Andorra offers many opportunities for both residents and non-residents. And it is also known for its fair taxation system, which is the perfect example of transparency and legality. But before embarking on the tax residence project or purchasing something on Andorra; you must know the important elements of taxes and taxation. So, here are the important parts of the personal and business taxes in Andorra.
Income tax for individuals: The personal income tax is one of the major taxes in Andorra, which is calculated on the income of a person or the income of activity or profession. According to the Andorran taxation system and the accountant and audit in Andorra, this tax has a limitation of 10%. It is zero below the income level of 24,000.00 euros per year and 5% for the income level between 24,000.00 euros and 40,000.00 euros. And for more than 40,000.00 euros, the tax rate is 10%
Corporation tax: This is another taxation system in Andorra about which you must know before taking the preparation of tax returns. This tax is applied to the profits earned by the companies within the tax period. The maximum corporate tax rate is 10%. But, the new businesses can enjoy two reductions of special interests on corporation tax. For example, in the first year of tax application, the taxpayers can enjoy a 50% reduction in the settlement fee with which the corporate tax rate would be 5%.
Income tax for non-residents: This tax system is applicable for people or companies, which earn in the Principality of Andorra, but don’t have residency in this country. These people or companies must have to submit the statement-liquidation individually and also have to hire tax representatives in case their income is obtained from any permanent establishment or private individuals.
Indirect general tax: This taxation system is similar to VAT and it is levied on exchanging goods and services performed in the principality. The general tax rate in Andorra is 4.5%. The tax value is 1% in case of a reduced rate, 0% in case of super-reduced rate, and 2.5% is applicable for the transport of people, which is the special rate.