Non-resident income tax in Andorra
Key question number 1: Who should pay non-resident income tax? (IRNR)
Let's answer the key questions first.
According to the tax system, the IRNR has to be paid by companies and individuals who do not reside in Andorra and made profits in the territory, either through services provided or rented property.
What services are subject to this tax?
In this case, it is important to differentiate whether the services are provided in Andorra or consumed in the country.
If the services are provided in Andorra, then they will be included:
- Other professional work in property.
If the services are consumed in Andorra, we will be talking about:
- Guidance, studies, technical assistance or management projects.
In addition, the tax rule also includes other situations that should be taken into account:
- Rentals of properties owned by non-residents
- As of 2015, salaries of workers affiliated to the CASS
- As of 2015, pensions paid by the CASS to non-tax residents in Andorra
- Interest and other income on moveable assets.
- International sale of goods
What is the amount of nonresident income tax?
The general amount is 10% of the amount of the invoice paid. But there are exceptions that are important to keep in mind.
- In the case of royalty payments, it is equivalent to 5% of the invoice paid.
- In the case of reinsurance, it will be 5%, also of the invoice paid.
- While, in the case of property rentals, a reduction of 20% is applied on the amount received.
It can give rise to a series of doubts, but when it comes to implementing it, it is much easier than you can imagine. However, it is always interesting and almost necessary to have a professional to assist you in meeting Andorran tax obligations.
What are the taxpayer's tax obligations in relation to that tax?
Andorran companies that pay rents to companies or persons not residing in Andorra with services provided in Andorra should comply with the following obligations:
- Withhold the amount resulting from applying the tax rate to the amount of the tax invoice to be paid
- Provide the taxpayer with a certificate of approval of the source deduction.
- Submit to the Ministry of Finance a declaration of withholding and payment on account of the tax during the months of April, July, October or January immediately following the withholding.
- A person or company that obtains income in Andorra can present the declaration-liquidation individually. The law also establishes that the taxpayer must appoint a tax representative when obtaining income from a natural person or a permanent establishment.
Would you like to ask anything about the tax? We can assist you in learning how to handle this.
If you have any questions about how this tax works and need help, you can contact us.
We will guide you in its processing, we will solve your doubts and, in general, we will look for a way to make the payment as efficient as possible.