1 Basic framework

1.1 Is there a single tax regime or is the regime multi-level (eg, federal, state, city)?

Corporate taxation in Andorra is based on a single tax regime. This small country of just 468 square kilometres is divided into seven parishes. However, these parishes do not apply corporate taxes and are limited to charging municipal and administrational fees.

1.2 What taxes (and rates) apply to corporate entities which are tax resident in your jurisdiction?

Corporate entities are subject to a 10% corporate tax, applicable on profits.

Collective investment undertakings (funds and sociétés d’investissement à capital variable) are subject to a 0% corporate tax.

Negligible municipal taxes/fees are charged based on the location and size of commercial offices.

1.3 Is taxation based on revenue, profits, specific trade income, deemed profits or some other tax base?

Corporate taxation is based on profits generated by a company’s worldwide activities.

1.4 Is there a different treatment based on the nature of the taxable income (eg, gains on assets as opposed to trading income or dividend income)?

Worldwide income is subject to the same tax rate, regardless of its nature. However, some kinds of income may be exempt under legal dispositions (eg, capital gains, dividends).

1.5 Is the regime a worldwide or territorial regime, or a mixture?

Andorra’s tax regime is a worldwide regime.

1.6 Can losses be utilised and/or carried forward for tax purposes, and must these all be intra-jurisdiction (ie, foreign losses cannot be utilised domestically and vice versa)?

Losses may be utilised and carried forward into the subsequent 10 exercises. In the case of foreign losses, Andorran companies may compensate them domestically under certain circumstances.

1.7 Is there a concept of beneficial ownership of taxable income or is it only the named or legal owner of the income that is taxed?

Andorra’s legal system does not distinguish between the beneficial owner and legal owner in terms of taxation.

1.8 Do the rates change depending on the income or balance-sheet size of the taxpayer?

The corporate tax rate is 10%, irrespective of the balance-sheet size of the taxpayer.

1.9 Are entities other than companies subject to corporate taxes (eg, partnerships or trusts)?

Trusts and partnerships do not exist in the Andorran legal system, given that the legal owner is not distinguished from the beneficial owner.

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