Banking & Taxation

Banking & Taxation

Andorra is one of the lowest taxed countries in the world, both in terms of taxes on individuals and taxes on companies (large and small). This makes Andorra a most attractive destination for individuals and companies alike who have become less and less inclined to suffer the tax burdens imposed on them by western governments. These governments, burdened with massive debts caused by years of financial mis-management, now see increased taxation across the board as a principal means of reducing these debts over the next 10 to 20 years and beyond. This is inevitably targeted at wealthy citizens who, after years of hard toil, are now being asked to share a much larger fiscal burden to right the wrongs of incompetent governments.

If you are disinclined to endure this fiscal millstone, then Andorra, along with its scenery, skiing and lifestyle, is the answer for you.

 

Taxation on Individuals

  • There is no income tax levied on income in Andorra
  • There is no tax levied on an individual’s worldwide income
  • There is no inheritance or gift taxes
  • There is no wealth tax in Andorra
  • There is a 4% Real Estate transfer fee paid to the government by the purchaser.
  • There is a 4% VAT charge on all goods and services.
  • There is no capital gains tax on principal residencies in Andorra provided a new principal residency is purchased within 12 months.
  • There is no capital gains tax on property owned for 10 years or more.
  • If the property is sold within 10 years, the Capital Gains Tax is applicable on a decreasing scale as set out below;

 

NOTE: There is also an inflation adjustment of approximately 1% per annum, discounting the capital gain of the property from the time of purchase to the point of sale.

 

Taxation on Companies

  • Corporation Tax is levied on a company’s net profit before tax at a rate of 10%.
  • There is a 4% VAT charge on all goods and services.
  • All Andorran companies must contribute 20% of an employee’s salary to the CASS (Caixa Andorrana de Seguritat Social – Andorran Social Security) which provides working residents with health insurance cover and funds the retirement pension scheme.

 

 

Taxation Comparisons with the United Kingdom

 

 

ANDORRA

United Kingdom

TYPES OF TAX
 
 
INDIVIDUAL INCOME   TAX

 0% in Andorra   and 0% on foreign income

45% on incomes over   £150,000
 
CORPORATION TAX

5% 0n net profit for 2012. 10% after 2012

24% Large companies. 20% Small companies

 
VAT (or equivalent)

4%

20%

 
INHERITANCE/GIFT   TAX

0%

Subject to complicated rules but essentially 20%.   But 40% if death occurs within 7 years of making the gift.

 
CAPITAL GAINS TAX

Property – more than 10 years ownership – 0%. Less   than 10 years ownership –  sliding   scale 1% -15%. Andorran   securities  -5%for 2012 and 10%   thereafter. Foreign securities  – 0%.

Individuals –   18% if income plus gains not in excess of £37,400. 28% if greater than   £37,400. Exclusions apply to principal residence,ISAs and GIFTS. Corporations – the   relevant corporation tax rate.
 
REAL ESTATE   TRANSFER TAX 4% on purchase   price 0% sliding up to   5% for purchase prices greater than £1mio.
 
NET WEALTH TAX

NO

NO

 

 

The fiscal advantages of becoming an Andorran Tax resident are clearly obvious.

Clearly, the rates in the comparative table will change from time to time. We will update any changes in Andorran rates as and when they occur in our News section, which is constantly maintained.SONY DSC

The rates provided for the Western Countries are trending in an upward direction as Western Governments grapple to reduce their huge debts. However there are many more indirect taxes imposed upon individuals and corporations in these countries that are not always self-evident, and that add up to an impossible tax burden on citizens and companies. These taxes, known commonly as “Stealth Taxes” are particularly insidious and although they are predominantly unknown and unseen, they add up to billions of dollars surreptitiously taken from the pockets of individuals and the corporate world.

For more information about Stealth Taxes for U.K. readers, please google UK Stealth Taxes and you may be shocked on the effect that these are having on you.

ANDORRA HAS NO STEALTH TAXES

 

Taking advantage of the Andorran Tax rates

To take advantage of the Taxation system you must first become an Andorran Tax Resident. APP provides a discrete and professional residency service as a part of our overall relocation package. Please click the section Relocate to Andorra for details of this service, and the requirements and timing of this procedure.