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Law Of Indirect Tax On Banking And Financial Services, 14-5-2002

Original Language Title: Llei de l'impost indirecte sobre la prestació de serveis bancaris i de serveis financers, de 14-5-2002

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The indirect tax law on the provision of banking services and financial services since the General Council in its session of 14 May 2002, has approved the following: law on the indirect tax on banking and financial services exhibition of illustrations and the indirect tax law on the provision of services of 13 April 2000, establishes the bases of an indirect taxation on the services and fixes a maximum period of two years to be developed in all sectors.

On 13 April 2000, and later, on 15 December 2000, the General Council approved the law regulating modules applicable to banking institutions in the framework of the law of sales tax on the provision of services. This law developed the sales tax on the provision of services to the banking and financial services provided by banks and determined the payment basis corresponding to the services provided by the banks by fixing a strict determination system which established specific modules for the banking sector.

Even though the desired module system neutrality in relation to the management policies, in practice, this system requires a constant adaptation of the calculation formula used, in order to achieve maximum efficiency taking into account the changes in the financial structure of balance sheets of the banks and the evolution of these over the last few years. At the same time, it became necessary to update anyalment the relative importance of each variable used for the system to reflect a burden efficiently on the provision of banking and financial services of the entities that are provided. These factors, together with the need to expand the scope of the field of application of the law across the financial sector, have made it necessary to adapt the system of modules to the specificities of the sector, and these are the most significant elements that make up this law.

The objective of this law is to establish the foundations for an indirect tax system preserving a neutrality in relation to the management of all entities in the financial system that provide the services recorded for this law. The method used to record the entirety of the services carried out by the financial system in general different, from the point of view of those who receive, among the services with explicit consideration and services with consideration is implied. The services with explicit consideration mainly consist of all those services that the companies of the financial sector to lend to their customers and for which, usually, you charge a Commission. With respect to the services with implicit consideration, its value is integrated in the interest rates of deposits and credits, and this highlights the need to differentiate between the cost of money and the value of the services performed.

This law determines the settlement fee objectively, which is estimated, on the basis of economic and financial figures, the value of the services performed. Likewise, the tax takes into account, in calculating the settlement fee, the fees of indirect taxes borne in order to carry out the services subject to the tax. However, this fee supported, also it is estimated by means of an objective determination system.

Finally, in the event that the financial and banking entities are part of the same group, the law provides for the mechanism of consolidated statement, simplifying the system of payment of the tax.

The law consists of a chapter, and composed of two articles which establish the General provisions; one chapter II, which will determine the essential elements of the tax, consisting of nine articles; one chapter III, with four articles, where you collect the obligations of taxable in relation to this tax; one chapter IV, which establishes the system of management, settlement and control of the tax, with three articles, and a chapter V relating to the violations and penalties, with two articles. Also part of the Act two additional provisions, a transitional provision, repeal and final provisions a two.

Chapter i. General provisions Article 1 legal status 1. The indirect tax on banking and on the provision of financial services is a tribute of indirect nature that record the services defined in this law.

2. This tax is governed by the provisions laid down in this law, the regulations and other provisions that develop, and by the law of sales tax on the provision of services of 13 April 2000.

Article 2 territorial scope this tax is applied to the rendering of services defined in this law that are carried out in the territory of Andorra.

Chapter II. Essential elements of the tax Article 3 Fact Generator are subject to the tax benefits of banking services and the performance of financial services are defined in the following article, made by banks or financial institutions.

Article 4 the concept of banking services and financial services 1. It is understood to banking and financial services to all those who are included in the financial legislation and, particularly, in law regulating the powers of the various operational components of the financial system.

2. Without this relationship have restricted, are banking services or financial services related to the following matters: a) the recruitment of tanks b) the granting of loans and credits c) management on behalf of a third party) Are services related to the means of payment (credit cards, traveller's cheques, etc.)

e) operations in the stock markets and currencies (business administration and safekeeping of securities, etc.)

f) financial mediation g) financial advice h) The currency exchange and) the granting of guarantees and similar j) the provision of related services to the banking and financial activity Article 5 taxable Are taxable to that tax the banks, non-banking financial institutions-specialised credit, investment and financial institutions financial institutions of services defined in Chapter 2 of the law on regulation of the operational of the different components of the financial system , dated December 19, 1996, which provide some of the services defined in article 4 of this law.

Article 6 Place of realisation of the benefits of the services


For the purposes of this law, are understood in Andorran territory those services that meet any of the following conditions: a) Who have been hired or formalized in Andorran territory.

b) that have been carried out by banks or financial institutions that operate in Andorra.

c) that have been carried out by entities dominated by forced taxation of this tax, when those residing outside of the Principality and provided that they fulfil the conditions laid down in article 15. In this case, the rendering of services are deemed to be made by the dominant entities.

Article 7 Tax Base 1. The tax base consists of the total amount of the consideration for the provision of certain services above.

