ANDORRA

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ABOUT ANDORRA

Andorra at a Glance


Andorra is a tiny, independent principality situated between France and Spain in the Pyrenees mountains. It’s known for its ski resorts and a tax-haven status that encourages duty-free shopping. Tourism is the mainstay of Andorra’s tiny economy, accounts for roughly 80% of GDP. An estimated 9 million tourists visit annually, attracted by Andorra’s duty-free status and summer and winter resorts. Andorra is not a member of the European Union, but the euro is the official currency. Due to its unique location at the heart of Europe it is an attractive place to set up a business.

 

Population: 77 281
Form of government: Unitary parliamentarysemi-elective diarchy
Official & spoken languages: Catalan
Currency: Euro
Time zone: CET (UTC+1) summer CEST (UTC+2)
GDP (PPP): $3 249 billion
GDP (PPP)/per capita: $36 987
Average salary: 1900 euro
Unemployment: 2,9 %
Major trading partners: Germany, France, Spain, Norway, Hong Kong, China, Italy, Switzerland

 

 

 

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Doing Business in Andorra

Advantages of doing business in Andorra

A limited liability company in Andorra can be formed with only: 

  • Two shareholders and one director of any nationality
  • A paid-up share capital of EUR 3000

Andorra an attractive jurisdiction for doing business because:

  • Andorra companies are allowed to conduct business in the country and overseas without suffering from punitive tax rates making at an attractive EU solution for international entrepreneurs.
  • Andorra is not part of EU, but the country still uses euro as its currency, and does not implement any exchange controls.
  • Andorran VAT is the lowest in Europe at 4.5%. EU VAT registered companies can be tax exempt and recover any VAT incurred when doing business in Europe through and Andorran company.
  • Andorra offers also an attractive holding company regime, trough which holding vehicles are legally exempt from corporate income tax from their global subsidiaries.

Forming a company in Andorra will benefit from advantageous tax incentives, including:

  • A corporate income tax rate of only 10%.
  • Capital gain tax of only 10%.
  • No withholding tax on dividends and interest remitted abroad.

 Disadvantages of doing business in Andorra

  • While Andorra has recently introduced regulations to reduce banking secrecy, the country is still perceived as a tax haven by foreign tax administrations. Andorra is notably included into the blacklisted tax haven lists of several countries, including Spain, Canada, Italy, Sweden, Australia and Monaco.
  • Annual accounts must be submitted to the government for the fiscal year following Andorra company formation. 
  • No global bank is directly present in Andorra. It is still possible to open a corporate bank account to support Andorra company formation, this will have to be done with local Andorra bank.

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Residency and Moving to Andorra

Tax Resident in Andorra

TAX RESIDENCY – INDIVIDUALS:

  • Tax Resident of Andorra is individual that has Andorra residency or Andorra is center of his business and personal interest.
  • Tax Resident of Andorra is individual that spends in Andorra above 183 days during calendar year
  • Both income gained in Andorra and worldwide tax will be subject to taxation, all tough rates are lowest in Europe

TAX RESIDENCY – BUSINESS:

  • Tax Residents of Andorra is business that is registered in Andorra OR  has actual management and control unit in Andorra.
  • Subject of taxation for residents is gained income in Andorra as well as Worldwide.

Taxation in Andorra

Taxes in Andorra

Residence: A company that is registered in Andorra or that has its management and control there is deemed to be resident for tax purposes

Basis: Companies are taxed on worldwide income.

Taxable income: Taxable income is based on accounting profit, adjusted for tax purposes by nondeductible expenses, nontaxable income, tax depreciation, etc.

Taxation of dividends: Dividends and interest paid to nonresident businesses and individuals are exempt from tax.

Capital gains: Capital gains tax on sales of real properties is set between 0% and 15%. The applicable tax rate depends on the holding period or the number of years that the property is owned by the seller.

Property Tax: Property tax is levied on Andorran property at an average of €100 per property. The property owner is liable to pay this tax.

LossesBusinesses are allowed to carry forward their losses for up to 10 years.

Foreign tax credit: A tax credit is available to resident taxpayers for foreign direct taxes incurred that are similar to Andorra corporate income tax.

