Andorra
offers one of the most competitive fiscal frameworks in Europe based
on a 10% maximum Corporate Tax and Personal Income Tax.
The
Principality of Andorra is a low-tax jurisdiction located between
France and Spain, well known for its mountain tourism and ski
resorts. It not a member of the European Union but enjoys a special
status within the EU and welcomes foreign direct investment and
ownership of local companies with a very attractive fiscal framework.
In
recent years it has moved away from a tax haven to comply with the
OCDE’s International Financial Transparency standards and has
signed Double Taxation Conventions with France, Spain, Luxemburg,
Liechtenstein, Portugal, United Arab Emirates and Malta. These
conventions benefit tax residents from paying taxes elsewhere or in
their countries of citizenship. Furthermore it uses the euro as its
main currency and is in process to become a member of the
International Monetary Fund.
Requirements
to become a Tax Resident in Andorra
According
to Andorran law, the following factors are considered important to
become a resident for tax purposes:
1.
He/she must spend more than 183 days a year in the country.
2.
He/she must have an economic interest or activity in Andorra,
directly or indirectly.
3.
His/her family live in Andorra (spouse and children) and are tax
residents under the criteria mentioned above.
Corporate
Tax
Andorra
allows 100% foreign investment and ownership of local companies with
a very competitive fiscal framework based on a 10% maximum Corporate
Tax on profits.
Personal
Income Tax
Personal
Income Tax in Andorra is one of the lowest in the world at a maximum
rate of 10%. The tax system classifies tax rates by personal income:
if your income is equal or lower than €24,000 the rate is 0%, if
its between €24,001 and €40,000 the rate is 5% and if your income
is higher than €40,001 the rate is 10%. For married couples, the
tax rate is 10% for any income over €40,000 and 0% for anything
below.
Indirect
Tax
The
general VAT rate is 4.5% and only 1% on goods and services related to
health, education, culture, foods and rentals.
Other
Taxes
Andorra
has no taxes on donations or inheritance and a low capital gains tax
on property at a maximum rate of 15%.
Taxes
and tax liabilities can be very complex. We strongly recommend
professional assistance to make sure you have the best and most
trusted advice. At IS21 we can help you or your company with the
Andorran tax system. Contact us at www.is21.ad.
