Tax Information Exchange in Andorra: The Key News
Andorra’s tax information exchange: the Government has approved the amendment of the tax information exchange law to incorporate the treatment of electronic money and digital currencies. The decision aligns with standards approved by the OECD (CRS 2.0 and the Crypto-Asset Reporting Framework) and requires banks and entities to adapt their systems to start reporting these assets in mid-2027.
Why does this change matter?
The regulatory framework’s adaptation impacts residents, businesses, and investors operating with cryptocurrencies or digital assets in Andorra. With the new approach, Andorra’s tax information exchange moves closer to global best practices in tax transparency, leading to administrative and compliance changes for financial institutions and benefits for market regulation.
Objectives of the change
- Integrate the OECD Crypto-Asset Reporting Framework into the local framework.
- Prevent fraud and tax evasion related to digital assets.
- Enhance international tax cooperation and flow traceability.
Ultimately, the tax information exchange in Andorra is modernized to include new digital financial instruments and ensure relevant information flows between jurisdictions under common standards.
What should banks and entities prepare to do?
Affected entities will need to update procedures, systems, and client documentation. This includes:
- Identify and classify digital assets and crypto-asset custodians.
- Implement more thorough KYC (Know Your Customer) processes applied to crypto-assets.
- Gather additional data to enable reports for the international exchange system.
- Train technical and legal teams to meet deadlines (reporting to start in mid-2027).
The Government has indicated that entities are already preparing to adopt the change, so it is advisable to start planning now for technological and legal integration.
Consequences for residents, companies, and investors
The practical implementation of the change has direct effects in various areas:
- Tax transparency: more information available to tax authorities of other countries.
- Impact on personal and corporate tax planning: certain schemes become less opaque when data sharing occurs.
- Greater legal security for investments in crypto-assets within regulated entities.
If you are considering moving to Andorra or investing from there, it is advisable to review how this advancement in Andorra’s tax information exchange affects your situation. In Andorraway, we offer guides to understand taxes and residency; for example, consult benefits of living in Andorra and residency in Andorra to plan properly.
How does it affect you if you already own crypto-assets?
If you keep cryptocurrencies or wallets held in institutions, part of that information is likely to become part of the new reports. In practice:
- Accounts and custodians will report balances and certain transactions linked to clients.
- Additional data may be requested to identify beneficiaries and holders.
- Traceability increases, so tax planning must be transparent and well-documented.
Andorra’s tax information exchange will be a tool for authorities but also an opportunity to regularize positions and operate with legal certainty.
Impact on the decision to move or create a company in Andorra
Andorra remains an attractive destination due to its favorable tax environment and quality of life, but modernization in tax matters requires adjusting expectations. If you are thinking about living in Andorra or establishing a company, keep in mind:
- The need to comply with higher reporting obligations if your activity involves digital assets.
- Improvements in transparency that increase institutional and financial trust.
- Recommendation for prior advice on taxes and residency.
For practical guides, check materials on taxes in Andorra and moving to Andorra to help plan the transition.
Practical recommendations before 2027
If this change affects you directly or indirectly, follow these steps:
- Make an inventory of digital assets: custodians, wallets, and exchanges linked to Andorra.
- Contact your bank or provider to learn their roadmap for CRS 2.0 compliance.
- Seek specialized tax advice to adjust filings and avoid sanctions.
- Document operations and keep clear records of fund sources.
Andorra’s tax information exchange aims not to penalize by default but to integrate the country into international frameworks and provide legal security for digital markets.
Frequently asked questions
When do reports start?
The official schedule indicates that affected entities must be able to report starting in mid-2027, so preparations should begin as soon as possible.
Does this diminish Andorra’s fiscal attractiveness?
Not necessarily. Andorra maintains competitive advantages in taxation and quality of life, but tax information exchange calls for more transparency. For those wishing to reside or create a company, it remains crucial to stay informed and adapt to new obligations.
Where can I get local assistance?
If you need guidance on moving, residency management, understanding the healthcare system or taxes, in Andorraway we offer resources and support. Visit our contact page for personalized assistance.
Conclusion
The move towards including digital currencies and electronic money within Andorra’s tax information exchange framework aligns the country with international standards seeking transparency and security. For residents, companies, and banks, this entails adaptation work but also leads to more clarity and confidence in the financial ecosystem. If you plan to move, invest, or create a company in Andorra, inform yourself in advance and consult specialists to adjust your tax and migration planning.
Remember, in Andorraway, we provide guides on residency, taxes, and healthcare system that help you make informed decisions.