An entrepreneur resident in Spain owns an e-commerce company with 4 employees. The company bills 20 million € and generates an economic profit before taxes of 11 million €. The net profit of the company amounts to 7,7 million €. Dividends will be subject to Income Tax in Spain.
An entrepreneur decides to relocate its business in Andorra (including the company’s employees), but wants to remain a resident in Spain. Trading companies can benefit from an 80% tax reduction resulting in a 2% effective rate therefore tax benefits are significant. There is no withholding tax applicable when transferring back dividends earned in Andorra.