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The end of bank secrecy by 2018?

Andorra_la_Vella_2An EU deal with Andorra, which will make it harder for EU citizens to hide cash from the tax man in bank accounts there, was endorsed by European Parliament in a vote on Wednesday. Under the deal, the EU and Andorra will automatically exchange information on the bank accounts of each other’s residents, starting in 2018 for information collected since 1 January 2017.

On 12 February 2016, the EU and Andorra signed an agreement  to clamp down on tax fraud and tax evasion. The information to be exchanged includes not only income, such as interest and dividends, but also account balances and proceeds from the sale of financial assets.

The agreement ensures that Andorra will apply stricter measures, equivalent to those in place within the EU since March 2014. The agreement also complies with the 2014 global standard on the automatic exchange of financial account information promoted by the OECD.

Tax administrations in EU member states and in Andorra will be able to:

  • identify correctly and unequivocally the taxpayers concerned,
  • administer and enforce their tax laws in cross-border situations,
  • assess the likelihood of tax evasion being perpetrated, and
  • avoid unnecessary further investigations.

The agreement was approved by the European Parliament.

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