Andorra

Basic taxes (briefly)

Personal tax 0-10%
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
Government fee
Stamp duty

International tax agreement

   


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TAXATION

Personal tax

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.

Withholding tax

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.

Stamp duty

  • 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”.

Customs duty

  • 4% on most goods (general)
  • 7% on electronic products, perfume and optical products (increased)
  • 12% on jewelry and recreational equipment (special).

For some exceptions the rate might be 0% or 1% (agricultural products).

Wealth tax

No.

Local taxes

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.

Exchange control

There is no exchange control in the country.

ACCOUNTING

Annual Return

An annual report, including annual accounts, has to be filed to the Companies Register.

Financial Statement

Accounting records include:
  • balance sheet
  • profit and loss account
  • statements of income, asset and cash flow.

Also the company should keep the proposed distribution of profits.
Accounting records should be kept in the company’s office in Andorra.
Auditing is obligatory in situation when during two years:
  • total assets exceed EUR 3 600 000
  • net sales exceed EUR 6 000 000
  • the company has more than 25 employees.

Tax accounts

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
    VAT 4.5%
    Withholding tax 0%/5%/10%
    Exchange control No
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