10 - August / 2017

The DTA between Andorra and the United Arab Emirates enters into force

The agreement between the governments of Andorra and the United Arab Emirates (UAE) to avoid double taxation and prevent tax evasion of income taxes (DTA) is already in force. Therefore, the Principality can already apply this agreement with six countries (France, Spain, Luxembourg, Liechtenstein, Portugal and the UAE). In addition, the negotiations for an agreement with Latvia have already begun.

The Principality of Andorra initiated an ambitious project of economic opening, with the passing of June 2012’s Law of foreign investment. An important legal and fiscal mutation began for its homogenization with international standards. This process resulted from the signing of the Monetary Agreement (June 2011) and further agreements with 7 countries: France, Spain, Luxembourg, the UAE, Portugal, Liechtenstein and Malta.

What is the purpose of CDIs?

The double taxation conventions (CDI) are international treaties that aim to prevent situations of double taxation internationally through a series of criteria, involving the two Contracting States. CDIs facilitate foreign investment and promote the competitiveness of domestic companies abroad.

These agreements apply to natural and legal persons residing in any of the signatory States and concerns taxes on incomes and assets, which may be requested by each of the signatory States and / or their political and administrative subdivisions. In them, it is established which of the two States has the competence to tax the incomes.
To ensure the correct functioning of a DTA, both the tax system, legislation on transparency, and accounting laws of the two signatory States must be compatible.

These agreements entail a major step forward in the Principality of Andorra by bringing an end to the taxation of deductions at origin that certain administrations, such as France or Spain, applied to Andorran corporations that wanted to export their services to these countries. It is therefore an indispensable element for the economic opening of the country.