Andorra corporate tax and international structures

An Andorran company and a company managed from Andorra

Corporate residence includes incorporation under Andorran law, a registered office in Andorra, effective management in Andorra and the relevant redomiciliation circumstances. Effective management concerns the direction and control of the business as a whole. A foreign registration does not settle where the company is actually run.

For an owner relocating with an existing company, identify who approves strategy, negotiates material contracts, controls finance and exercises authority. Meeting minutes should reflect real decisions. A local director who merely signs decisions already made elsewhere does not answer the residence question.

Ordinary profit tax and the accounting bridge

The ordinary corporate rate is 10%. Resident companies generally bring worldwide income into the calculation, starting from accounting profit and applying tax adjustments. Revenue is not the same as taxable profit; depreciation, non-deductible costs, provisions, financing and related-party transactions affect the result.

A qualifying regulated investment vehicle may have a separate rate, including a 0% category, but its management company is not thereby exempt. Special regimes for eligible intellectual property, cooperatives, consolidation and holding structures each have conditions. They should be tested against the activity actually being carried on.

Participation income and foreign-company attribution

Participation relief and CFC attribution answer different questions. Article 20 can exempt qualifying participation income subject to its ownership, holding and taxation conditions. Article 17 bis can instead attribute certain controlled, insufficiently taxed foreign income before distribution.

Build the file from the ownership chart, the foreign entity’s accounts and tax assessment, the nature of each income stream and the people performing the activity. It is unsafe to infer exemption from a nominal foreign rate or from calling an entity a holding company.

Moving a company or assets: arrival and exit values

The corporate law expressly addresses assets when a company changes residence or its effective management. Where Andorra loses taxing rights, the market value of affected assets compared with their tax value can enter the exit calculation. Assets remaining attributable to an Andorran permanent establishment require separate treatment.

For specified incoming fixed assets, Article 17 provides a market-value rule at the transfer into Andorran residence, relevant to later disposal or departure and accompanied by accounting/depreciation adjustments. This is a company migration rule. It does not prove a universal reset for private assets held by the shareholder.

Prepare the asset register, foreign tax values, transfer-date valuations and the opening Andorran accounts before the move. Otherwise the departure country’s exit calculation and Andorra’s later disposal calculation can be difficult to reconcile.

Withholding depends on the recipient and the payment

Payments to nonresidents require the IRNR analysis. The general no-permanent-establishment rate, specific royalty rules, capital-income exemptions and treaty reductions cannot be reduced to one universal withholding percentage. The domestic law includes exemptions for relevant capital income, but the legal character of the payment is decisive.

A service fee is not a dividend simply because paid to an owner’s foreign company. Determine where the service is performed or used, whether a permanent establishment is involved, who beneficially receives the income and what evidence is required for treaty treatment.

IGI and cross-border sales

IGI’s ordinary 4.5% rate applies within its statutory scope. Registration depends on the activity and turnover tests, and cross-border services and imports need place-of-supply analysis. Taxing the company’s profits at 10% does not remove indirect-tax registration or invoicing obligations.

For a business selling into the EU, Andorra’s own low indirect-tax rate does not replace destination-country VAT, import or marketplace obligations. Map customer location, delivery terms and the entity making each sale before changing invoicing.

Employees, owners and the cost of operation

Ordinary employee payroll carries 15.5% employer CASS and 6.5% employee CASS on the statutory base. CASS requires registration and timely monthly declarations and payments. Paid leave, insurance, equipment, premises and contractual commitments add to salary-plus-contribution totals.

An owner working through the self-employed immigration route has to satisfy both the immigration activity requirements and the separate self-employed CASS rules. A company’s formation, its immigration usefulness and the individual’s social-insurance classification are three separate steps.

A structure that can be maintained

Keep company accounts, contracts, payroll, invoices, banking records and evidence of decision-making consistent. The implementation sequence should identify who registers the activity, obtains permissions, maintains the books and files each return.

Before incorporating, compare a new Andorran operation with retaining or moving an existing entity. The answer can change when foreign exit tax, customers, employees, financing and the owner’s residence are considered together. We can help coordinate that cross-border analysis and the agreed implementation rather than choosing a company solely from its nominal rate.