Trading companies in Andorra fulfilling certain requirements are taxed at an effective rate of 2% applied on the benefits.
This particular regime is one of the most competitive in Europe allowing an important logistical and fiscal optimization. There are many companies benefiting from theses advantages offered by Andorra.
Triangulation schemes are shown in the following chart.
The Intermediary Company purchases the product from the Production Company and sells it to the Client Company. Notwithstanding, the goods circulate directly to the Client Company, that is, from the country of origin (Production Company/supplier) to the country of destination (Client Company) without entering Andorra.
If the Andorran company wishes to transact with suppliers and/or clients established in the European Union, it can designate a tax agent and operate under a triangular scheme as if located in the EU.
Requirements to incorporate a trading company
- The Company should have an office of at least 20m2 office and a part-time employee.
- The goods must be sent directly to the client company from the supplier company, without enterin.
- Authorisation required from the Ministry of Finance
Other advantages of the system
- Incorporating a company in Andorra with 100% foreign investment is a common practice.
- Repatriation of dividends from an Andorran company to a foreign company can be done without triggering WHT (exemption method, Corporation Tax).
- The trading regime implies no storage infrastructure in Andorra and no customs formalities.
- Administrative simplicity, no taxation under indirect tax (IGI).
- For those activities that require having administrative or retail department staff, it is important to note that the Andorran National Health System is more competitive than those in neighboring countries.
Case study of a trading scheme (1)
Case study of a trading scheme (2)
Corporate Taxation (Spain)
Income: 3,00,000 €
Expenses: 3,000,000 €
Profit: 500,000 €
Nominal rate: 30%
Total Taxation: 150.000 €
Corporate Taxation (Andorra)
Income: 5,00,000 €
Nominal rate: 2%
Total Taxation: 29,700€
Total taxation in Spain: 150.000 €
Total taxation in Andorra: 29,700 €
Total taxation paid: 179,700 €
Optimization = (600,000-179,700€)
Savings 420,300 €