Harmful Tax Practices – 2023 Peer Review Reports on the Exchange of Information on Tax Rulings

1. Andorra can legally issue the following five types of rulings within the scope of the transparency framework: (i) preferential regimes;2 (ii) cross-border unilateral APAs and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles; (iii) rulings providing for unilateral downward adjustments; (iv) permanent establishment rulings; and (v) related party conduit rulings.

2. For Andorra, past rulings are any tax rulings within scope that are issued either (i) on or after 1 January 2015 but before 1 April 2017; and (ii) on or after 1 January 2012 but before 1 January 2015, provided they were still in effect as at 1 January 2015.

3. In the prior years’ peer review reports, it was determined that Andorra’s undertakings to identify past rulings and all potential exchange jurisdictions were sufficient to meet the minimum standard. Andorra’s implementation in this regard remains unchanged, and therefore continues to meet the minimum standard.

4. For Andorra, future rulings are any tax rulings within scope that are issued on or after 1 April 2017.

5. In the prior years’ peer review reports, it was determined future rulings were able to be identified, but that the information on potential exchange jurisdictions was not always being collected, and instead this was being performed by the application of the “best efforts approach”. The prior years’ reports noted that Andorra intended to amend the application process to require the taxpayer to identify all relevant jurisdictions when requesting the ruling. Andorra was recommended to continue its efforts to ensure that all potential exchange jurisdictions are identified swiftly for all future rulings.

6. Andorra adopted the amendment to its application process in the beginning of 2023. As the issue has been resolved, the prior years’ recommendation is now removed.

7. In the prior years’ peer review reports, it was determined that Andorra’s review and supervision mechanism was sufficient to meet the minimum standard. Andorra’s implementation in this regard remains unchanged, and therefore continues to meet the minimum standard.

8. Andorra has met all of the ToR for the information gathering process and no recommendations are made.

9. Andorra has the necessary domestic legal basis to exchange information spontaneously. Andorra notes that there are no legal or practical impediments that prevent the spontaneous exchange of information on rulings as contemplated in the Action 5 minimum standard.

10. Andorra has international agreements permitting spontaneous exchange of information, including: (i) the Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol (OECD/Council of Europe, 2011[2]) (“the Convention”) and (ii) bilateral agreements in force with 28 jurisdictions.3

11. In the prior years’ peer review reports, it was determined that Andorra’s process for the completion and exchange of templates met all the ToR, except for undertaking spontaneous exchange of information on tax rulings within the scope of the transparency framework (ToR II.B). Therefore, Andorra was recommended to complete the templates for all relevant rulings and to ensure that the exchanges of information on rulings occur as soon as possible.

12. In the prior years’ peer review reports, it was determined that Andorra’s previously issued rulings related to preferential regimes were related to wholly domestic taxpayers without any related parties in a foreign jurisdiction, and therefore, no exchange of information needed to take place. However, in the event that a relevant ruling would be issued in the future, Andorra needed to have the processes in place to complete the templates and conduct the exchanges in accordance with the transparency framework.

13. In the beginning of 2023, Andorra adopted a modification to the Andorran General Tax Code (Article 75 of the Law 5/2023) which introduces a new fifth additional provision that establishes that the Andorran Competent Authority must exchange information regarding tax rulings with the Competent Authorities of other members of the Inclusive Framework on BEPS, in line with the process and timelines under the Action 5 transparency framework. Andorra now also requires all taxpayers to provide all relevant information needed to complete the template contained in Annex C of the Action 5 Report (OECD, 2015[3]).

14. As Andorra has now resolved the issue, the prior years’ recommendation is removed.

15. As there were no exchanges for the year in review, no data on the timeliness of exchanges can be reported.

16. Andorra has the necessary legal basis for spontaneous exchange of information, a process for completing the templates in a timely way and has completed all exchanges. Andorra has met all of the ToR for the exchange of information process and no recommendations are made.

17. As no rulings were issued, no statistics can be reported.

18. In the prior years’ peer review reports, it was determined that Andorra’s information gathering and exchange of information processes for matters related to intellectual property regimes4 were sufficient to meet the minimum standard. Andorra’s implementation in this regard remains unchanged and therefore continues to meet the minimum standard.

[1] OECD (2021), BEPS Action 5 on Harmful Tax Practices - Terms of Reference and Methodology for the Conduct of the Peer Reviews of the Action 5 Transparency Framework, OECD Publishing, Paris, http://www.oecd.org/tax/beps/beps-action-5-harmful-tax-practices-peer-review-transparency-framework.pdf.

[3] OECD (2015), Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 - 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris, https://doi.org/10.1787/9789264241190-en.

[2] OECD/Council of Europe (2011), The Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol, OECD Publishing, Paris, https://doi.org/10.1787/9789264115606-en.