Fiscal differences between Spain and Andorra: what do business people have to know?

Spain And Andorra Psf

This is the tax situation for companies in Spain 

It is likely that what he is going to tell you now is no surprise. 

In fact, you may have had it clear. 

The problem is that we get so used to things simply being like this, that we do not stop to think about what opportunities we would have in another context. 

That is why it is important to stop from time to time and analyze the fiscal and tax system in which Spanish companies move. 

  • Corporate Income Tax 

As you know, Corporate Income Tax is the main tax that companies in Spain must face. 

Depending on the profits that your company has had at the end of each year, you will have to face a payment of 25%. 

An amount that is smaller during the first years of operation of the company, but that means delivering one of every four euros generated. 

  • Value added tax (VAT) 

Although it can vary depending on the product, most companies must collect VAT to deliver it to the Treasury. 

This implies a surcharge of 21% on all sales prices, which can increase the perception by the end customer and alter their purchase decision. 

Of course, in some sectors considered essential there are reduced rates of 10%, 4.5% and even 0%. 

However, in most cases the amount will be that 21% previously cited. 


  • Conclusions. 

The complexity and high level of taxation involved in the Spanish tax system can become an obstacle for companies wishing to operate in this country. 

By reducing companies' profits so much, they make them much less competitive with foreign competition. 

That is why it is increasingly common for organizations like this to consider alternatives to increase their profit margin. 

This is the tax situation for companies in Andorra 

Now that we have analyzed the Spanish case, it is time to travel to the neighboring country to know why its tax regime is so well known. 

For this we will analyze a real situation, away from all the mysticism that is read many times in the press, and that will allow you to really assess if it is an opportunity for you. 

  • Corporate income tax. 

While in Spain the Corporate Tax was 25%, in Andorra it amounts to only 10%. 

It is a single rate, which applies regardless of the type of company, and which extends the profit margin of the company. 

A considerable amount of margin that can lead to very concrete decisions being taken. 

  • Value Added Tax (VAT) 

Unlike the 21% VAT we had in Spain, in Andorra this tax only amounts to 4.5% (IGI) 

By having a smaller public system, the State needs to raise less money to achieve its objectives. 

Therefore, lower rates can be allowed, which meet the needs of companies. 


Is Andorra a fiscal paradise? 

Even though both the press and television constantly refer to Andorra as a tax haven, the reality is very different. 

Andorra complies with all international tax regulations. 

All it does is rely on its small public economy to offer its inhabitants the same opportunities, but at a lower expense. 

A final comparison between the two tax systems 

The main difference in taxes between Spain and Andorra is the tax rate on corporate tax. While in Spain the rate is 25%, in Andorra it is 10% 

Another important difference is VAT. While in Spain the general rate is 21%, in Andorra it is 4.5% (IGI).  

Andorra can be an interesting option for companies looking to reduce their tax costs and operate from a small country while still thinking big.