France taxes VS Andorra taxes. Comparative analysis of tax systems

France taxes VS Andorra taxes. Comparative analysis of tax systems (updated 01/01/2020)

    Andorra France
Income tax For the first time in the history of the state the income tax was implemented in 2015.  All citizens and tax residents of Andorra (living more than 180 days on the territory of the country) that have more than 24 000 euro of annual income are obliged to pay income tax. The incomes from 24 000 euro to 40 000 will be taxed in accordance to 5% concessionary rate. The incomes that surpass 40 000 euro per year will be taxed by 10%. The authors of the bill assure that 10% will be the highest possible rate. Interests on deposits at Andorran banks; interests on securities, issued by the Government of Andorra; incomes on property abroad in case of owning that for more than 10 years; inheritance and welfare assistance in the form of benefits (up to 3000 euro annually) won’t be taxed. IR.  It is imposed on the comprehensive incomes, obtained by a natural person from the sources both in France and abroad. Tax payer fiscal item is a family (spouses and dependents under 18, unmarried children under 21 and children-students under 25). Lonely people make a fiscal item themselves. Income tax is levied in accordance to 6-grade progressive scale. At that different coefficients are taken into consideration in calculations. Family size coefficient for unmarried citizens without children is 1, for spouses without children –2,  for spouses with 1 child—2,5, with 2 children—3, for widows with under-age children—3,  for one divorced parent (not living in civil marriage) with 2 under-age children—2,5 etc. The tax calculated in the following way: the total sum of income  is divided by corresponding coefficient; then the tax is deducted in accordance to the rate, presupposed for certain type of incomes and then the obtained sum is multiplied by the same coefficient. Retired and disabled people as well as the categories of citizens that get meal allowances have the right for tax remissions. The rates: under 5900 euro per year—0%; from 5900 to 11900 euro—5,5%; from 11900 to 26400 euro—14%, from 26400 to 70800 –30%, from  70800 to 150000 euro—41$, over 150000—45%
VAT IGI. General collateral tax. 4,5% flat rate was implemented from January 2013. This tax is not imposed on the goods and services, sold beyond the borders of the Principality. Reduced 1% or 0% rate is applied for essential goods and services; increased 9.5% tax rate is applied for banking and financial tools. TVA. It is one of the most important budget revenues of France. From 2014 the basic rate makes up 20% (previously 19.6%); intermediate rate –10% (previously –7%)  is valid in reference to restaurants, transport, repairs, technical servicing and firewoods. The reduced rate remains at the same level of 5.5% (alimentary, soft drinks, gas and electricity, equipment and services for disabled people, books; cinema, museum and concert ticketsas well as new energy saving technologies in building (used to be 7%). 2,1% rate is valid for medical prescriptions, TV and other media license. VAT tax is not imposed on education, medical services, exports within euro-zone, waste recovery and recycling as well as sea fishing.
Corporate income tax IDS. Corporate income tax was implemented in 2012. The valid rate for this tax is 10%. There are certain concessions for the companies within first 3 years of activity: first 50000 euro is taxed by 5% rate (i.e. “newcomers” have 50% benefit); the sums of incomes over 50000 euro are taxed by 10% rate. At that, 2% rate is levied on the companies that sell their goods and/or services beyond the borders of Andorra. Holdings, the companies that own and manage the shares of equity capital, are exempt from this tax. Corporate income tax (impot sur les societies) is imposed on legal entities—business units (private joint-stock-companies and associations, state enterprises, institutions,  utility providers that have financial autonomy, produce goods and/or present services on entrepreneurial basis). This tax encompasses the incomes, obtained from the activity on the territory of France by both residents and non-residents. The taxation base is a declared income for the accounting (previous) year, the data should be presented to tax authorities no later than April 1 of the current year. Before the final payment, every quarter a tax payer makes advanced payments. The basic rate makes up 33.33% of the net income; as for the companies that sell oil and gas, the rate is increased up to 50%. The reduced 20,9% tax rate is levied on agricultural companies. New companies have concessions within first five years of their activities (during first 2 years they are exempt from taxes in general, for the third year the payment makes 25% of the rate, for the fourth year—50%, for the fifth year –75% and only after 6 years of company’s activity the rate makes up 100%). There is also a 25% tax benefit that covers the expenses for professional education of employees.  This tax is not imposed on abnormal depreciation, in particular on computer software and the equipment, aimed at environmental improvement and the economy of energy. Assets sales revenues are taxed same as ordinary incomes. 19% tax is levied on the assets sales revenues that were sent to surplus fund after 2 years of usage.  The incomes of industrial and trade origin  as well as real estate incomes are taxed in the country of the constant location of tax subjects or their properties.
