship by blood or adoption in downline, ascending and/or collateral to the third grade or are spouses or integrate the stable partnerships, regulated by law 4/2005, of 21 February.

8.2. The contributions of real estate or real rights on the same goods made to companies of the same group.

For the purposes of this law, are part of the same group the companies that participate in other companies by a percentage greater than 50 percent of its share capital or of the voting rights.

9. The lucrative transmissions of real estate and also the constitutions or lucrative transfers of real rights on the same goods made in favour of non-profit entities or in favor of associations referred to in the law of associations, of 29 December 2000, provided that these associations are registered in the register of associations.

10. check that transmissions are administered for the redistribution of the land of his property that have been contained in a unit of action defined in the urbanism plans, in application of the provisions of the general law of spatial planning and urbanism and the regulations that develop.

11. transmissions, onerous or profits, of real property made in favor of persons, provided that the attendance of the following conditions: a) the acquirer has the Andorran nationality with effective residence in the Principality of Andorra, or if you're abroad stating a minimum of legal, permanent residence and continued in the Principality of Andorra in 5 years.

b) the real estate is the first acquisition of housing and you have to set up a regular and permanent housing of the acquirer.

Is included in the concept of the housing estate which is the usual and permanent housing, parking, storerooms and the annexes to these accessories last, if purchased together.

It is considered the first acquisition for housing the first transmission of property in favour of the acquirer.

It is considered a regular and permanent housing that serves mainly of permanent residence and of the acquirer and the set of people who live together, regardless of whether there is a relationship of kinship or not, within a period greater than six months and one day per calendar year.

The House should be the usual and permanent housing for a minimum period of 4 years from the time of the occupation.

In the event of non-compliance of the period of 4 years referred to in the preceding paragraph, the tax must have to enter the tax debt arising from the transmission, including the interests of corresponding delay. For these purposes, the prescription of the tax will be counted from the date on which the non-compliance occurs.

The purchaser must occupy the home within a maximum period of 6 months after the acquisition.

c) That the acquirer has an annual income derived from a salary, work for themselves, a pension or other income that does not exceed two and a half times the monthly minimum wage anualitzat, or that the whole of the annual income, the same concepts, of all the people who purchase the housing does not exceed four times the monthly minimum wage anualitzat.

d) that the value of the property does not exceed 360,000 euros.

e) That the acquirer does not have outstanding debts for payment with the general administration.

The purchaser must apply for the exemption to the Administration and must comply with formal conditions and procedures to be determined by the regulations.

f) in the event that the acquirer or any family member or person in charge who lives suffers a disability, according to the provisions of article 4 of the law on guarantees of the rights of persons with disabilities on October 17, 2002, the values entered in sections c and d)) have increased by 20 per cent. "

Article 3 modifies the paragraph 3 of article 5, Incurrence, which is worded as follows: "Notwithstanding the provisions of the previous sections, for the promises referred to in paragraph 4 of article 3 of this law, the tax is payable at the time of the completion of the promise. The completion of the transfer tax payable not final. "

Article 4 1. The first paragraph of section 3 of article 7, the basis of taxation, is worded as follows: "for the purposes of this law, the establishment or transfer of real rights of usufruct is valued as follows:" 2. In paragraph 7 of article 7, the basis of taxation, is worded as follows: "in the case of promises of sale or purchase options referred to in paragraph 3 of article 3 , the tax base is constituted by the price consigned to the promise, or choice, with a minimum of 10 percent of the value of the good.

In the case of promises of sale referred to in paragraph 4 of article 3, the tax base is constituted by the real value of the asset at this time. "

3. Add a new paragraph 10 in article 7, based on taxation, with the following wording: "in the case of transfers of shares or of shares of companies, set out in the letter a) of paragraph 2 of article 3, the tax base is the proportion of the capital represented by the shares or


shares or the voting rights they hold as a result of the transmission which constitutes the fact generator, applied to the total actual value of the shares or shares of the company.

In the case of constitutions or transfers of real rights on these shares or participations, the tax base is the result of applying the rules set out in the previous paragraph, taking into account the value of the right over the shares or participations in accordance with the provisions of paragraphs 3 and 4. "

Article 5 adds one letter of the paragraph 2 of article 18, infractions and sanctions, with the following wording: "to make the transfer of a right or a right by declaring a value that, checked by the Administration, resulting in a difference that exceeds 50% of the declared value of the real estate built or real law on the same or the 100% in the case of land not occupied."

Article 6 modifies the article 19, determination of the sanctions, which is worded as follows: "1. The simple offences will be penalize with a fine of no less than 500 euros or more than 3,000 euros.

2. The offences of defrauding it penalize with pecuniary fine consisting of 25 to 100 resulting tax debt, plus the corresponding delay interests. "

Article 7 modifies the second additional provision is drafted as follows: "the law of general budget you can update the values and meet the criteria of the exemption established in paragraph 11 of article 4, as well as modify the tax rate and the amount of the penalties established by this law."

Transitional provision The preparatory contracts, promises of sale or purchase options where they are expected to pay a price higher than 20 per cent of the total price that has been agreed for the sale, or they can get indefinitely or for a period exceeding 5 years that have been cleared before the entry into force of this law, shall be governed in accordance with the provisions of paragraph 4 of article 3 of the law on the tax on real estate transfers , 29 December 2000.

Repealing provision Is repealed the law 6/2004 of specific amendment of the law on the tax on real estate transfers, on 14 April, and any provision of equal or lower rank which contradict the provisions of this law.

Final provision this law shall enter into force the day after being published in the official bulletin of the Principality of Andorra.

Casa de la Vall, June 21, 2006 Joan Gabriel i Estany 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 Jacques Chirac President of the French Republic and the Bishop of Urgell Co-prince of Andorra Co-prince of Andorra