Andorra has a modern tax system, with most personal and corporate taxes capped at 10% and VAT of only 4.5%. The government is also preparing attractive tax regulations for crypto currency and digital assets. There is no obligation to declare assets abroad.
Over the past decade, Andorra has changed from a tax haven to one of the most attractive recognised tax systems in Europe, both for individuals and companies.
Any resident whose main base of economic activity is Andorra, or who is a resident of Andorra for more than 183 days a year, is liable for personal taxes up to 10%.
The system is progressive, with personal income up to EUR 24,000 being tax-free, the next EUR 16,000 taxed at 5% and any income over EUR 40,000 taxed at 10%.
There is zero tax on:
- Inheritance, donations and gifts
- Sale of shares where one holds less than 25%
- Dividends from mutual funds
- Dividends from Andorran SICAV funds
If one already paid more than 10% tax at source of the payment, there is no tax liability in Andorra.
In Andorra there is no obligation to declare or list assets held abroad.
All Andorran companies, except for foundations, are taxed as follows:
Andorran limited companies (SL and SA) are taxed at 10%, but numerous allowed deductions reduce the effective tax bill. Also, companies can carry forward past losses up to 10 years to offset taxable profits.
Holding companies are exempt from taxation of profits, dividends and capital gains. However, this status must be applied for in advance, which we at Prime Management can help you with.
There are no withholding taxes on dividends or interest paid from Andorra to foreign partners.
Andorra has signed and is the in process of signing several double taxation agreements, which creates opportunities to establish tax-efficient international tax structures. As per today, Andorra has agreements with Cyprus, France, Hungary, Luxemburg, Lichtenstein, Malta, Portugal, San Marino, Spain, and the UAE. In progress are Belgium, Netherlands, Switzerland and further Middle Eastern countries.
Andorran VAT (IGI) is 4.5%.