The
term 'offshore' is not used in Andorran legislation
or in describing company forms. Indeed there
is no 'offshore' sector as such, since there
is no significant direct taxation of Andorran
entities in any event. See Direct
Corporate Taxation for details of the
few taxes that impinge on business; see Personal
Taxation for details of taxes impinging
on individuals.
The
Foreign Investment Law, which came into effect
on November 7, 2008, allows the opening up
of 200 sectors of the Andorran economy to
entrepreneurs and businesses from other countries.
This is viewed by the government as an important
step in Andorra's programme of reforms which
are aimed at opening, modernising and diversifying
the national economy.
As
a result of the new legislation, foreigners
can now hold 100% of a business in any of
200 designated economic sectors, including
among others, industrial production, research
and development, e-commerce, audiovisual production,
plastic surgery and education and training.
Previously the limit was 33%.
In
December 2007, the parliament unanimously
approved the business accounting law, which
forms part of Andorran government's efforts
to modernise and open the national economy.
The new law makes accounting obligatory for
all companies. Any business that generates
more than EUR100,000 annually will have to
file accounts with the government.
The
government has introduced legislation providing
for a corporate income tax, initially on non-resident
entities, at a rate of 10% which came into
force as of April 1, 2011. The introduction
of a Value-Added Tax regime, to be followed
by the extension of the income tax regime
to resident individuals and corporations are
forthcoming.
To
phase out the existing consumption tax, the
Value-Added Tax rate will be imposed on a
broader spectrum of goods and services, at
an anticipated 5% rate. A concessionary rate
of 1% is expected to be available on a number
of healthcare goods and services; on basic
living essentials, such as rent and water;
and welfare goods and services.
In
June, 2004, Andorra was obliged to accept
the EU's Savings Tax Directive, and as from
July, 2005, is imposing a withholding tax
of 15% (20% from July 1, 2008, 35% from 2011)
on returns on savings paid to citizens of
Member States of the EU, of which 75% is remitted
onwards to the States concerned.
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Andorra Forms of Offshore Operation
The corporate forms available
for external operations in Andorra are the
same as those available for internal operations
- see Forms of Company.
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Andorra Fees
Payable by Companies
The annual fee (tax) payable to the Government
by a Societat Limitadad is EUR463; and by a
Societat Anonima is EUR1,000.
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Andorra Taxation
of Foreign Employees of Offshore Operations
This
section refers to the taxation of foreign employees
in Andorra. See Domestic
Personal Taxes for the general principles
of individual taxation in Andorra, which also
apply to the resident employees of foreign entities.
There are in fact no personal taxes as such
in Andorra and there is no distinction between
the employees of resident or non-resident operations.
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Andorra Exchange
Controls
There are no exchange controls
in Andorra; the Euro was adopted as national
currency in 2011.
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Andorra Offshore
Activities
There is no offshore sector as
such in Andorra. Other than the rules concerning
ownership, there is very little legislation
to restrain business activity, which takes place
in a liberal environment. However, the Penal
Code and the Law of Protection of Banking Secrecy
and of Prevention of Laundering of Money and
Assets Deriving from Crime 1995 contain severe
penalties for criminal activity; and the Government
is very watchful in this respect. (Tax avoidance
and evasion do not count as crimes.)
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Andorra
Employment
and Residence
All
foreigners wanting to work in Andorra need work
permits. These are obtained by employers, whether
Andorran individuals or companies, on behalf
of employees. Self-employment is not allowed
until after 10 years' residence or trade in
Andorra.
A
new immigration law finally passed in 2002 was
highly contentious, but legalised the situation
of about 7,000 'pink slip' long-term immigrant
workers, as well as setting new rules for the
issuance of work permit quotas which give preference
first to citizens from Andorra's neighboring
countries, then to citizens from the countries
of the European Union, then to citizens of countries
with which the principality has signed international
agreements, and finally immigrants from third
party states. Under the law, the government
sets annual quotas for new issues of renewable
work permits.
There
are separate types of non-renewable work permit
for temporary and seasonal workers, to which
the quotas don't apply. The holder of such a
work permit must leave the country within one
month of expiry of the permit.
Renewable
work permits are issued first for 6 months,
extensible for a further year; then a temporary
residence card is issued valid for a renewable
2 years; then, a 5-year ordinary residence card
is issued; and finally a 10-year privileged
residence card is issued. Fees are modest.
Tourist
visas are issued freely, but for longer-term
stay it is necessary to have either a work permit
(which will ensure issue of a residence permit)
or a Passive Residence Permit (PRP). Permanent
residence means a stay of more than 183 days
in the year.
The
Law on Passive Residence Permits November 2006
established that a quota would be determined
periodically according to the “economic
and social needs of the Principality of Andorra”.
An
initial quota of 500 such permits was set. Passive
residents do not work of carry out professional
activity in the principality.
New
entrants to the Principality must:
- Show
minimum annual income of 300% higher than
the minimum wage in Andorra for the head of
the family plus a supplement of 100% for each
dependent family member;
- Prove
good conduct in their previous domicile;
- Produce
health insurance and a pension plan;
- Own
or rent a house or apartment in the Principality;
- Pay
a non-interest-beating deposit of 30,000 Euros
plus 7,000 for each dependent to the Andorran
National Institute of Finances (INAF) which
is refundable on departure.
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