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Is Andorra a tax haven? 

Andorra is no longer a tax haven. In this other article we previously detailed it more exhaustively.

It should be noted that this may confuse many people, since Andorra for a long time was considered a tax haven by the European Union. However, more than 5 years ago, Andorra ceased to be present in the list of tax havens or, as it is commonly referred to, it was definitely removed from the OECD blacklist.

It is for this reason and for the attractive tax framework that Andorra currently has that many people confuse Andorra with a tax haven.

But the truth is that Andorra is not a tax haven anymore.

It is very common to confuse Andorra with a tax haven nowadays, since for many years it was. But it is a mistake that should be avoided at all costs if you want to optimize your corporate and personal benefits.

Andorra has a very attractive tax framework compared to other countries such as Spain, France or other EU countries. That is why the Principality of Andorra tends to be criticized (especially from countries like Spain and France) for having lower taxes, higher quality of life and many services comparable to those of neighboring countries.

What makes a country a tax haven? 

A tax haven is characterized mainly by having very low or no taxation.

Specifically, the characteristics of a tax haven are the following:

• No or very low personal income tax and corporate income tax for companies or individuals not resident in that country.
• There is no exchange of tax information with other countries.
• There is no organization for cooperation.
• There are different tax regimes: one for residents in the country and another for non-residents in the specific country.
• There is great confidentiality, bank secrecy and in general very little transparency with other countries.
• The legislative power is above the information demands of other countries.

All these characteristics mean that a country can be considered a tax haven both by the European Union and the rest of the world.

It is important to bear in mind that income tax and corporate income tax may exist in tax havens, but it is essential that there is a different regime for residents and another for non-residents.

Tax heaven blacklists 

The EU blacklist is based on a list of tax havens recognized as such by the European Union.

This list includes those countries that do not cooperate in the exchange of tax information and are therefore not transparent.

This list is updated every six months and currently the countries on the EU blacklist are the following:

• Costa Rica.
• Marshall Islands.
• British Virgin Islands.
• Panama.
• American Samoa.
• Fiji.
• Guam.
• Palau.
• Trinidad and Tobago.
• Samoa.
• The U.S. Virgin Islands.
• Vanuatu.
• Bahamas.
• Anguilla.
• The Turks and Caicos Islands.

Russia: this is a special case, as it is the first time that Russia has been blacklisted by the European Union. This is because Russia does not respect Moscow’s commitment based on its international holding company regime. In addition to the offensive against Ukraine.

On the other hand, it should also be noted that the following countries were removed from the gray list: North Macedonia, Uruguay, Jamaica and Barbados.

Why was Andorra considered a tax heaven? 

 Andorra was considered for many years as a tax haven.

This was due to the fact that they did not have a properly approved tax framework, there was no exchange of tax information and there was also banking and judicial secrecy and therefore there was very little transparency with other countries.

These were the characteristics of Andorra for many years, when the so-called Andorran tax haven existed.

Now, since 2018 Andorra ceased to be considered a tax haven and therefore left the list of tax havens of the OECD.

This marked a before and after in the Andorran economy and society, since it went from no income tax or corporate income tax to a fully consolidated tax framework accepted by the OECD.

Is Andorra still a tax heaven?

As we have advanced, Andorra is no longer a tax haven.

This is so because it ceased to be within the blacklist or within the list of tax havens established by the OECD.

This fact took place in 2018 and since then, the Principality of Andorra, has an approved tax framework and fights for cooperation and development to avoid tax avoidance.

On the other hand, Andorra has a very attractive tax framework today to attract foreign investment, especially Spanish and French, as has happened for example with the famous case of youtubers from Spain. These youtubers, such as Rubius, for example, have decided to flee the Spanish tax hell and pay their taxes in Andorra.

 

However, it has not happened only with youtubers, as there is a wide list of professions that have taken the decision to change their tax residence to Andorra.

Although there is a large percentage of the Spanish population that still thinks that the change of residence to Andorra is still a tax fraud, this situation could not be further from reality.

That is why the Spanish tax agency has accepted Andorra as a country with an adequate taxation and that respects the double taxation agreement.

However, it is important to know that there are great tax benefits if a company or enterprise develops its economic activity from Andorra.

Contact us

If you have any questions regarding Andorra, you can contact us without obligation.

Andorra has been considered for many years as a tax haven, but nowadays it is not. For that reason and for its attractive fiscal framework, it is the perfect scenario to develop economic activities and pay low taxes.

For this reason, you can contact us to see if your business could be viable to be carried out from Andorra and enjoy the high benefits of the Andorran tax framework.