{"id":3072,"date":"2020-05-14T18:49:12","date_gmt":"2020-05-14T16:49:12","guid":{"rendered":"https:\/\/www.augelegalfiscal.com\/andorra-taxes\/"},"modified":"2023-04-20T19:21:10","modified_gmt":"2023-04-20T17:21:10","slug":"andorra-taxes","status":"publish","type":"post","link":"https:\/\/www.augelegalfiscal.com\/en\/andorra-taxes\/","title":{"rendered":"Andorran taxes"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"3072\" class=\"elementor elementor-3072\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-714cc3 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"714cc3\" data-element_type=\"section\" data-settings=\"{&quot;background_background&quot;:&quot;classic&quot;}\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-68c9ead9\" data-id=\"68c9ead9\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-db06526 elementor-widget elementor-widget-heading\" data-id=\"db06526\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_79_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #8f2b2f;color:#8f2b2f\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #8f2b2f;color:#8f2b2f\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.augelegalfiscal.com\/en\/andorra-taxes\/#Andorran_taxes\" >Andorran taxes<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.augelegalfiscal.com\/en\/andorra-taxes\/#1_Corporate_tax_in_Andorra\" >1. Corporate tax in Andorra<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.augelegalfiscal.com\/en\/andorra-taxes\/#2_Income_tax_for_non-residents\" >2. Income tax for non-residents<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.augelegalfiscal.com\/en\/andorra-taxes\/#3_Indirect_general_tax_or_IGI_%E2%80%9CAndorran_VAT%E2%80%9D\" >3. Indirect general tax or IGI (&#8220;Andorran VAT&#8221;)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.augelegalfiscal.com\/en\/andorra-taxes\/#4_Personal_income_tax_IRPF_Andorra\" >4. Personal income tax (IRPF Andorra)<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1 class=\"elementor-heading-title elementor-size-default\"><span class=\"ez-toc-section\" id=\"Andorran_taxes\"><\/span>Andorran taxes<span class=\"ez-toc-section-end\"><\/span><\/h1>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-2ca7a36 elementor-widget elementor-widget-text-editor\" data-id=\"2ca7a36\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>As of today, the Principality of Andorra is the only country in the world which, having a fiscal framework fully approved by the EU and the OECD, has no tax higher than 10 %.<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-3c00ecaf elementor-widget elementor-widget-text-editor\" data-id=\"3c00ecaf\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><strong>Andorran taxation<\/strong> has a legal framework that includes the essential figures of conventional tax systems, but incorporates different features that give it a competitive advantage compared to neighboring countries.<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6e30f32 elementor-widget elementor-widget-text-editor\" data-id=\"6e30f32\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h2><span class=\"ez-toc-section\" id=\"1_Corporate_tax_in_Andorra\"><\/span><span style=\"color: #993300;\"><strong>1. Corporate tax in Andorra<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-11a46b4d elementor-widget elementor-widget-text-editor\" data-id=\"11a46b4d\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>It is a direct tax on the <strong>profits of companies of Andorran nationality<\/strong>. The <strong>general applicable rate is 10%<\/strong>, but there are significant tax incentives. Among these, it is possible to <strong>reduce the tax base<\/strong> of the company by a director&#8217;s remuneration for the services actually provided to the company (while the exempt and reduced rate applicble to portions of revenue submitted to the personal income tax are less than 10%, unlike other countries where directors&#8217; remuneration can increase the overall tax impact).