2. For services with implicit consideration, the base of taxation corresponds to the amount resulting from applying to each operation of customers, in the case of credits, the positive difference between the interest rates of the operation and the market interest rate and, in the case of the deposits, the positive difference between the market interest rate and the interest rate of the operation.

Are considered to be services with implicit consideration those services provided to customers in which the price received for the realization of the benefit is mostly included in the interest rates of the transactions carried out.

For the operations referred to in euros, it is understood by the market interest rate that is calculated in the Euribor in the same term and conditions that are established in the operation. For the operations referred to in other currencies, it is understood by the market interest rate equivalent to the previous corresponding to the currency used. In the event that by the characteristics of the operation there is an explicit market type, you use the nearest to the period and conditions of operation.

3. For the services of currency exchange, the base of taxation corresponds to the difference between the purchase price and the selling price of these operations.

4. In operations the consideration of which does not consist in money is considered the basis of taxation that had been agreed to under normal conditions of the market between independent parties.

Article 8 tax rate The tax rate applicable is from 7 to 100.

Article 9 tax Fee The tax share is the result of applying to the base of taxation the tax rate.

Article 10 1 Incurrence. The tax is payable at the time in which it performs the service recorded. The service is understood to have made when you can demand the price.

2. In operations subject to originate payments on account prior to the realization of the benefits of the services, the tax is payable at the time of payment in advance, by the amounts actually received.

Article 11 Transfer of tax 1. The tax liable should move the tax to those who provide the services.

2. The tax obligation is not obliged to consign separately the tax receipt, the invoice or equivalent document, and if you do not separate consignment, is considered to be included in the price of the operation.

Chapter III. Obligations of the tax Article 12 formal Obligations bound 1. Are taxable must submit their claims relating to the home, the modification and completion of the activities that determine their subject to the tax, in the manner and for the terms to be determined by the regulations.

2. the taxable must be presented at the request of the Ministry responsible for finance or public institutions delegated to this, information on the data that make up the variables of the settlement of the tax.

3. The taxable must declare and pay for each calendar year the quota of payment of the tax, as determined in this chapter and the next.

Article 13 settlement of fee Fee payment of the tax is the result of estimative way to carry out, the difference between the amounts of the tax impacted by the performance of services and the amount of the indirect taxes of a happy state in the acquisition of goods and services necessary to carry out the services mentioned.

Article 14 determination of the settlement fee 1. The settlement of the tax is calculated according to the system of objective determination, in accordance with the provisions of this law and with the statements presented by taxable.

2. The determination of the settlement fee is the resulting calculation follows: settlement Fee = t x [(V1 0.85 x)-(V2 x r *)]-x 0.001 V1 Where: t: tax rate V1: Gross Value of services V2: shareholders ' equity adjusted r *: t variable reference interest rate, tax rate, the tax rate established in article 8.

The variable gross value V1, of the services, is determined by the difference between the sum of the related items in the section a) next, and the sum of the related section) as follows: a) interest and similar income from equity securities commissions accrued for services rendered positive results from financial operations net Other ordinary net positive results b) interest and similar charges commissions accrued for services received from taxable entities net negative Results from financial operations

Other ordinary results net negative interest and related income cover products derived from fixed-income securities, loans, investment balances with financial institutions, as well as all those who have the same nature.

Variable income securities yields are those that come from investments in own funds of all kinds of entities, of shares in profit (investment) and those from equity products.

The commissions accrued for services rendered correspond to services provided to third parties and accrued during the financial year, which cannot be assimilated-by concept, by periodicity, or others-to a rate of interest.

The positive results from financial operations NET include net positive results deriving from operations with securities, exchange differences, future operations, as well as all those who have the same nature.

Other ordinary results include the returns of tangible fixed assets as well as any other ordinary results that have not been counted in the previous games.

The interest and charges include the charges relating


the creditor balances commitments with customers and financial institutions, as well as all those who have the same nature.

The commissions accrued for services received from entities that are taxable, correspond to the services received from third parties that are taxable to that tax, and accrued during the financial year, which cannot be assimilated-by concept, by periodicity, or others-to a rate of interest.

The net negative results from financial operations, including net negative results deriving from operations with securities, exchange differences, future operations, as well as all those who have the same nature.

The variable V2, shareholders ' equity adjusted, is calculated as the sum of the following items: social Capital Reserves as a result of the exercise in progress results from previous years to distribute the variable r *, the reference interest rate, is determined by each calendar year to the arithmetical average of the interbank market interest rate Euribor to one month, applicable on the first working day of each calendar month.

In the event that the calculation of the settlement fee in an amount to be negative, the share of payment of the tax will be zero.

The above variables should be the corresponding to the calendar year subject to liquidation.

