Obligations for non-established companies in Andorra
Some of our clients are non-resident companies in the Principality, they are not established in the country for VAT purposes and some of these clients provide services electronically to resident individuals in Andorra. Consequently, they can have tax obligations that must be contemplated. However, first of all it will be fundamental to understand through the Andorran law if according to the location rules of IGI (andorran VAT) the company is in the situation that generates such formal obligations.
Therefore, this document is divided into the following two points:
1.-Taxation on electronic supplied services.
2.- Formal obligations in the registration for VAT purposes.
1.- TAXATION ON ELECTRONIC SUPPLIED SERVICES
The indirect tax in Andorra is called IGI and is regulated by the “Decret Legislatiu del 29-4-2015 de publicació del text refós de la Llei 11/2012, del 21 de juny, de l’impost general indirecte” (from now on, LIGI).
The present explanation will be about companies providing services within the framework of Electronically Supplied Services, to individuals residing in Andorra.
For some non-established companies, fees derived from services provided by electronic means must be fiscally understood as coming from services provided by a non-established legal person in Andorra, to an individual with habitual residence in the principality.
The concept of Electronically Supplied Services (ESS) is defined by the Art.43.3.d) of the LIGI. It is defined as:
Services consisting in the transmission sent and received integrally by processing equipment, including the numeric comprehension and the data storage, and integrally transmitted, transported and received by cable, radio, optical system or other electronic means, and among others, the following ones:
Supply and hosting of websites.
Maintenance at distance of software and equipment.
Supply and update of software.
Supply of images, text, information and delivery of databases.
Supply of films, games, including gambling, and broadcasting related to politics, culture, sports, arts, science or leisure.
Supply of distance learning.
The Art. 43.2.l) of the LIGI establishes that, by virtue of the general localization rules, when the recipient is not a professional or businessman acting on their own behalf, the ESS provided by a businessman or a professional are understood as localized in Andorra when the effective usage or exploitation of the aforementioned services is performed in Andorra.
The LIGI presuppose that this effective usage or exploitation of the services is performed in Andorra if the individual has their domicile or habitual residency in the country.
On the basis of the above, we consider that the fees for the access to the electronic services or contents would be understood as rendered in Andorra, and therefore subject and non-exempt to IGI.
This fact involves that companies will be understood as taxable subjects of the IGI and will be forced to accomplish the requirements envisaged in the Art.76 of the LIGI, with the conditions determined in the regulations.
The IGI Tax Rate (IGI) is regulated by the “Decret Legislatiu del 29-4-2015 de publicació del text refós de la Llei 11/2012, del 21 de juny, de l’impost general indirecte”. Specifically, the Art. 57 of the LIGI establishes a standard rate of 4,5%, applicable to ESS.
2.- FORMAL OBLIGATIONS IN THE REGISTRATION FOR VAT PURPOSES
In the case that the company registers in Andorra for IGI purposes, by virtue of the Art.76 of the LIGI, to comply with the Law, the contributor should:
Submit a Census Declaration for Registration;
Apply for a tax number in Andorra (NRT);
Appoint to a tax representative in Andorra, for the fulfillment of the obligations established in the LIGI;
Liquidate the IGI periodically (according to the volume of the turnover it can be monthly, quarterly or biannually);
Respect the invoicing obligations in Andorra (delivery of invoices and registries).
Augé Legal & Fiscal can provide a comprehensive service related to the implementation of all these obligations, taking charge of entering the Census Declaration for the Registration and making the necessary procedures to obtain the NRT.
On the other hand, our company can provide the service of being the Tax representative in Andorra to be able to fulfill all the IGI tax obligations.
Finally, through coordination with the client company, our team would proceed to determine the periodicity of the settlement of the IGI, as well as the formal procedures to carry out said Liquidation and of course give advice regarding the Invoicing Obligations in the principality.