<br \/>\nIn addition, in certain sectors, there are advantages for companies that meet certain requirements, such as <strong>companies dedicated to the international management of intellectual property rights developed in the Principality<\/strong>. The aforementioned tax incentives can reduce the tax until reaching effective rates of 2% on profits (<strong>80% exemption of the taxable base on this stream of income<\/strong>). We should also not forget the <strong>multiplicity of deductions applicable to the tax base<\/strong>, as well as the reductions applicable for <strong>new investments or the recruitment of new employees<\/strong> (tax incentives to boost the workforce and production). Likewise, the \u201c<strong>Holding<\/strong>\u201d regime allows Andorran companies (pure parent companies) that hold more than 10% in a foreign company, which has been taxed at a minimum tax rate of 4% on corporate tax (IS ) at origin, to benefit from a total <strong>dividend exemption<\/strong> (these requirements are also considered to be fulfilled if Andorra has signed a Convention to avoid double taxation (CDI) with the foreign country in which the subsidiary is located).<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-acdccb9 elementor-widget elementor-widget-text-editor\" data-id=\"acdccb9\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h2><span class=\"ez-toc-section\" id=\"2_Income_tax_for_non-residents\"><\/span><span style=\"color: #993300;\"><strong>2. Income tax for non-residents<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-59417ab0 elementor-widget elementor-widget-text-editor\" data-id=\"59417ab0\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>This is the direct taxation of income obtained in Andorra by natural or legal persons not resident in the Principality. The <strong>maximum applicable rate is 10%<\/strong>, however, the application of the CDI reduces the scope of this provision since they have a higher hierarchy.<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-38e1179 elementor-widget elementor-widget-text-editor\" data-id=\"38e1179\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h2><span class=\"ez-toc-section\" id=\"3_Indirect_general_tax_or_IGI_%E2%80%9CAndorran_VAT%E2%80%9D\"><\/span><span style=\"color: #993300;\"><strong>3. Indirect general tax or IGI (&#8220;Andorran VAT&#8221;)<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-4e770d57 elementor-widget elementor-widget-text-editor\" data-id=\"4e770d57\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>Indirect tax levied on the delivery of goods and the provision of services in the Principality of Andorra. The nature of this tax is assimilated to the value added tax (TVA or VAT) existing in the European Union. However, the main virtue of IGI in relation to VAT is the simplification of the model.<br \/>\nThe general IGI rate is 4.5% and, as a value added tax, it makes it possible to offset the taxes supported and to deduct them from those invoiced by the company (it is a neutral tax for the entrepreneur). There are also reduced VAT or IGI rates of 1%, generally applicable to basic products and services, another at 0%, applicable to health services, and an increased rate of 9.5% for banking and financial services.<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-be8c52b elementor-widget elementor-widget-text-editor\" data-id=\"be8c52b\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h2><span class=\"ez-toc-section\" id=\"4_Personal_income_tax_IRPF_Andorra\"><\/span><span style=\"color: #993300;\"><strong>4. Personal income tax (IRPF Andorra)<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-41b0ef0 elementor-widget elementor-widget-text-editor\" data-id=\"41b0ef0\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>Direct tax levied on the income of individuals residing in the Principality of Andorra.<br \/>\nThe <strong>maximum applicable rate is 10%<\/strong>. However, an <strong>exemption<\/strong> applies to the <strong>first bracket of EUR 24.000<\/strong>\u00a0of income from work, property income and economic activities (+ an effective rate of 5% is applied to the income bracket between 24,000 euros and EUR 40,000). The <strong>effective rate for the first EUR 40.000 is 2%<\/strong>. In addition, the <strong>distribution of dividends<\/strong> to tax residents of Andorra by Andorran national companies is <strong>completely exempt<\/strong>.<br \/>\nSuch tax incentives make it possible to considerably reduce the &#8220;effective rate&#8221; of taxation, especially with the absence of wealth tax, taxes on inheritance and donations, which transform Andorra into a standardized platform but highly competitive in tax matters.