3. The payment of the annual tax is.

Article 15 Consolidated Statement 1. Are taxable in the tax that regulates this law and belonging to the same group of domain, will be required to settle the tax according to the consolidated data of the group in the terms that determine this article. The settlement fee is determined with the parameters and the form to which refers article 14, taking into account the data resulting from the consolidation of the financial statements of the dominant entities with those of the entities dominated. To this effect, the dominant entities must be incorporated in its tax services carried out by the entities dominated whether residing in the Principality as if you do not reside.

2. Are part of the same domain group entities that participate in the share capital of other provided this participation exceeds the 75 to 100 of its share capital or of the voting rights. It is understood by the dominant entity that participates in the share capital of others, under the conditions mentioned above, and for entity dominated the participated in the same conditions.

3. It is understood for consolidation for the purposes in this article, the result of adding the economic magnitudes considered individually for each of the taxable, in the terms established in article 14 of this law, considering mainly the adjustments arising from the cancellation of the transactions carried out between companies of the group domain.

4. In the event that the entities dominated provide directly and independently of the services provided by the dominant entities, they can deduct from the gross value of the services (V1) in its consolidated statement, the amount of these contributions, as at its market value, as long as they meet and/or justified to the Ministry in charge of finance each of the following requirements: a) reality of the services provided by the entity dominated, b) not linking the performance of the services performed by the entity dominated in relation to the dominant entity, c) the amount of the benefits of services and d) that these services have been subject to a tax equivalent in the territory of the entity dominated.

5. The entity you have mastered the group subject to the consolidation must file a tax statement of the consolidated data and enter the tax resulting from the domain group, in the form provided for in the following article.

6. The entities dominated the group must submit the Declaration of the tax corresponding to their individual data, without making the payment of the tax that is, in the manner and for the period specified in the regulations.

Chapter IV. Management, control and settlement of the tax tax management Article 16 1. The management and collection of the tax corresponding to the Ministry in charge of finance, who can delegate to organisations or public institutions.

2. The regulations must determine the place, the time, the shape and the models of Declaration and payment of the fee and payment of quarterly payments on account of the same quota.

Article 17 Settlements at the expense of the tax provided for in paragraph 3 of article 12, the tax must submit and pay settlements at the expense of the settlement payment of the tax, corresponding to natural quarters of each year. The amount to be paid in advance for each quarter is the result of applying the percentage of 25 to 100 on the settlement fee corresponding to the previous calendar year.

The positive or negative difference between the amount of the payments made on account and the payment of the tax has to be 1850 during the period of payment of the membership fee payment of the tax that will define the regulations.

Article 18 Control of tax 1. The control of the tax corresponding to the Ministry in charge of finance, who can delegate to organisations or public institutions.

2. Is delegated to the Institut Nacional Andorrà de Finances the verification of the accuracy of the data contained in the tax returns. In the period of one month from the receipt of the claims, the Institut Nacional Andorrà de Finances must communicate via report to the Ministry in charge of finance results of the verification of the accuracy of the data contained in the tax returns.

3. The Ministry in charge of finance may request additional information requirements and make the necessary revisions that it deems inspections in the tax obligation in accordance with the provisions of article 51 of the law on the bases of the Tax Ordinance, as well as start, if applicable, the sanctioning procedure.

V. infractions and sanctions Article 19 Breaches the regulation infringements relating to the content of this law shall be governed by the regime of offences set out in chapter V of the law of sales tax on the provision of services.

Article 20 Sanctions regulation of sanctions is set following the graduation criteria set out in chapter V of the law of sales tax on the provision of services.

First additional provision in the case of the creation of new banking or financial institutions, or


completion of activities during the calendar year, the settlement of the tax refers to the period during which the activities have been effectively carried out. The new bank or financial institutions do not have to make payments on account of the settlement of the tax corresponding to the first year of activity.

Second additional provision The tax payment fee for the first year of application of the law, is the result of apportion the annual fee for the quotient resulting from dividing the days from the entry into force of the law remain until 31 December 2002 and the total number of days of the year 2002.

Transitional provision for the first year of application of the law, and only for this exercise, the non-banking financial institutions-specialised credit, investment and financial institutions financial institutions of services do not have to make payments on account of the settlement of the tax.

For this exercise, the banks have to make payments on account on the basis of the payment of the tax for the year 2001, established by the law regulating modules applicable to banking institutions in the framework of the law of sales tax on the provision of services, of 15 December 2000.

Repealing provision Is repealed the law regulating modules applicable to banking institutions in the framework of the law of sales tax on the provision of services, of 15 December 2000, and any provision of equal or lower rank which contradict the provisions of the present law.

First final provision of the law of the general budget can update the tax rate established in this law.

Second final provision this law comes into force the day after being published in the official bulletin of the Principality of Andorra.

Casa de la Vall, 14 May 2002 Francesc Areny Casal 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.

Jacques Chirac Joan Marti Alanis, President of the French Republic the Bishop of Urgell Co-prince of Andorra Co-prince of Andorra