Best ways to save money: Andorran private banking
Why Andorra with a population a little more than 70 000 people has accumulated almost 50 billion euros on private customers’ accounts?
What is the difference between EU, Swiss and Andorran banks?
In all three countries clients enjoy private banking services; however Swiss and German banks are able to undertake highly complex transactions and offer their clients a wider range of services. Andorra can catch up it in the coming years, as the government of Andorra has always offered great support to its banking sector. This is the main advantage of private banking system of Andorra comparing to EU and Swiss Banks. After all, this sector accounts for about 20% of Andorra’s GDP, whereas the Swiss banking sector represents less than 10% and German banks a mere 5% of their respective GDPs.
Due to the great importance of the Andorran banking sector to the country’s economic performance, not only is the government very attentive to its needs but the sector’s jurisdiction is very wide-ranging. Levels of banking secrecy and asset protection are high, and clients benefit from very strict banking regulations protecting their rights and privacy. Furthermore, all these regulations comply with the Organisation for Economic Co-operation and Development (OECD) rules and allow Andorran banks to provide their customers with sophisticated and secure state-of-the-art banking services, backed by both a financially and politically stable environment.
In 2018 Andorra will join the Tax Information Exchange Agreement. How will this impact the Andorran banking sector and how to save money?
The private banking sector is growing in most countries as private wealth is increasing globally. Countries whose value proposition for investors relied strongly on their banking secrecy policies now have to rethink their services and focus more on the quality of their services and the performance of their investment strategies.
The agreement on the automatic exchange of tax information does not entail full disclosure of information on beneficiaries. The authorities are interested in bank accounts for tax reasons, but they will not receive information on sensitive private data, movement of money or details of investments.
Nevertheless, signatories to the agreement commit to the exchange of several types of information between their financial institutions and tax authorities in the client’s country of residence for tax purposes. This includes information on the client’s identity, such as name, address, and tax identification number; information on the client’s bank account, like the name of the financial institution and the client’s account number; and financial information such as the account balance, dividends, income, and gross proceeds.
Andorra still maintains a high degree of banking secrecy, offering confidentiality to its clients while remaining fully compliant with international best practice regulations through the Know Your Customer (KYC) process of identity verification, which filters out financing of terrorist activities.
Additionally, Andorra is becoming a compliant jurisdiction for tax transparency and as a whole, offers different tips for saving money, like political, economic and financial stability, including solid democratic political practices. It is well regulated and offers a long tradition of banking expertise.