<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6e60ad6 elementor-widget elementor-widget-text-editor\" data-id=\"6e60ad6\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>The most frequent question is: How much tax does one pay in Andorra and how can I optimize my assets? To answer this question, below is a very illustrative grid on tax savings and the advantages of setting up a company in Andorra.<\/p>\n<p>Example of taxes paid by a company with an annual turnover of EUR 600.000, with a net profit of EUR 50.000 and which decides to distribute dividends on profits from previous years worth EUR 80.000. The table below on comparative taxes between France and Andorra demonstrates the savings for the entrepreneur to carry out his activity from the Principality:<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6d2b51f elementor-widget elementor-widget-eael-advanced-data-table\" data-id=\"6d2b51f\" data-element_type=\"widget\" data-widget_type=\"eael-advanced-data-table.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"ea-advanced-data-table-wrap\" data-id=\"6d2b51f\"><div class=\"ea-advanced-data-table-wrap-inner\">\n                <table class=\"ea-advanced-data-table ea-advanced-data-table-static ea-advanced-data-table-6d2b51f\" data-id=\"6d2b51f\"><thead><tr><th>TAXES<\/th><th>TAX RATE SPAIN<\/th><th>TAX RATE ANDORRA<\/th><th>SPAIN<\/th><th>ANDORRA<\/th><th>DIFERENTIAL<\/th><\/tr><\/thead><tbody><tr><td>Corporate tax<\/td><td>25%<\/td><td>10%<\/td><td>12.500<\/td><td>5.000<\/td><td>7.500<\/td><\/tr><tr><td>VAT \/ IGI<\/td><td>21%<\/td><td>4,5%<\/td><td>126.000<\/td><td>27.000<\/td><td>99.000<\/td><\/tr><tr><td>Dividends<\/td><td>19% - 23%<\/td><td>exento<\/td><td>8.000<\/td><td>0<\/td><td>8.000<\/td><\/tr><tr><td>TOTAL<\/td><td>N\/A<\/td><td>N\/A<\/td><td>146.500<\/td><td>32.000<\/td><td>114.000<\/td><\/tr><\/tbody><\/table>\n            <\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-00511b7 elementor-widget elementor-widget-text-editor\" data-id=\"00511b7\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>We notice a considerable difference compared to France, when the taxes are paid in Andorra. Our <a href=\"https:\/\/augelegalfiscal.com\/en\/practice-areas\/tax-law\/\">team of tax experts<\/a> can advise and help you design a strategy to help you optimize your business activity in Andorra.<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-62d0409f elementor-widget elementor-widget-text-editor\" data-id=\"62d0409f\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><a href=\"https:\/\/augelegalfiscal.com\/en\/the-firm\/our-team\/#pau-auge\">Pau Aug\u00e9<\/a><\/p><p><strong><span style=\"color: #000000;\">Aug\u00e9 Legal &amp; Fiscal<\/span><\/strong><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-c9ef354 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"c9ef354\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Andorran taxes As of today, the Principality of Andorra is the only country in the world which, having a fiscal framework fully approved by the EU and the OECD, has no tax higher than 10 %. Andorran taxation has a legal framework that includes the essential figures of conventional tax systems, but incorporates different features [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":8176,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3072","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-auge"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.augelegalfiscal.com\/en\/wp-json\/wp\/v2\/posts\/3072","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.augelegalfiscal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.augelegalfiscal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.augelegalfiscal.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.augelegalfiscal.com\/en\/wp-json\/wp\/v2\/comments?post=3072"}],"version-history":[{"count":8,"href":"https:\/\/www.augelegalfiscal.com\/en\/wp-json\/wp\/v2\/posts\/3072\/revisions"}],"predecessor-version":[{"id":8246,"href":"https:\/\/www.augelegalfiscal.com\/en\/wp-json\/wp\/v2\/posts\/3072\/revisions\/8246"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.augelegalfiscal.com\/en\/wp-json\/wp\/v2\/media\/8176"}],"wp:attachment":[{"href":"https:\/\/www.augelegalfiscal.com\/en\/wp-json\/wp\/v2\/media?parent=3072"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.augelegalfiscal.com\/en\/wp-json\/wp\/v2\/categories?post=3072"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.augelegalfiscal.com\/en\/wp-json\/wp\/v2\/tags?post=3072"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}