Taxation in Andorra: is it profitable to live and do business here?

16 Sep 2018 08:55

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When someone says "Andorra" in a conversation, the eyes of a seasoned tourist-shopaholic light up with excitement. Still: it's a tax free zone! But now we will talk about higher finance: how interesting is this country for those who are planning to open or do business in Europe?

Residence permit in Andorra
The residence permit in Andorra is active and passive. Active residence permit actually equates you to the citizens of this country and implies that you live and work in the territory of the Principality constantly. Passive status does not entitle you to employment and does not strictly restrict your stay on the territory of the state.

Sales Director of the Spanish company Mahersol Victoria Kutuzova: "The availability of real estate in the property will be a significant plus for a positive decision on the provision of residence permit. Although, there are cases when families received a resident status and did not own a house or apartment, but only on the basis of a long-term lease contract.

Taxes for the purchase of real estate in Andorra
At the time of conclusion of the transaction, you pay a standard tax of 2% of the cost of the acquired object to the local municipality. Additionally, you will receive 2% of the transaction value in favor of the government. Thus, 4% is automatically added to the price. Also, the buyer pays for the notarialization of the transaction, an average of about € 500. The annual property tax is not necessary to pay, and there is no luxury and inheritance tax in the country.

Andorra Church Taxes on personal income in Andorra
And now, to replace the issue of "where to live" comes another - "how to live": work or do nothing, conduct business in Andorra or not.

An individual who is in the territory of Andorra for more than 183 days a year acquires the status of a tax resident. The basic tax rate for personal income in Andorra is only 10%. This indicator attracts many people.

Consultant on the opening of companies in the Kingdom of Andorra in the company Denis Korolev: "Even this low rate can be minimized. For example, an individual's income of up to € 24,000 per year per investor is not taxed at all. If, for example, a spouse does not have a source of personal income, then the family will have this threshold of € 40,000. "

The income of an individual in the amount of € 24 000 to € 40 000 per year is subject to a reduced rate of 5%. And only income over € 40,000 is taxed at 10%.

Thus, Andorra is really very different from many countries in Europe. Preferential treatment is established for both buying and selling real estate in case it is the principal place of residence of the seller. The rate in this case depends on the period of ownership of the object: the more it is, the lower it is. Minimum it will be with a tenure of 10 years - only 1%. But with a tenure of up to 2 years - 14%. There is no tax on gift and inheritance.

Victoria Kutuzova: "All these tax breaks attract Andorra" smart "investment. The two-bedroom apartment can be purchased from € 200,000. The townhouse is from € 350,000, and the villa is from € 500,000. "

It turns out, to buy a property in Andorra and get a resident status - the question is more of money and desire. The question is solved and real.

Andorra landscapeWhat is important to know about opening a business in Andorra
In Andorra there are two main types of companies: Limited Liability Company (SL) and Joint-Stock Company (SA). You can also create holding companies and funds. The first are established for the ownership of shares of foreign companies. Well, the activities of the latter, unlike the holding companies, is beautiful in that it is regulated by special legislation.

For our fellow citizens, the most common form is the opening of limited liability companies. The requirements for the capital of SL are € 3000, for SA - € 60 000, and for the holding - € 120 000.

By the way, an important bonus is that Russians can own a 100% stake in the capital of the Andorran company. And this rule applies to all sectors and sectors of the economy.

Denis Korolev: "The basic corporate income tax rate will be 10% for SL and SA. But Andorran holdings and funds are completely exempt from taxation, provided that the former do not carry out other activities, in addition to owning shares or shares of foreign companies, while the latter clearly comply with the reporting requirements. Tax on interest income and on capital gains are most often levied at a basic VAT rate of 4.5%. "

The most important fact, or call it a spoonful of tar in a barrel of honey. The activity of any company open in Andorra must be real, not nominal! This applies to both holdings and funds. The police conducts inspections of companies, both fresh and old.
Andorra does not count and, in truth, is not an offshore company. But a lot of people and businesses make a smartinvestments here. Therefore, at the opening stage of the company, Andorran banks will be analyzed. And if there are signs that the company being created is nominal, the account will be blocked very quickly, or you will not be able to open it initially. Such cases are known. Gone are the days when the banks of the Principality opened an account on the passport and personal presence of the applicant.

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