The agreement will contribute to efforts to clamp down on tax evasion, by requiring the EU member states and Andorra to exchange information automatically.
This will allow their tax administrations improved cross-border access to information on the financial accounts of each other’s residents.
“Tax instruments can only work effectively where they do not leave loopholes that can be used by tax planners to avoid taxation”, said Jeroen Dijsselbloem, minister for finance of the Netherlands and president of the Council. “This agreement will enable remaining gaps in the exchange of information for taxation purposes to be filled in, and will maintain consistency in the applicable rules.”
The agreement upgrades a 2004 agreement that ensured that Andorra applied measures equivalent to those in an EU directive on the taxation of savings income. The aim is to extend the automatic exchange of information on financial accounts in order to prevent taxpayers from hiding capital representing income or assets for which tax has not been paid.