Trading taxes in Andorra: what you need to know if you invest from the Principality

Taxas Trader Andorra Psf

Andorra has become one of the most attractive destinations for trading professionals and investors. Thanks to its favorable tax system, safe environment, and solid infrastructure, more and more people are relocating to the Principality to manage their assets and operate in financial markets.

However, many traders wonder: What taxes do I have to pay in Andorra if I trade? In this article, we explain clearly and professionally how trading is taxed in Andorra, the requirements to benefit from the local tax regime, and what you need to consider before making the move.

1. What Is Considered Trading for Tax Purposes?
Trading can take many forms: buying and selling stocks, derivatives, cryptocurrencies, ETFs, forex, or even managing a portfolio professionally.

For tax purposes in Andorra, it is important to distinguish between:

  • Individuals trading as a private investment activity (managing their own wealth).

  • Professionals operating through a business structure, usually to provide services to third parties or manage external capital.

This distinction is crucial, as it determines which taxes apply to your activity.

2. A Quick Look at the Andorran Tax System
Andorra has reformed its tax system in recent years to align with international standards. Since 2015, a Personal Income Tax (IRPF) and a Corporate Income Tax apply. Despite these reforms, Andorra’s tax burden remains highly competitive compared to neighboring countries like Spain or France.

The main taxes affecting traders are:

  • IRPF (Personal Income Tax): Applies to capital gains for individuals.

  • Corporate Income Tax: Applies to companies based in Andorra.

  • IGI (Andorran VAT): Not applicable to trading, as it is not a consumption activity.

3. How Are Trading Gains Taxed for Individuals?
If you are a tax resident in Andorra and trade on your own behalf, your gains are considered investment income or capital gains, depending on the case.

Andorra’s IRPF rates are:

  • 0% for annual gains up to €3,000.

  • 10% on the amount exceeding €3,000.

This means that if you earn trading profits (from stocks, ETFs, or crypto), you will pay a maximum of 10% on the net gain.

Example:
If you earn €10,000 from trading in one year, you will be taxed on €7,000 (above the €3,000 exemption), resulting in €700 of tax (10%).

✳️ Cryptocurrency Taxation
Since 2023, cryptocurrency trading is considered a capital gain and is taxed under IRPF using the same brackets. You must declare both sales and exchanges (e.g., swapping BTC for ETH), as these are considered asset disposals.

4. How Is Trading Taxed Through an Andorran Company?
Many professional traders set up an Andorran company to operate and manage funds (own or third-party). In this case, profits are taxed under the Corporate Income Tax, with a general rate of 10%.

🔍 Tax and Operational Advantages of a Company:

  • New business reductions: A 50% discount for the first 3 years (effective rate: 5%).

  • Deductible expenses (platforms, education, technology, etc.).

  • Tax-free dividend distribution if the shareholder is an Andorran resident.

A company can be a very efficient option for traders with high volumes, frequent activity, or investment-related services.

5. What About Foreign Accounts and Brokers?
Many Andorran residents use platforms like Interactive Brokers, DEGIRO, Binance, or eToro. These accounts are fully compatible with Andorran residency but must be correctly declared:

  • The income earned (profits and losses).

  • Foreign accounts, if they exceed certain thresholds.

Unlike Spain, Andorra does not require a formal Modelo 720 declaration. However, it is advisable to report significant foreign assets, especially if you plan to repatriate profits or hold large amounts abroad.

6. Requirements to Be Considered a Tax Resident in Andorra
To benefit from Andorra’s tax regime, you must meet the fiscal residency requirements:

  • Reside more than 183 days per year in the country (physically).

  • Have your center of economic or personal interests in Andorra (investments, home, family, etc.).

It is advisable to formalize either active or passive residency, depending on your profile. For traders, the most common options are non-lucrative active residency or self-employed residency with a company.

7. Compliance, Legal Security, and International Cooperation
Andorra has signed double taxation treaties with several countries (including Spain, France, Luxembourg, Portugal, etc.). It also participates in international tax cooperation (OECD, CRS) and information exchange agreements.

This means that:

  • Your funds must be legitimate and documented.

  • You should have a clean tax history before moving.

  • Tax planning is strongly recommended before changing residency or opening a company.

8. Final Recommendations for Traders in Andorra

✅ Plan your taxes in advance. Analyze your profile (individual or professional) to determine the best structure for you.
✅ Declare your earnings properly. Andorra offers tax advantages, but transparency is still required.
✅ Work with local professionals. A specialized advisor can help you comply with regulations and optimize your taxes.
✅ Consider a company if you trade intensively. It may offer tax and operational benefits, especially if you plan to scale or work with third parties.

If you want to analyze your specific situation as a trader or need help to establish yourself in Andorra with the best tax structure, at PSF we advise you in a close, clear and 100% adapted way to your profile. We are here to help you operate with peace of mind and with total legal security.

Cordially

The Plus Serveis i Família Team