The Ministers of Finance of the European Union (Ecofin) They decided to remove Andorra from the gray list of tax havens. The trans-Pyrenean country was listed as a country with a "pernicious fiscal regime" because of a system of bonuses in corporate tax. Among other activities, holdings that had interests in foreign companies only paid 2%. After having modified its taxation, Andorra goes, along with San Marino, from that list.
At their meeting this week, Ecofin reviewed the list of tax havens I had made last year. Andorra was not blacklisted by opaque jurisdictions, but by states with tax regimes that were harmful to the rest. Along with Andorra, there were 46 other countries indicated, from Aruba, Barbados or the Seychelles to Switzerland, Panama or Turkey.
The finance ministers decided, however, to withdraw Andorra and San Marino from that annex, considering that they have "amended" or "abolished" the regimes that were "preferential" and "detrimental". The rest still remains on the list despite having committed to follow the same steps in 2018.
In a statement, the Andorran government explained that the exit comes after the amendment of the corporate tax law was approved in May of this year to modify and eliminate some bonuses. Andorra had become a threat to EU countries, especially Spain and France, for their low taxation. Although the general rate was 10%, in practice in several activities it was 2%.
This was mainly used by holding companies that had participated companies, international merchandise sales companies or financial management and investment companies of the same business group. Some countries considered that such tax rebates were, in practice, a case of dumping at the heart of the EU. Andorra celebrated that with this decision the country "leaves the gray list and definitively positions itself as a cooperating jurisdiction in tax matters".