Double Taxation Agreements in Andorra

In today's post we are going to talk about the importance of the Double Taxation Agreements in Andorra, what they are, what they are for and how they affect both natural and legal persons.


What is international double taxation and how can it be avoided?


International double taxation is considered when a situation occurs in which the same taxable event, which affects the same person, is recorded at the same time in two different countries. To avoid this, administrations often take measures that can sometimes be unilateral, for example by establishing deductions, or they reach an agreement with the other administrations and that is when the Double Taxation Agreements arise. Through these agreements, which apply to both individuals and companies, it is agreed which country has the competence to tax the taxable event. In addition to promoting the competitiveness of companies abroad and promoting investments abroad, they help combat tax fraud at the international level.


What taxes affect the Double Taxation Agreements in Andorra?


In the principality, these agreements affect the Personal Income Tax (IRPF), Corporate Income Tax, Income Tax of non-resident taxpayers and capital gains on real estate property transfers. In order to have access to the tax benefits that include the Agreements, it will be necessary to present a tax certificate issued by the state (Tax and Border Department.


In recent years Andorra has made an important effort to open up the economy and fiscal and legal homogenization with Europe that has allowed it to leave the list of tax havens established by the OECD. The more than 20 tax information exchange agreements signed with different European countries are joined by the 7 international double taxation agreements, of which 4 are already in force: with Spain, France, Luxembourg and Liechtenstein. Thus, Andorran companies that previously were taxed with withholding taxes, such as in Spain or France, with these agreements have a much easier to operate internationally.


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