What is corporate tax in Andorra?
Corporate tax levies the net profits of companies that are tax residents in the Principality. It is key for economic sustainability and to guarantee business competitiveness.
It is regulated by Law 95/2010, with modifications that adapt the conditions according to the market and the needs of taxpayers. Andorra stands out for its simplicity and legal certainty, making it attractive to local and international entrepreneurs.
What is the applicable tax rate?
The general rate is 10% on net profits, with the possibility of reducing the effective tax rate:
- Minimum effective rate of 2% for companies with special investment or international activity.
- Temporary exemptions for newly created companies.
- Benefits for innovation and R&D, allowing deduction of technological development expenses.
“With a general rate of 10% and reductions down to 2%, Andorra is one of the most competitive tax environments in Europe to grow your company.”
Practical example:
A company with a net profit of €100,000 would have a tax of €10,000. Applying deductions, the tax could drop to €2,000, increasing liquidity to invest in growth.
Who has to pay corporate tax?
- Resident companies (SL, SA, cooperatives, etc.) with economic activity in Andorra.
- Permanent establishments of foreign companies in the Principality.
Companies with activities abroad must take into account tax residency and international agreements to avoid double taxation. For this, you can consult our tax advisory service.
When and how is it filed?
- Fiscal year: calendar year (January 1 – December 31).
- Instalment payment: 50% of the previous year’s tax due in September.
- Final declaration and payment: between September 1 and 30 of the following year.
To simplify the process, our administrative management service supports the entire procedure.
Advantages of paying taxes in Andorra
- Competitive and clear tax rate.
- Stability and legal certainty with modern laws.
- Double taxation treaties with Spain, France, and Portugal.
- Simple and efficient administrative management.
- Quality of life and reduced operating costs, facilitating talent retention.
Legal strategies to reduce the tax burden
- Reinvestment of profits in R&D or business expansion.
- Sector-specific deductions according to activity.
- Planning dividends and salaries according to regulations.
International coverage and agreements
- Agreements with Spain, France, and Portugal avoid double taxation.
- Allows combining tax periods in different countries and avoids tax duplication.
- Facilitates cross-border business operations.
Conclusions
Corporate tax in Andorra is a competitive fiscal tool with a general rate of 10% and deductions that can lower it to 2%. The combination of legal certainty, tax advantages, and international agreements makes Andorra ideal for establishing and growing a company. For incorporation, accounting management and tax planning, Bon Consell accompanies you throughout the process.
