Andorra Double Tax Treaties

Taxation in Andorra has undergone a profound transformation, which began in 2012 with the liberalization of foreign investments and the approval of unprecedented tax regulations with the introduction of the Andorran Personal Income Tax Law. Principality has been progressively adopting legislation to comply with all the standards required by supranational entities (OECD and EU) to be able to stop being part of the blacklists of tax havens.

One of the great advances has been the signing of several double taxation agreements with different jurisdictions related to Andorran Principality as measures to avoid international double taxation. Currently, there are 8 double taxation treaties (DTA) ratified with Andorra in force and there is the will to expand the list.

What is a Double Taxation Treaty?

A double taxation treaty is an international agreement that establishes mechanisms to prevent the same income or taxable event from being taxed by two or more states.

Double taxation occurs when a taxable income for the same event and the same period is taxed by several states. The taxes that are subject to the application of the DTA are all those of a direct nature on income, such as corporate income tax (IS), personal income tax (IRPF), non-resident income tax (IRNR), and capital gains tax.

Double Taxation Treaties with Andorra

The following are the double taxation agreements or agreements to avoid double taxation with Andorra and their date of entry into force:

• Andorra and France double taxation agreement entered into force on 01/07/2015
• Andorra and Spain double taxation agreement entered into force on February 26/02/2016
• Andorra and Luxembourg double taxation agreement entered into force on 07/03/2016
• Andorra and Liechtenstein double taxation treaty entered into force on 21/11/2016
• Andorra and Portugal double taxation agreement entered into force on 23/04/2016
• Andorra and the United Arab Emirates double taxation agreement, entered into force on 01/08/2017
• Andorra and Malta double taxation treaty, entered into force on 27/09/2017
• Andorra and Cyprus double taxation agreement entered into force on 11/01/2019

Andorran tax administration has the power to issue tax residency certificates. The document can be obtained once the tax residence in Andorra is consolidated (6 months and one day after receiving the residence permit from the immigration service), and is a guarantee that confirms that the applicant is a tax resident in that country. It should be noted that the certificate has a high probative value since it is issued under the Double Taxation Agreement, if it exists with the applicant’s country of origin, although it admits proof to the contrary.

If you have any doubts about the tax system in Andorra or about how to apply a double taxation agreement in the collection of dividends from international subsidiaries, we encourage you to contact us, our professionals will advise you in this matter.

What Taxes are Affected by the Double Taxation Agreement in Andorra?

The taxes to which the DTA applies are all taxes of a direct nature on income:

• Corporate tax
• Personal income tax
• Non-resident income tax
• Capital gains tax on real estate transfers

What is the Content of a Double Taxation Treaty?

Given that the DTAs signed by Andorra have taken as a reference the model agreement proposed by the OECD, its structure is as follows:

• Scope and definitions
• Taxation rules according to the type of income (real estate, corporate profits, dividends, interest, fees, capital gains, income from work, artists and athletes, pensions, civil service, etc.)
• Methods for eliminating double taxation
• Special and final provisions
• Additional protocol