If you are thinking of creating an International Trading Company, Andorra may be the ideal place to do it as it offers important tax advantages not only at the company level but also at a personal level.
At the company level, as we discussed some time ago in the article of our blog on Corporate Tax in Andorra, there exists in the Principality a special tax regime for these companies, which allows taxing at a rate of 2% on benefits generated by it. This tax rate is the lowest in the European Union, much lower than cases such as Ireland, where the company would be taxed at a rate of 12.5% for corporation tax. In countries like Spain we would be between 25 and 30%.
What requirements must the company fulfill in order to qualify for this special regime?
- Have a place for the activity of at least 20 square meters
- Have a person working at least part-time
- Perform a request to the Andorran Government
At the individual level, what are the advantages for the investor to create an International Trade company and to reside in Andorra?
If, as a partner, you are resident in another country, such as Spain, you will have to tax the corresponding IRPF rate (19% to 21%) for the profits obtained from the company. If we compare it, as we have done with the Corporate Tax, with Ireland we would be talking about 33%. However, if you reside in Andorra, the company's dividends would be taxed at 0% of the IRPF. That is the most important saving tha Andorra offers to foreing. Residing in Andorra makes up for it, thanks to its lower income tax.
That is, if the partner is living in Andorra, will end up paying the dividends generated at a total rate of 2% (adding income tax and company). Thus, it would be much more beneficial to reside in Andorra when creating an International Trade company.