Andorra tax system: audit, reporting and optimization of taxation of Andorran companies and individuals: VAT, income tax and capital gains
Basic taxes (briefly)
|Corporate tax (in detail)||Corporate tax is paid at the rate of 10%.|
|Capital gains tax. Details||Capital gains are included in the general tax base.|
|VAT. Details||The standard rate is 4,5%; reduced rates are1% and 0% for some particular products; 9,5% for bank services.|
|Other taxes||social contributions, real estate tax, real estate transfer tax|
International tax agreement
|France, Liechtenstein, Luxembourg, Malta, Portugal, Spain, United Arab Emirates|
|Argentina, Australia, Austria, Belgium, Czech Republic, Denmark, Faroe Islands, Finland, France, Germany, Greenland, Iceland, Italy, Korea (Republic of), Liechtenstein, Monaco, Netherlands, Norway, Poland, Portugal, San Marino, Spain, Sweden, Switzerland|
There is no individual income tax, but Andorra now is planning to introduce it.
Economic Activities Tax, cat. impost activitats econimiques
The IAE has a tax rate of 10% with a minimum exemption of EUR 40,000.00. Income from self-employment is taxed. The income from paid employment, real estate and personal property are exempt from taxation. The social security contribution is approximately EUR 400 per month.
Income tax (сorporate income tax, cat. impost sobre les societats)
Since 2013 a 10% corporate income tax has been established. There is a special regime for holding companies provides for tax exemption of both dividends and capital gains. For intangible assets operating company, companies engaged in international trading and for intragroup financial investment companies a 80% reduction of tax base has been determined.
Non-Residents income tax (cat. impost sobre la renda deis no-residants fiscals)
The general rate is 10% both for natural and legal persons (for services which have been provided to Andorran company or individual). A tax representative should be appointed to deal with tax payments in Andorra. But the absence of DTA should be ones more mentioned, as a risk of being taxed in native country arises.
Capital gains tax (cat. plusvalua)
Only for transfer of real estate and it depends on the number of years, the property has been owned by the seller; the rates are from 0% to 12%.
VAT (cat. impostos generals inderectes)
Has been levied since 2013 (IGI).
- 4,5% for the most part of goods and services 1% for food, books, newspapers and magazines 0% for welfare and healthcare goods and services, some basic living essentials 9,5% for bank services.
There is no. There is only a tax on income from savings of residents in EU states with deposits in Andorra (tax rate is 35% which comes from international agreement; 75% of the sum goes to the resident country). The reason is to remove Andorra from financial paradises.
Labor cost for companies
Social contribution is one of the lowest:
- 4,5% – employee 14,5% - employer.
Transfer tax (ITP)
For transfer of real estate situated in Andorra or transfer of rights over such real estate the tax rate is 4%. For new real estate IGI is applied.
- for registration of a company (the sum varies from the type of company – EUR 563 for SL and EUR 803 for SA, EUR 202 for trade company) for registration and renewal of a trademark (depends on kind).
Real estate tax
See “local taxes”.
- 4% on most goods (general) 7% on electronic products, perfume and optical products (increased) 12% on jewelry and recreational equipment (special).
Real estate tax is paid in parts to the state and to the commune it’s situated in.
Avoiding International double taxation
Double Tax Agreements
The Andorra has exchange of information relationships with 27 jurisdictions through:
- 6 DTC: Liechtenstein, Luxembourg, Malta, Portugal, Spain, United Arab Emirates. 24 TIEA: Argentina, Australia, Austria, Belgium, Czech Republic, Denmark, Faroe Islands, Finland, France, Germany, Greenland, Iceland, Italy, Korea (Republic of), Liechtenstein, Monaco, Netherlands, Norway, Poland, Portugal, San Marino, Spain, Sweden, Switzerland.
There is no exchange control in the country.
An annual report, including annual accounts, has to be filed to the Companies Register.
Accounting records include:
- balance sheet profit and loss account statements of income, asset and cash flow.
- total assets exceed EUR 3 600 000 net sales exceed EUR 6 000 000 the company has more than 25 employees.
There is no special requirements to keep accounting records and underlying documents. Legislation concerning taxes refer to obligations under the Accounting Act.
Taxes of Andorra
|Min. rate for corporate tax||10%|
|Capital gains tax||Regular rate|