{"id":3637,"date":"2020-10-29T16:11:10","date_gmt":"2020-10-29T15:11:10","guid":{"rendered":"https:\/\/www.augelegalfiscal.com\/the-tax-residency-of-corporations-incorporated-in-andorra\/"},"modified":"2020-11-04T18:43:30","modified_gmt":"2020-11-04T17:43:30","slug":"the-tax-residency-of-corporations-incorporated-in-andorra","status":"publish","type":"post","link":"https:\/\/www.augelegalfiscal.com\/en\/the-tax-residency-of-corporations-incorporated-in-andorra\/","title":{"rendered":"The tax residency of corporations incorporated in Andorra"},"content":{"rendered":"<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\/the-tax-residency-of-corporations-incorporated-in-andorra\/#The_tax_residency_of_corporations_incorporated_in_Andorra\" >The tax residency of corporations incorporated in Andorra<\/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\/the-tax-residency-of-corporations-incorporated-in-andorra\/#376_803_636\" >+376 803 636<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"The_tax_residency_of_corporations_incorporated_in_Andorra\"><\/span>The tax residency of corporations incorporated in Andorra<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p>The question regarding the determination of the tax residency is of first importance from a tax standpoint and therefore requires a detailed analysis; Indeed, the answer to this question determines the country in which the tax is due and therefore the applicable tax rate, as said rate is different for tax residents and non-residents from a tax point of view.<\/p>\n<p>Since the determination of the tax residency depends on the Law of each State, along with the application of signed bilateral Conventions, it is possible that a given company be treated as a tax resident of various countries, generating a situation of double taxation.<\/p>\n<p>This article deals with the question of determination of companies\u2019 tax residency, in application of Andorran tax law and International tax doctrine.<\/p>\n<p>First of all, pursuant to article 7.1 of Law 95\/2010, of 29 December on corporate tax, the criteria that determines the tax residency of corporations based in Andorra are as follows:<\/p>\n<p><em>\u201cAre considered tax residents in Andorra the companies that comply with one of the requisites below:<\/em><br \/>\n<em>a) Having been incorporated according to the Laws of the Principality of Andorra.<\/em><br \/>\n<em>b) Have their headquarters in the Principality of Andorra.<\/em><br \/>\n<em>c) Have their effective place of decision in the territory of the Principality of Andorra. For this purpose, it is understood that a company has its place of effective decision in Andorra when the general management and production control of its business are located in Andorra.<\/em><br \/>\n<em>d) Have transferred their residency towards the Principality of Andorra, as of the moment that such transfer produces its effects, pursuant to the applicable law\u201d.<\/em><\/p>\n<p>On the basis of these legal provisions, Andorran law sets out connexion points to determine the tax residency of a company: any one of the above-mentioned criteria is sufficient to establish a company\u2019s tax residency in Andorra since there is no pre-determined order of application.<\/p>\n<p>Moreover, as mentioned, a company could be considered as a tax resident of various States pursuant to their respective Law. In such cases, the <a href=\"https:\/\/www.augelegalfiscal.com\/en\/conventions-to-avoid-double-taxation\/\">Conventions to avoid double taxation<\/a> signed by Andorra within the frame of the Organisation for Economic Co-operation and Development (OECD) would apply; the latter aim at delimitating the States\u2019 tax sovereignty and avoid situations of International double taxation.<\/p>\n<p>Indeed, in front of situations of double tax residency, the OECD &#8211; through the Conventions to avoid double taxation \u2013 has established a \u201ctie-break\u201d rule to determine the tax residency of corporations. In that respect, unlike what is applicable for physical persons for whom successive criteria must be dealt with, a corporation will be considered as a tax resident of the country in which it has its place of effective management.<\/p>\n<p>Therefore, from the tax administration\u2019s standpoint, no relevance is granted to a purely formal criteria such as the recordal at a corporate registry. What is taken into consideration over all is the place where the company is effectively managed. This is why the \u201cplace of effective management\u201d has been chosen as the preferred criteria for companies, which must be understood as the place where the key commercial decisions are taken along with the management decisions that are necessary to carry through the business or professional activities of the company. Logically, in order to determine the place of effective management, must be taken into consideration all relevant facts and circumstances. As a consequence, depending on the interpretation of the tax authorities a company could simultaneously have more than one place of management but it can only have one place of effective management that will be where the \u201ccentralized management and control of the whole activities of the company\u201d is located.