What are the special provisions for Andorran companies engaged in international trade?
Director of Augé Grup’s Tax Department Marc Urgell Díaz answers:
“One of the most common profiles of foreign investors in Andorra are the entrepreneurs who develop their business in the realm of international trade, either through traditional models of international trading (B2B) or innovative models in the form of e-commerce platforms (B2C).
The attractivity of Andorra in this respect are the innumerable tax advantages that the country offers to entrepreneurs in general, and to international trading companies in particular, pursuant to the special regime of companies dedicated to international trade.
There is a corporate tax in Andorra at a rate of 10% on the company’s profit. Under this special regime, there is a reduction of 80% of the tax base, thus achieving an effective taxation of 2% on the companie’s profit. It is the most competitive preferential scheme in Europe.
This special regime applies to companies engaged in international trade (i.e buying and selling of products at an international level). In the same way, intermediary or commission companies in international trade may also benefit from this regime.
In order to benefit from the special regime, the company must fulfill the following requirements and have within the Andorran territory: an office of at least 20m2 dedicated exclusively to the activity and a person hired at least at part-time. In addition, in its business model the product should not enter the Andorran territory. Therefore, the goods must be purchased abroad and the product must be sent directly to the customer’s headquarters abroad (i.e outside of Andorra).
It is not necessary to be an Andorran resident to incorporate a company in Andorra. However, it is highly recommended. If the shareholder of the Andorran company is an Andorran resident, once the corporate tax of 2% has been paid, the dividends distributed by the Andorran company to the Andorran resident are exempt from taxation.
One of the most important firms in this field in Andorra is Augé Grup, which together with the firm Baker & McKenzie gave a conference on e-commerce in 2016.
The aforementioned special regime, regulated by article 23 of the corporate tax law, also offers similar advantages in the field of intellectual property and the management of said rights. The advantages granted to said types of companies will be analyzed in the coming weeks”.
