Andorra Trading

Andorra is fiscally attractive for sportsmen and YouTubers. The Andorra tax system is also very beneficial for traders and brokers obtaining high returns with stock market operations.

Do you trade stocks, currencies, or even cryptocurrencies? Regardless of what you are trading, you can work from home or multiple locations with full flexibility to work from anywhere. Why not consider Andorra as your base of operations and as a lifestyle choice? The option of working as a financial advisor, data analyst, and asset manager regardless of physical location makes it possible for many professionals in the sector to move to Andorra.


Why is Andorra so attractive for traders?

Generally speaking, taxes in Andorra are very low (the maximum Andorra corporate tax rate is 10%), but there are also beneficial tax exemptions, i.e. you don’t pay a single euro for your stock market gains.

Article 5k of the current Andorran Personal Income Tax Law establishes that capital gains derived from the sale of participations, shares in companies, or participation in collective investment institutions (investment funds) will be exempt from taxation, as long as they do not hold more than 25% of fund or company. Unless you are Elon Musk, Bill Gates, or similar, it is unlikely that you own more than 25% of a listed company.

A trader or an individual who invests in the stock market and settles in Andorra will not pay taxes on capital gains. It is as simple as that.

Advantages of Andorra for traders and broker

Trading exemption in Andorra explained

Imagine you buy a Tesla share and after some time you decide to sell it at a profit.

In Spain, you would pay 19 or 23% tax on profit, depending on the total profit you have received during the year. On the other hand, in Andorra, since you own less than 25% of Tesla, the taxation would be 0% since the gain is covered by an exemption.

Also, since the US does not apply withholding tax on the sale of shares (despite not having a double taxation agreement with Andorra), the total taxation on the gain will be 0% worldwide, a total net income. Isn’t that fantastic?

To sum up:

And what about the other income derived from the financial portfolio?

Unfortunately, this exemption only applies to the sale of shares and investment funds.

We will now go on to detail how other portfolio or derivative income and financial products are taxed to see the potential and attractiveness of Andorra clearly.

How are dividends taxed in Andorra?

Regarding the Andorra dividend tax, a distinction should be made between dividends from Andorran sources (i.e. from Andorra registered company), which are taxed at 0%, and dividends from foreign sources, which are taxed at 10%.

Let us take the example of taxation in Spain vs taxation in Andorra.

Inditex dividends

Imagine that you receive dividends from the multinational Inditex. In Spain, these would be taxed between 19% and 23% depending on the amount you receive.

If you receive this income as a holder of Andorra tax residency, you would pay a maximum tax rate of 10%, corresponding 5% to the Non-Resident Income Tax paid in Spain and the remaining 5% to the Andorran Personal Income Tax (once the deduction for international double taxation has been applied).

Microsoft dividends

Here we are faced with one of the Andorran dysfunctionalities. Unfortunately, Andorra has a rather poor network of double taxation treaties, thus generally, dividends received by countries without a double taxation avoidance treaty are subject to a withholding tax ranging from 15% to 35%.

In the example here, a Microsoft dividend received as a Spanish resident would be subject to a withholding tax in the United States of 15% and subsequent taxation in Spain of between 19% and 23%, which, together with the deductions for the avoidance of international double taxation, would imply total taxation of 23%.

On the other hand, as an Andorran resident, a dividend from Microsoft will be subject to a withholding tax of 30%, and its subsequent integration in Andorra exempt from payment of the deduction for the avoidance of double international taxation. Therefore, the total taxation is 30%, higher even than the “overall” taxation of a Spanish resident.

In short:

How is interest taxed?

As with dividends, in Andorra, interest does not enjoy any exemption beyond the minimum exemption of 3,000 euros for savings income already mentioned.

Thus, interest received for lending capital to third parties, bonds, etc., will be taxed at a maximum of 10%.

How are CFDs taxed?

Many risk-averse traders operate with trading platforms such as Plus500 or Etoro. For the most part, brokers do not operate through the holding of real shares but contracts for speculative purposes on shares, commonly known as CFDs.

CFD’s are not “per se” participation titles or shares in companies, but are a speculative financial instrument whose underlying asset is a share, therefore, the Article 5k exemption mentioned above is not applicable and the yields will be taxed at a maximum of 10% (versus 19% to 23% in Spain).

In summary:

Warrants, spread-bets, and other derivatives or options

These instruments follow the same criteria as above: for the Andorran authorities in charge of interpreting the Law, derivatives or options on shares are not shares per se, therefore these do not enjoy any exemption.

However, they will continue to get an advantageous 10% tax rate.