On 2 June 2021, the Government of Andorra issued a release announcing that the Council of Ministers has approved the ratification of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). After the internal ratification process is completed, Andorra must deposit its ratification instrument to bring the MLI into force for its covered agreements (tax treaties).
The MLI will generally enter into force for a particular covered agreement on the first day of the month following a three-month period after both parties to the covered agreement have deposited their ratification instruments. For the MLI to become effective, Andorra has made the reservation that it must first deposit a notification that it has completed its internal procedures for the entry into effect of the MLI for a particular covered agreement. As such, the provisions of the MLI will generally apply for a covered agreement:
- in respect of withholding taxes, from the first day of the next calendar year that begins on or after 30 days after the date of deposit of the notification by Andorra (or by the respective counterparty if the same reservation is taken); and
- in respect of other taxes, from the taxable period beginning on or after the expiration of a six-month period from 30 days after the date of deposit of the notification by Andorra (or by the respective counterparty if the same reservation is taken).
For Andorra's own application of the MLI in respect of other taxes, however, Andorra has taken the reservation that the MLI will apply for tax periods beginning on or after 1 January of the next calendar year following a six-month period after the MLI's entry into force.
Click the following link for Andorra's provisional list of reservations and notifications at the time of signature. A definitive list will be provided when the ratification instrument is deposited.