The Freedom Search

Some weeks ago, the social-democrat government from Andorra passed a law ending bank secrecy in the country, in order to prevent ‘fiscal fraud’ and ‘money laundering’. It was accompanied by the usual parrot-talk: no fish-expeditions, case-per-case investigation and so.
Some other measures in progress were information exchanges for those not paying the price: you can accept a tax on your funds at Andorra, or your information will be be passed to spanish fiscal authorities, without the need of a court order.

Since past january, the Guardia Civil (spanish border and customs police) has confiscated about 500.000€. Five times more than the whole 2009 period.
The Andorran PM, Jaume Bartumeu, said the reason for that is the financial crisis in which Spain is immersed. Obviously he is trying to soften the fact that many customers are getting out of the little country, one of the two natural tax havens to spaniards, with Gibraltar.
I do not know if Gibraltar banks will experience a raise of money depositing in their accounts in the next months, but Andorra is paving its way to cease being a quiet, peaceful and profitable offshore jurisdiction.

Along with this bank secrecy ending, the ‘progressive’ government of Mr Bartumeu is preparing some new surprises: one of them was the brand new Capital Gains Tax, which was to be enforced this year, but the negative from andorran commerces and companies to pay it ended in government speaking of a new timeline ending in 2012.
The other one is the arrival of VAT into the country. Just a 5%. It can be little if one looks back, but can be a serious hit in the future. Andorra lives most from two sources from two different countries, being Spain its main market. France, which has their own natural tax haven in Monaco, and has almost no interest in this little pirenaic spot.
One income source for Andorra is its offshore bank and financial system. The other one, where the big-money is and what makes people earn a living, is tax-free commerce and services with spanish tourists and buyers who spend a full week-end shopping those otherwise-expensive items as tobacco and electronics, products that can be as much as 50% half price compared with Spain.
Yes, Andorra has its skying resorts and so, but just a few months a year. If you ever visited this country, I’m sure you will agree about retail commerce being the first and main income source.

Well, now apply a 5% VAT raise where there was nothing but a 1% export tax in some products. It may seem that nothing should happen today, or tomorrow, but if we take into consideration that, for the first time in years unemployment is likely starting to be a worry, that maybe many banking customers will decide to move their money out to other places, and that, along the new Capital Gain Tax being enforced in 2012, the next big move from the social-democrats will be the integration within the European Union, the picture is not really pleasant for this country, who used to live quietly and offer real good bargains to its neighbours.
Under the spell of ‘wanting to be good guys’ lies the truth of VAT or EU directives, not to talk about ‘for your own security’ surveillance systems and many many more to come. Being a free country means have the control of it, not giving up to the EU, the OECD and its blackmail black lists, because if you ever sell your soul to the Devil, the Devil will reclaim, it, sooner or later.

Anyway, until this happens, many years from now, Andorra will still be cheaper and easier than other places as Switzerland or Monaco, still a place worth to enjoy while you can.