Andorra, officially the Principality of Andorra, is a country in the Pyrenees between France and Spain. It is a jurisdiction with a GDP per capita of $42,035 and a population of 77,383 people. It refers to an attractive country to launch a business, both for entrepreneurs and investors. There are a lot of startup ventures in Andorra that have been successful, and they continue to grow over the years. Larger businesses also show good profits in different industries such as finance, banking, retail, and tourism.
Ease of Doing Business in Andorra
Although the Principality of Andorra is a landlocked and small European country, these features do not prevent Andorra from becoming more and more attractive in terms of investment in its economy. Nowadays, Andorra is an attractive place to do business, since the country has become especially popular with tourists and ski lovers. The tourism industry annually replenishes the budget of the Principality, about 80% of its GDP. According to various sources, the flow of tourists in recent years ranges from 9 to 12 million people.
In Andorra, government interference in the activities of private businesses is as limited as possible. In particular, the banking sector enjoys great benefits here.
It is also necessary to remember the reputation of the country. Andorra has previously positioned itself as neutral in all respects, which resulted in a true offshore status. However, due to the market open to foreigners, the legislation has been changed. Now Andorra is recognized as a law-abiding, transparent, and legal jurisdiction with an excellent reputation as well as a wide range of opportunities. It is not a member of the EU, which is beneficial to itself.
Business Taxes in Andorra
Andorra is a jurisdiction that has changed from a tax haven to a country with a low and transparent tax burden. Today, the creation of companies in Andorra by the foreign investors is considered to be a good solution, as such individuals can benefit from its tax advantages. The Principality currently has seven double taxation treaties with the countries such as Spain, France, Luxembourg, Liechtenstein, Portugal, and the United Arab Emirates.
In addition, it is important to mention that there are no taxes on the dividends paid in Andorra.
There are tax payments, also known as the total number of taxes, paid by businesses (plus electronic filing). This tax is counted as paid once a year even if payments are more often. Nevertheless, there was no research performed in Andorra in 2019, so the World Bank research has no results for that year.
An income tax is a tax imposed on individuals or business entities (taxpayers) in respect of their income or profits earned. Income tax rates may vary by the types or characteristics of the taxpayer and the type of the income.
As for the Personal Income Tax Rate in Andorra, it is 10%.
A corporate tax (also called corporation tax or company tax) is a direct tax imposed on the profits of a corporation. The corporate income tax (CIT) rate in Andorra is 10%.
Since 2013, the VAT rate has been 4.5%.