Taxable income: 10% and 0%
Taxation of dividends: 0%
VAT registration: All companies are required to register for VAT
– VAT Rates: The standard rate of VAT is 4,5%. 
Alternative minimum tax: No
Withholding tax (general): 0%
– From Dividends  0%
– From Royalties 5%/10% (Non-resident company)
Transfer tax: 0%
Capital gains tax: 0%
Social security: Foreign investors in Andorra must contribute social security on employees salaries at the rate of 14,5%
Payroll tax: 0%
Anti-avoidance rules:
– Transfer pricing Transactions between related parties (as defined) must be at arm’s length. The comparable uncontrolled price method may be used, but in the absence of any direct comparables, the taxpayer may use the cost-plus or the resale price method.
– Thin capitalization rule There are no specific thin capitalization rules, but interest paid to a nonresident (whether or not related) must be on arm’s length terms.
– Disclosure requirements No

Compliance for corporation:

Tax year: Calendar year.

Consolidated returns: Consolidated returns are not permitted; each company must file separate return.

Filling requirements: The tax return must be filed within three months after the year-end.

Rulings: No.

Tax authorities: The tax authorities are organized within the Ministry of Finance and the municipal level.

Personal Taxation in Andorra 2018

Personal taxation basis:

Residents individuals are taxed on their worldwide income.

Tax Residence:

An individual is resident if he/she is in Andorra for 183 days or more in a calendar year or if his/her principle place of residence or the center of economic interests is in Andorra. 

Filling status:

Joint returns are not permitted.

Income tax rates in Andorra:

Taxable income comprises income from employment, business and professional income and income from immovable property.

Social security payments in Andorra:

For employees such contributions will vary from 5.5% up to 10.5% of their wages, the rest (14.5%) will be paid by the employer.

Inheritance/estate tax in Andorra:

When real estate is transferred, a property acquisition tax is payable by the new owner and the amount payable is generally calculated as a percentage (between 1.5% and 2.5%) of the acquisition cost.

There is no inheritance tax in Andorra.

Net wealth/net worth tax in Andorra:

No

Tax year:

Calendar year

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OUR OFFERS IN ANDORRA

  • business planning, tax consulting by Novasigma
    BUSINESS CONSULTING FROM 125€/h
  • TAX PLANNING FOR PRIVATE PERSONS FROM 850€
  • TAX CONSULTING FOR CORPORATIONS FROM 2.490€

NOVASIGMA IN ANDORRA

Consulting & Advisory services

Consulting & Advisory services

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Incorporation, Administration & Business services in Andorra

Incorporation services in Andorra

  • New company formations in Andorra
  • Company Closures and liquidations in Andorra

Company administration in Andorra

  • Legal registration address service for a Andorran company
  • Company secretarial service | 60€/h
  • Nominee director services | from 600€/year
  • Nominee shareholder/ techical UBO services

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Additional business services in Andorra (by Novasigma Certified Partners)

Accounting and Bookkeeping services in Andorra


Some of the common domestic Accounting and Bookkeeping services we provide in Andorra include

  • Bookkeeping and Accounting Package
    • Invoicing and payments
    • Annual accounts
    • Monthly Reconciliation
    • Monthly financial statements (including balance sheet and income statement)
    • Payroll services
    • Income and tax return
  • Management accounts | Ask for quotation

Value Added Tax (VAT)

  • VAT registration
  • EORI registration
  • Advice on VAT scheme options | Ask for quotation
  • VAT returns and declarations

Audit

  • Annual accounts in view of an annual audit and attend accounting audits | Ask for quotation

Legal services for Andorran companies and business owners

Legal services in Andorra for all Novasigma Clients including companies and their owners and directors

Novasigma has built in Andorra team of lawyers, associates and legal advisers to assist our clients with a business and tax planning, overseas business operations, risk management and other legal matters. Primarily focused on business transactions, Novasigma Accounting & Law corporate attorneys are a great asset to a small and large businesses. With a background on corporate law, our corporate lawyers and legal advisers have an in depth knowledge on the transactions that may put your business at risk of litigation. These include contracts and negotiations, taxation laws, business structuring, buy/sell agreements, and intellectual property, among others.

Send us a Brief for Quotation

Banking, Financial and Insurance services in Andorra

Banking services in Andorra

Financial services in Andorra

 

NEWS AND BUSINESS OPPORTUNITIES IN ANDORRA

  • 10 Low Tax Countries for Living in Europe
  • Offshore bank account opening with Euro Pacific Bank
    Euro Pacific Bank- New USD Route available

Interested in Andorra? Please leave us a message and we will come back to you shortly.

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