Corporate income tax in Andorra is one of the lowest in the world. The percentage to be paid ranges between 2% and 10%, depending both on the activity of the company and the amount of income generated by it.
Below, we explain when and how much corporation tax you will have to pay in Andorra depending on your business activity and the amount of profits it may generate.
How much corporation tax do I have to pay in Andorra?
Corporate Income Tax in Andorra is paid according to the net profits obtained by a company. In Europe, the amount payable by a company in respect of its net profits is usually around 25%. Therefore, even paying the maximum rate of 10%, having a company in Andorra can mean an average profit of 15% compared to neighbouring countries. In Andorra, the general corporate tax rate is set at a maximum of 10% of the company’s annual profits. However, there are so-called special regimes, which apply to those companies that meet a series of requirements and conditions and which have an effective rate of 2%. Thus, there is a special regime for companies that exploit intangible assets (such as patents or utility models), for cooperative companies and for companies whose activity is the management and holding of shares in companies resident or non-resident for tax purposes in Andorra. There are also corporate income tax exemptions (i.e. the applicable tax rate is 0%) for collective investment institutions (such as SICAVs), excluding wealth management companies, and for dividends received by Andorran companies from Andorran tax residents.How is corporation tax paid in Andorra?
In Andorra, unlike other countries where this tax is paid quarterly, corporation tax is paid annually, with the tax period coinciding with the company’s financial year. However, you should bear in mind that the tax is paid as follows:- In the month of September, 50% of the Corporate Tax for the current year must be paid, taking into account the profits reported in the immediately preceding year.
- At the end of the current tax period (usually during the month of July) the second part of the tax must be paid, after deducting the part already paid at the beginning of the year.
