Andorra is a country that has an incredible tax system, however, it is not completely tax-free. The country has no capital gains, inheritance, or sales taxes. In addition to these benefits, the Andorran government does not impose any tariffs on imports and exports. With a maximum of 10% income tax and corporate tax, <a dir="ltr" href="https://andorrapartner.com/living-in-andorra/">living in Andorra </a>is a really attractive option if you are looking for a way out of paying high taxes!

Is Andorra Tax-Free?

There is no consensus on whether Andorra is a tax haven or not . The European Union and the Organization for Economic Cooperation and Development – OECD do not consider Andorra as a fiscal paradise since 2018 . On the contrary, the NGO Oxfam International keeps Andorra on the list of 73 countries considered tax havens due to low tax pressure, and in detail lower percentage of revenue contributed to the state to the <a dir="ltr" href="https://andorrapartner.com/andorra-gdp/">GDP </a>(Gross Domestic Product). Pyrenean micro-state remains an important financial haven thanks to significantly lower taxes than neighboring countries.

Andorra Tax Haven

<ul><li>Maximum 10% tax on personal income above €40,000 </li><li><a dir="ltr" href="https://andorrapartner.com/corporate-tax/">Andorra corporate tax </a>capped at 10% </li><li>VAT rate (IGI) at 4.5% for most goods and services (the lowest in Europe) </li><li>Non-taxable bank interest up to €3,000 per year </li><li>No wealth tax </li><li>Low contribution to <a dir="ltr" href="https://andorrapartner.com/cass/">CASS </a>(Caixa Andorrana de Seguretat Social) </li><li>Very reasonable tax rates on <a dir="ltr" href="https://andorrapartner.com/real-estate-investing/">Andorra real estate investment </a> </li><li><a dir="ltr" href="https://andorrapartner.com/double-taxation-agreements/">Double taxation treaties </a> with several countries </li> </ul>

Why Do People Think Andorra Is a Tax Haven?

Spain removed Andorra from the list of tax havens in 2010, after agreeing on several bilateral measures. The pact established Andorra’s commitment to adapt its laws by OECD principles, as well as to establish collaboration with the Spanish Tax Agency, including the possibility of carrying out tax inspections in the micro-state.

Tax optimization is fully compatible with transparency. Since 2018, the principality’s banks have the duty to collaborate and contribute to the fiscal clarity effort being made by Andorran institutions. Non-resident EU citizen opening a <a dir="ltr" href="https://andorrapartner.com/banking/">bank account in Andorra </a>is obliged to communicate their existence to the country of holder’s origin.

Andorra: Fiscal Paradise vs Tax Optimization

Although the principality remains for many foreigners a tax haven, Andorra does not cease to seduce foreign investors. With a clearly advantageous taxation system and a tax structure designed to encourage <a dir="ltr" href="https://andorrapartner.com/residency-by-investment/">Andorra residency by investment </a>and entrepreneurship, the principality is one of the top countries for welcoming <a dir="ltr" href="https://andorrapartner.com/invest-in-andorra/">foreign investment </a>. Andorra has bureaucratic mechanisms, however, management and procedures with the different administrations must be carried out in the <a dir="ltr" href="https://andorrapartner.com/languanges/">official language </a>of the principality, Catalan.

Advantages of Andorran Residency in Terms of Taxation

One of the factors that determine whether a country is a tax haven is banking secrecy, the prohibition to disclose information about client accounts to third parties outside the financial institution. Through various transparency agreements, Andorra abandoned <a href="https://andorrapartner.com/banking-secrecy/">banking secrecy </a>in 2017, allowing the exchange of information with the European Union and the OECD, and managing to get out of their blacklists. This decision had negative consequences for <a href="https://andorrapartner.com/banking/">Andorran banking </a>, which saw a decrease in the number of foreign investment deposits.

What Makes Andorra a Tax Haven?

According to EU institutions, Andorra is no longer a tax haven due to commitment to data transparency, however is still an attractive tax destination.