We invite you to consider the opportunity to transfer the tax residence of your foreign company to Andorra. The opportunity is available for all companies including those registered in offshore jurisdictions. Domiciliation in Andorra would improve your foreign company’s reputation and bring it an important competitive advantage as the corporate tax rate in Andorra is one the lowest tax rates in Europe.
Offshore companies are becoming costly to register and maintain
Only a few years ago, opening an offshore company was easy and affordable. The benefits, however, were tremendous: zero taxes, inexpensive company maintenance (only a small annual fee was required), and an opportunity to open accounts in foreign banks.
Today, things are much more complicated as far as offshore companies are concerned. It is considerably more expensive to register an offshore company, opening a corporate bank account is problematic if not impossible, accounting records need to be kept, and the company has to have economic substance in the country where it is registered. The latter requirement implies renting or purchasing a company office and hiring a local company director or company secretary.
As a result, an offshore company is not such an attractive business instrument any longer. It costs more and giving access to the corporate account to a stranger (the local company director) involves certain risks too. Moreover, those jurisdictions that used to levy zero taxes are now beginning to tax businesses at international rates.
If you are a foreign company owner facing the problems described above, we suggest that you should consider the opportunity to transfer your offshore company (and your personal) tax residence to Andorra. The small European country offers several important advantages to international entrepreneurs.
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Tax residence in Andorra for an offshore company
It does not matter where your foreign company is registered: it can be Spain or Germany, or it can be the BVI, Saint Kitts and Nevis, or the Marshall Islands. In any case, your company can become a tax resident of Andorra if you do everything right.
The effective corporate tax rate in Andorra is 10% so acquiring an Andorran tax number is worth considering indeed.
The key requirement that the company has to satisfy to qualify for tax residence in Andorra is as follows: one of the company owners or directors shall be a citizen or a legal resident of Andorra.
You can follow to routes to meet this requirement:
1. You can appoint an Andorran resident company (co-) director. The International Wealth team will be happy to introduce you to a professional company director who is a legal resident of Andorra.
You will then have to submit the corporate documents such as the Certificate of Incumbency and the Certificate of Good Standing (apostilled, originals and scanned copies are required) as well as other registration documents.
We will have them translated in the Catalan language and submit them to the tax service that will issue a company registration certificate.
You have to keep financial records and submit accounting reports in Andorra. We will gladly assist you in handling the matter.
You will have to pay a 10% corporate tax plus an income tax on your dividends. The income tax is payable in the country where the shareholder (dividend recipient) resides for tax purposes.
The route to Andorran tax residence described above is simpler than the one described below but you have to realize that you are going to be taxed on dividends in the country of your tax residence.
The cost of the company registration service will depend on the type of business activities that the company is engaged in. We will calculate the total cost if you supply the corporate documents to us as well as a description of your business activities and your balance sheet, if possible.
2. You can acquire legal residence in Andorra for yourself. This status will make you qualified for registering a business company in the country.
The International Wealth team will be happy to assist you in applying for legal residence in Andorra in case you do not have a residence permit there. Legal residence means tax residence in the country.
When you become a tax resident of Andorra, you will have to submit the corporate documents such as the Certificate of Incumbency and the Certificate of Good Standing (apostilled, originals and scanned copies are required) as well as other documents required for registering a company in the country.
We will have them translated in the Catalan language and submit them to the tax service that will issue a company registration certificate.
You have to keep financial records and submit accounting reports in Andorra. We will gladly assist you in handling the matter.
You will have to pay a 10% corporate tax but the dividend tax is going to be 0%.
This route to Andorra tax residence for your company is a bit longer and a bit more complicated but it has important advantages. Apart from saving on taxes, you will have a chance to relocate to a resort area that boasts high living standards. The level of medical and educational services is exceptionally high in Andorra and they are quite affordable.
The cost of acquiring Andorran tax residence for your foreign company
If you are already a resident of Andorra, company registration with the local tax authorities is going to cost you from 3,750 EUR + the costs of translating documents into Catalan. In addition, some document delivery costs are going to be involved.
If you are not a legal resident of Andorra, you have two options: hire a local company director or obtain a residence permit in the country. We can be of assistance to you whichever option you choose.
The company director will have to be paid a salary that will depend on the type of your business.
As far as acquiring an Andorran residence permit is concerned, it can be done in two ways. First, you can apply for ‘passive’ residence in exchange for an investment. The required investment amount is 400,000 EUR and the ‘passive resident’ status does not oblige you to live in Andorra permanently (though you have to spend 90 days in the country per year anyway). Second, you can apply for ‘active’ residence. This option is much less costly but you will have to start a company in Andorra and spend the best part of each year in the country if you want to retain the status of a legal and tax resident in the country.
If you register a company in Andorra and apply for our accounting services, you will have to make a 2,000 EUR advanced payment and we will prepare and submit the accounting reports for you.
If you are interested in transferring your foreign company’s tax residence to Andorra or if you would like to register a new company in the country, please do not hesitate to write to info@offshore-pro.info or contact us in any other way that you prefer (see the ‘Contact us’ icon at the top of the page).
