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Andorra modifies its corporate tax regulations to allow online filing of tax returns

Andorra modifies its corporate tax regulations to allow online filing of tax returns

The Andorran tax system is being modernised with a commitment to creating new online portals for filing tax returns. As a result, the regulations governing corporate tax and income tax for non-resident taxpayers have been modified to include new forms that are being made available to allow online filing. From this year onwards, Corporation Tax and IRNR tax returns can only be filed through the virtual office of the Andorran government’s tax and duties department. In addition to these two taxes, Personal Income Tax (PIT) returns must also be submitted online.


Table of Contents

    1. Amendments to the Corporate Tax regulations

      Changes to the income tax regulations for non-resident taxpayers

      Filing your tax returns just got easier

      G20 agreement to unify the minimum corporate tax across countries

      The benefits of setting up a company in Andorra


Amendments to the Corporate Tax regulations

The following amendments have been made to Corporate Tax Law to adapt it to the submission of the new forms:

  • Modification related to payments on account: this tax return shall be submitted using the forms, in the place and manner determined by the Ministry of Finance.
  • Regarding the tax return, self-assessment and payment: taxpayers must use the forms to file and sign the tax return in the month that comes after the 6 months following the end of the tax period, in the place and manner determined by the Ministry of Finance.
  • Regarding methods of payment: the amount for the difference in tax or the payment on account must be paid by direct debit or nominative transfer to the Government of Andorra. In the latter case, a copy of the bank payment document and the tax return must be attached.

Changes to the income tax regulations for non-resident taxpayers:

  • Regarding the tax return: permanent establishments should file it during the month following the end of the tax period, using the forms and in the manner and place determined by the Ministry of Finance. It may be filed up to six months after the end of the tax period, without this having any impact on the deadlines for payment or refund.
  • The methods of payment are established in the income tax return and payments on account section: payment can be made by direct debit or nominative transfer to the Government of Andorra. Proof of the latter and the tax returns must be attached.

Filing your tax returns just got easier

Andorra is committed to simplifying the procedures for submitting and settling tax returns for corporate and non-resident income tax.

This represents another step forward for streamlining tax returns in Andorra and simplifying processes and procedures through digitalisation.

G20 agreement to unify the minimum corporate tax across countries

Last June, the G7 agreed to implement a global minimum for corporate tax. This agreement was ratified in July at the last G20 summit in Venice by a majority of the 139 countries that make up the OECD.

From 2023, large multinational corporations will pay a minimum Corporate Tax of 15% and will be taxed in countries where they operate, not just where they have their headquarters. The agreement has been reached after 4 years of discussions and negotiations, and will be implemented in 140 countries in 8 years, or by 2030 at the latest. The global agreement will apply to companies with an annual revenue of more than 750 million euros and will not affect private wealth or small and medium-sized companies. You can learn about the cases in which it will not affect Andorran investors in this article.

The benefits of setting up a company in Andorra

Andorra offers many advantages for starting a company, both in terms of taxation and company costs.

  • Tax advantages:

The tax burden in the principality is one of the lowest in Europe: a maximum of 10% corporate tax, with the possibility of a reduction to 2% or even complete exemption depending on the activity of the company. The IGI (Andorran VAT) is 4.5%, while the maximum for personal income tax is 10%, and this rate only applies above a threshold of €40,000. Personal income tax becomes payable at €24,000, and the rate between €24,001 and €40,000 is just 5%. Furthermore, annual company maintenance fees are around €850 for ordinary businesses.

  • Labour costs

These are also much lower than in neighbouring countries, with Social Security contributions per worker at 15.5%, compared to 30% in Spain. The minimum wage is currently €1,121.47.

  • No double taxation

Andorra has signed agreements to prevent double taxation and being taxed twice for the same income. The number of countries on this list is growing every year. Currently there are eight, including Spain, France and Portugal, and negotiations with more countries are in progress. These agreements include direct taxes such as corporate tax, personal income tax, income tax for non-residents, and capital gains tax. You can consult our article on the DTAs here.

  • Membership of international organisations

In October 2020, Andorra became the International Monetary Fund’s 190th member, thereby improving its international status and demonstrating its solvency and credibility on a global scale.

We explained the process of Andorra’s accession to the IMF in this article.

With a view to modernising the Andorran tax system, the Andorran Government has modified the regulations on Corporate Tax and IRNR to simplify and streamline administrative procedures.

Digitalisation of processes and reducing the time needed to perform administrative procedures are two of the main objectives for these changes. Given the results achieved with the digital portal for personal income tax returns, these goals are expected to be accomplished.

At Advantia Assessors, we are constantly adapting to changes in the Andorran tax system. Our clients are convinced: for smooth and efficient management of their tax obligations, they count on our team of specialists with extensive experience in the country.

Contact us to find out more.