<\/p>\n<p>As it can be noticed, this criteria is eminently practical: it involves the place where the decisions of the company are taken which allow for its normal development. This is why it is a factual element that can be evidenced by:<br \/>\n&#8211; the domicile of the Managers;<br \/>\n&#8211; the place of meetings;<br \/>\n&#8211; the location of the offices;<br \/>\n&#8211; Etc.<\/p>\n<p>The Comments regarding the Model of Convention to avoid double taxation can be mentioned, according to which:<\/p>\n<p><em>\u201cThe place of effective management is the place where the key commercial decisions are taken and the management decisions that are necessary to carry through the business and professional activities of the company. In order to determine the place of effective management, must be taken into consideration all relevant facts and circumstances. A company can simultaneously have more than a place of management but will only have one place of effective management. (&#8230;) The competent authorities that have to apply this provision to determine the (tax) residency of a company within the Convention will have to take into consideration various factors, such as the place at which the meetings of the Board or equivalent are usually held, from where are usually carried through the functions of the managing director and other high executives, from where is conducted the high level management on a daily basis, where is the main office located, etc&#8230;\u201d.<\/em><\/p>\n<p>Therefore, as highlighted above, one of the defining criteria of the place of effective management is the place where the strategic direction (\u201ckey management\u201d) or the place where the substantial decisions of the whole company are taken.<\/p>\n<p>As a conclusion, Andorran law, following the OECD\u2019s guidelines, contains anti-evasion clauses that aim at avoiding artificial delocalisation of companies\u2019 tax residency. For this reason, will only be subject to Andorran corporate tax the companies that present a clear economical link with the Principality, either because their main assets are located in Andorra or because the main activity is conducted from Andorra along with its management.<\/p>\n<p><b>Karima Sliman<\/b><\/p>\n<p>Aug\u00e9 Legal &amp; Fiscal<\/p>\n<h4>Do you want to contact one of our professionals?<\/h4>\n<p>[contact-form-7 id=&#8221;124&#8243; title=&#8221;Formulario de contacto 1&#8243;]<\/p>\n<h2><span class=\"ez-toc-section\" id=\"376_803_636\"><\/span>+376 803 636<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>If you wish, you can call us by phone and we will personally attend to your request.<\/p>\n<p>You can also contact our team by sending your inquiry to the following email:\u00a0<a href=\"mailto:info@augelegalfiscal.com\">info@augelegalfiscal.com<\/a>\u00a0or contact us via WhatsApp (Tel:\u00a0<a href=\"tel:00376333376\">+376 33 33 76<\/a>).<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The tax residency of corporations incorporated in Andorra The question regarding the determination of the tax residency is of first importance from a tax standpoint and therefore requires a detailed analysis; Indeed, the answer to this question determines the country in which the tax is due and therefore the applicable tax rate, as said rate [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":3620,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[11],"tags":[],"class_list":["post-3637","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\/3637","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=3637"}],"version-history":[{"count":2,"href":"https:\/\/www.augelegalfiscal.com\/en\/wp-json\/wp\/v2\/posts\/3637\/revisions"}],"predecessor-version":[{"id":3639,"href":"https:\/\/www.augelegalfiscal.com\/en\/wp-json\/wp\/v2\/posts\/3637\/revisions\/3639"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.augelegalfiscal.com\/en\/wp-json\/wp\/v2\/media\/3620"}],"wp:attachment":[{"href":"https:\/\/www.augelegalfiscal.com\/en\/wp-json\/wp\/v2\/media?parent=3637"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.augelegalfiscal.com\/en\/wp-json\/wp\/v2\/categories?post=3637"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.augelegalfiscal.com\/en\/wp-json\/wp\/v2\/tags?post=3637"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}