International double taxation arises when two different countries seek to tax the same income.
A typical example is a company resident in one State that earns profits in another country, or an individual who is tax resident in one country but receives salaries, dividends, or rental income from abroad.
Without any corrective mechanism, that income could be taxed twice, increasing the cost of cross-border operations and discouraging investment.
What are double taxation treaties?
Double taxation treaties (DTTs) are bilateral agreements between States that set clear rules on:
- Which State may tax each type of income (employment income, business profits, dividends, interest, royalties, income from immovable property, etc.) and, where applicable, subject to what limits.
- How double taxation is eliminated, usually through an exemption or a tax credit for the tax paid abroad.
In practice, DTTs allocate taxing rights between the two countries and require the State of residence to ensure the taxpayer does not pay twice on the same income. In addition, they increasingly include anti-abuse clauses and cooperation mechanisms between tax administrations.
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Andorra’s treaty policy
In Andorra, the signing of double taxation treaties is one of the pillars of its international “normalisation”. It represents a shift from being perceived as an opaque jurisdiction to consolidating its position as a cooperative, transparent State aligned with OECD standards.
Since the adoption of the new tax framework (with a 10% corporate income tax and a general VAT (IGI) rate of 4.5%), the Principality has pursued an active DTT negotiation policy. Initially, priority was given to countries with which economic and financial ties were strongest, and the network was later expanded to other strategic jurisdictions.
Currently, Andorra has signed 24 tax treaties to avoid double taxation, 22 of which are currently in force, with countries including Spain, France, Portugal, the Netherlands, Luxembourg, Hungary, the Czech Republic, Croatia, Romania, Iceland, Latvia, Lithuania, Malta, Cyprus, Liechtenstein, San Marino, Monaco, Montenegro, Estonia, South Korea, the United Kingdom and the United Arab Emirates, among others.
The DTA with the United Kingdom entered into force on 22 December 2025. This network has been expanded with the treaties with Austria, signed on 28 May 2026, and Bulgaria, signed on 19 June 2026, both of which are pending entry into force. Andorra also hasledged texts pending signature with Belgium and Germany.
Transparency and automatic exchange of information (CRS)
Double taxation treaties are complemented by another key pillar: tax transparency and the exchange of information.
Andorra has been a cooperative state in matters of transparency since 2009, but a major step forward came with Law 19/2016 of 30 November, which incorporated the Common Reporting Standard (CRS) into the Andorran legal system. This system establishes due diligence and information reporting obligations for Andorran financial institutions in relation to certain financial accounts.
Among other information, details are reported concerning account holders and, where applicable, persons exercising control over certain entities, as well as balances, interest, dividends and certain amounts arising from the sale or redemption of financial assets
The first effective exchange of information took place in 2018, using data from the 2017 tax year. Since then, CRS has been applied on a recurring basis and has become the central international instrument in the fight against tax evasion.
All of this shows that Andorra’s “normalisation” is not merely formal: the country has moved away from the model of an opaque financial centre and has embraced a position fully aligned with global standards of good governance and tax legality.
Practical advantages for businesses and investors
The combination of DTTs + transparency + moderate tax rates has very concrete effects for companies and individuals operating with Andorra:
- International tax optimisation: depending on each treaty and compliance with its requirements, certain withholding taxes at source on dividends, interest or royalties may be reduced or eliminated, in addition to mechanisms being available to prevent the double taxation of the same income.
- Legal certainty and predictability: the treaties establish criteria for determining which State may tax each type of income, the applicable limits and the mechanisms for eliminating double taxation, providing greater predictability for international transactions.
When combined with a general corporate income tax rate of 10%, a general IGI rate of 4.5% and a competitive tax system, Andorra offers an attractive framework for international companies and investors, within an environment of tax cooperation and transparency.
