Taxation in Andorra

Taxes in Andorra: what are they and why are they so advantageous.

For many years, Andorra has been considered as a “not very transparent” jurisdiction or as a “tax haven”. However, reality is currently very far from these concepts since the Principality of Andorra has its own fiscal framework, which has contributed to its being removed from the OECD black list.

Specifically, in Andorra there is the following taxation:

  • Income tax of people residing in the country: progressive tax rate until 10%.
  • Corporation tax: tax rate of the 10%.
  • Indirect General Tax: tax rate of 4.5%.
  • Income tax for non-residents in the country: progressive tax rate until 10%.

Jurisdiction and taxes in Andorra

Andorra is one of the countries in Europe with the lowest corporate tax rate (2-10%) and income tax (5-10%). It has the lowest value added tax (VAT or sales tax) in the whole of Europe with 4.5%. There are no inheritance or inheritance taxes and contributions to social security are among the lowest in Europe.

Tax agreements + strategic location

Andorra is located between France and Spain, just 2 hours from Barcelona and 2.5 hours away from Toulouse, France. Double taxation agreements have already entered into force with both countries as well as with Luxembourg and Liechtenstein. Agreements were also signed with Portugal and Malta.

100% open for foreign investment

Foreign investment to create companies in Andorra is more than welcome. Facilitates residency for company directors by opening a new business in Andorra.
Excellent standard of living and infrastructure
Andorra's per capita income is one of the highest in Europe. It has excellent health care, a multilingual educational system and high-speed internet through fiber optics throughout the country.

Benefits of holding companies in Andorra

Companies with shares in other national companies of third countries. These companies enjoy tax exemption on the dividends obtained, as well as on capital gains in the following cases:

  1. That the investee non-resident tax entity is subject, without the possibility of exemption, to an income tax with characteristics similar to the corporate tax of the Principality of Andorra.
  2. That the percentage of participation, direct or indirect, in the capital, equity, equity or voting rights of the resident or non-resident tax entity is equal to or greater than 5 percent. The corresponding participation must be held uninterruptedly during the year prior to the day on which the benefit to be distributed is due or, failing that, it must be maintained subsequently for the time necessary to complete this period.
Taxation in Andorra
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