Professional education tax No It is levied on the payrolls  in accordance to 0.5% of the annual payroll of the enterprise in general plus 0,1%. In case the enterprise uses temporary labor, the rate increases up to 2%.  Additional 0,3% are taken for the professional training of young specialists. Besides. The enterprise that employs more than 10 workers obligatory participates in housing construction program, 0,65% of annual payroll is taken for these purposes. The form of participation may be different: from direct investments to loans
Taxes on real estate,  securities  and other types of movables transactions Progressive tax on real estate sales makes up 15% in case the property was acquired no more than 12 months ago, 13$– less than 2 years, 10%– less than 3 years. Further the tax rate falls by 1 % every other year of owning the property and consequently will make 0% only after 12 years. Meanwhile, there are certain exceptions. For instance, in case the resident of Andorra decides to sell his real estate property in order to reinvest money in other projects on the territory of the Principality.  The customer pays the tax  fixed  in all regions (2% of the property  cost) to the local Comu as well as 2% tax to the Government (Impost de Transmissions Patrimonials). The income obtained from real estate sale is taxed in the year of the deal. At that 0% tax rate is valid only in case when houses and apartments that were used for actual residence are sold; in case of the first sale and in case the property that was owned no less than 32 years. The rates are differentiated in accordance to the terms of real estate owning  by a seller. The maximum tax rate is levied on the incomes obtained in the result of sales of the real estate that was acquired less than 2 years ago. The revenue from operations with securities is taxed in accordance to 16% rate in case the amount of income surpasses 307600 euro (this index was settled in 90ies). The income, obtained from the operations with other movables (except securities),  is taxed only when the sum of  the deal surpasses 20 000 euro. There are two rates for art objects: 4,5% and 7%,  for jewelry –7,5%
Land tax No Developed land tax  is levied on 50% of  cadastral or rental value of real estate or  patches of land aimed for industrial and commercial usage. State property, agricultural buildings,  accommodation units that belong to the persons older than 75 as well as to the people that get  support from social funds or disablement payouts, are exempt from taxes.  Non-developed land tax is imposed on 80% of cadastral or rental value of constructible surface cost; the same system is valid in respect to privately owned fields, forests and moors. State property is exempt from this tax completely, the lands with artificial afforestation—temporarily.
Housing tax No This tax is paid by the owners or/ and tenants of living quarters (houses or apartments). Financially disadvantaged citizens are exempt from this tax completely or partially. The rates of land and housing taxes are determined by local authorities but can not surpass the level of the previous year 2,5 times on both regional and national levels
Professional tax No Taxe professionnelle is levied on people of liberal professions (writers, artists, journalists, etc.) that don’t get salary for their work. The rate is determined by every administrative-territorial unit, depending on the cost of premises, used for professional activity of taxpayers, and on the amount of incomes. The maximum tax rate makes up 3,5%, imposed on added  value sum, generated by a tax payer within a year.  Added value is a difference between the sum of obtained income and the expenses (in accordance to existing prices), related to professional activities.
 Inheritance tax No The subjects of the tax: the residents in all cases of ownership transfer as well as non-residents that obtain title for property on the territory of France. The rates for the property that passes into ownership by way of inheritance are equal to the ones for the granted property. The property is estimated in accordance to market value. The property bequeathed for the sake of the state, local government institutions, charity organizations is not taxed in France or in other countries with the system of taxation for inheritance and grants that is identical to the French one. Eternal family annuity (the complete sum is paid by the spouse that remains alive longer) is deducted from the cost of inheritance and grants. The non-taxable minimum for spouses, direct descendants and parents makes up 275000 euro (for disabled persons—300 000 euro), for siblings –100000 euro. As for other categories of heritors, any inheritance that costs more than 10000 euro is taxed. The tax rates, varying from 5 to 60%, are differentiated in accordance to the cost of the property by three relation degrees of heritors.  The level of taxation decreases by 75% when the inheritance presents forests, wood-meadows and land property passed to long-term lease.
Excise duties No Alcohol drinks, tobacco, matches, jewelry, sugar and confectionary are attributed to excisable goods. Additional VAT is imposed on such goods as electric energy.




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