Andorra Business Taxation: Everything you need to know

Andorra, the small nation nestled in the Pyrenees between Spain and France, has become an attractive destination for companies seeking to optimize their tax burden. Despite its small size, this country offers a unique value proposition in tax terms, which has attracted a growing number of companies from around the world.

In this article, we will explore in detail the peculiarities and benefits of company taxation in Andorra, and we will show you how moving your company to this promising tax scenario can result in significant savings and growth opportunities. 

What makes Andorra so fiscally attractive? 

To understand Andorra's attractiveness in tax terms, it is essential to explore the most notable features of its tax system and how these can benefit companies, compared to other countries, such as Spain. 

Tailor-made corporate tax

One of the main tax advantages that Andorra offers companies is its attractive Corporate Tax. This levy has a maximum tax rate of 10%, a considerably lower percentage compared to many other countries.

In Spain, for example, the maximum rate of this tax can be up to 25%. But the advantages do not stop there: depending on the nature of the business activity, the tax can be even lower in Andorra, which translates into significant savings for companies.

A more competitive VAT 

The Value Added Tax (VAT) is another factor that adds attractiveness to Andorra's tax proposal. In this country, the equivalent of VAT is the Indirect General Tax (IGI), whose general rate is 4.5%.

This is significantly lower than VAT in Spain, where the general rate is 21%. This differential can represent a substantial reduction in operating costs for companies.

Profits for dividends and capital gains 

Andorra also stands out for its treatment of dividends and capital gains, which can be considerably more favorable than that of other countries. 

In certain circumstances, both dividends and capital gains may be exempt from taxation in Andorra. On the contrary, in countries like Spain, these may be subject to a tax of up to 23%.

Procedure to transfer your company to Andorra 

Relocating a company to Andorra can seem like a challenging process, but with the right guidance and expert advice, it can be a smooth and advantageous transition.

Next, we will break down the key steps to establish your business in the attractive tax scenario of Andorra. 

Creation of a commercial entity in Andorra

The first step to transfer your company to Andorra involves the formation of a commercial entity in the country. This process encompasses several stages, including the preparation of the company's statutes, the presentation of the necessary documentation and the registration of the company in the Andorran Mercantile Registry.

It is important to note that each type of company has its own rules and regulations, so it is essential to choose the structure that best suits your business and tax needs.

Change of tax residence to Andorra 

Once your company is established in Andorra, the next step is to move the tax residence of your company to this country. To do this, you will have to submit an application to the Andorran Tax Administration. This entity will be in charge of reviewing your application and determining if you meet the requirements for the change of tax residence. 

This is a critical point in the process, since the tax residence of your company will determine which tax system will apply to your business activities. In this sense, transferring the tax residence to Andorra can open the doors to a more favorable tax regime for your company.

Obtaining the corresponding business license 

In addition to the formation of the company and the change of tax residence, you will also need to obtain a business license to operate in Andorra. This is an essential step to ensure that your business complies with all local rules and regulations.

How can our law firm help you?

Our law firm, specialized in the relocation of Spanish companies in Andorra, is equipped to provide you with a full range of services to ease your transition. Here's how we can guide you through every step of this exciting entrepreneurial journey.

Advice on the creation of your company in Andorra

With our vast experience in Andorran legislation and business regulations, we are in a privileged position to advise you on setting up your company in Andorra.

We will help you prepare and present the necessary documentation, draft the company statutes and complete all the necessary procedures for registration in the Andorran Mercantile Registry. Our goal is to make this process as easy and efficient as possible for you. 

Assistance in the transfer of tax residence 

We know that the change of tax residence is a crucial step to take advantage of Andorra's tax advantages. For this reason, we offer you complete and personalized advice in this regard. 

We will help you prepare and submit your application to the Andorran Tax Administration, ensuring that all the requirements are met so that your company can obtain its tax residence in Andorra.

Support in obtaining the business license 

Our office will also assist you in the process of obtaining the commercial license to operate in Andorra. We will take care of all the red tape and guide you through the requirements and procedures necessary to get your license. 

Taxation in Andorra, an option to consider

Andorra's tax system offers notable advantages for companies, especially compared to the tax burden in Spain. Relocating a company to Andorra can be a smart strategic decision, which can result in considerable tax savings and more dynamic business growth.

If you are considering moving your company to Andorra, do not hesitate to contact Forcam Lawyers. Our Expert Lawyers in Companies will study your specific case. We offer assistance and legal advice in Companies in Andorra. In addition, we have:

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