Spain taxes VS Andorra taxes: comparative analysis of tax systems

Spain taxes VS Andorra taxes

Comparative analysis of tax systems

                                                                  Andorra                                                     Spain

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. IPRF. Calculated in accordance to the 6-level progressive tax percentage rate from 21% to 52%. A greater part of it goes to the federal budget, a smaller part—to the autonomous budget. That is why the rate varies from one province to another. From 1999 a declaration can be filed only by the person that has got only one source of income, and less than 22 000 euro of income. The declaration should be filed no later than June, 20 of the year that follows the tax year. The amount of tax is determined by different factors: family membership, the amount of dependents, mortgage loan payments, educational expenses, etc.
VAT IGI. The flat rate (4.5%) was introduced in January 2013. This tax is not imposed on goods and services that are sold beyond the borders of Andorra From September 1, 2012 the rates of this tax in Spain make up  21%, 10%, 4% and 0%. 10%– major alimentary products, medicines, transport, the majority of hotel services and the building of new objects. 4% is for essential foodstuff (vegetables, bread, milk, and fruit). 21 % rate exists for the goods and services that do not come under any other tax rates. VAT is paid while doing shopping or getting services on the territory of Spain.
Company tax IDS. The tax was introduced in 2012. Operating tax rate makes up 10%. There are certain benefits for the first 3 years of company’s activities. First 50 000 euro are taxed by 5% rate (it means that 50% benefit is presupposed for beginners); profits that exceed 50 000 euro level are taxed by 10% rate. At that the companies that sell their goods and/or services abroad are taxed by 2% rate. The companies that manage or own the shares of authorized capital of other companies (holdings) are exempt from this tax. IDS. This tax is periodical, proportional, direct and personal. This tax is imposed on the incomes of corporations and other legal persons. This tax is imposed all over the country except Basque Provinces and Navarra. The rate makes up 25 % (preferential rates can be 20% and 15%), in Basque Provinces—28%, in Navarra—30%. All types of institutions, regardless of form and name have a status of legal persons, except civil society.
Business activity tax IAE. The tax was introduced in 2013 and makes up 10% of income. This tax is annually collected only from natural persons (residents or non-residents) depending on the type of professional activity. First 40 000 of euro, obtained in the result of undertaking, is not tend for taxation. This measure of support was taken especially for natural persons-residents that provide their services for Andorran companies (for instance, in software development, repairs or business machine services, etc.) IAE. This tax is imposed on all types of economic operations, such as agreements on launching companies, capital increases and decreases, merging, the division and dissolution of companies, the alteration on companies’ legal data.
Legal act taxes No AJD. This tax is imposed on notarially certified documents. The rate may be fixed or variable. Fixed rate is imposed on documents, written on stamped paper. Variable rate is imposed on acts about money or valuables that should be registered in Real Estate Register, Trade and Industrial Registers. This tax for legal act documentation makes 0.5% of the cost, mentioned in the document.
Real property personal tax No IBI. The tax rate depends on the space and the quality of housing. Such factors as location, remoteness from cultural centers and places of interest (by analogy with French system). It is paid once a year in accordance to the rate, ranging from 0,50 to 2% of cadastral value of housing, depending on the municipality, where the object is located. The payment for apartment may vary from 100 euro to 500 euro per year, for villa—from 300 to 2000 euro per year.
Vehicle personal tax No IOVTM. Direct tax that is collected by local authorities. This tax is imposed on the usage of vehicles, proper for public highways, regardless of category and class. This tax is paid by vehicle owners. The average annual amount of payment varies from 90 to 150 euro per car. This tax is irrelevant for: busses, trucks, trailers and semitrailers, bicycles and motorcycles
Building and repair tax No This tax is indirect and is collected at the municipality level. This tax is paid by natural and legal persons that implement reconstructions or repairs as well as by natural and legal persons that bear expenses for building and reconstruction, not being the owners of the building. This tax should be paid within 30 days from the beginning of works. The sum of taxes is calculated on the basis of actual value of works. The tax rate makes up 4% of that value.
Wealth tax No No

Look here for more information about Andorran tax system

See also Andorra Business Guide

See also Taxes in Europe

See also Taxes in Andorra VS Taxes in France

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