FINTAX2020 is a very young firm, having been created in September 2020, but is the only law firm in Andorra focused exclusively on tax matters. The firm provides services for many local clients, and also advises foreign companies relating (to) investments in Andorra and companies relocating to the country or individuals who want to relocate to Andorra for several reasons. FINTAX2020 focuses on its specialist area of tax, and has an agreement with Spanish law firm Gomez, Acebo & Pombo on a basis of exclusivity. Due to the experience of the partners in international investments, acquisitions and restructurings, the firm has a vast number of clients who are not Andorran residents but want to invest in IT, digital services and related matters. Law and Practice 1. Types of Business Entities, Their Residence and Basic Tax Treatment 1.1 Corporate Structures and Tax Treatment It is not compulsory to conduct a business through a legal entity in Andorra, but it is normally more efficient in terms of the deductions that apply to legal entities over individuals, who have more limitations for deductions or exemptions, even when they act as business individuals. Andorra only regulates two kinds of company by law: Societat de Responsabilitat Limitada (S.L.) and Societat Anónima (S.A.). The main difference is that the minimum capital in the S.L. is much lower (EUR3,000) than the S.A., which has a minimum capital of EUR60,000. Also, the S.A. is more open to foreign shareholders whereas the S.L. is very restrictive according to law in terms of the freedom of transferring participations to third parties (non-original partners). 1.2 Transparent Entities The typical entity used for investments is regulated by the Autoritat Financera Andorrana (AFA) under the form of a SICAV (Collective Investment Vehicle). There are different classes of SICAV in relation to the investment policy but, from the corporate point of view, all of them are incorporated as Societat Anonima. The key advantage of these entities is the tax treatment: although they are subject to Corporate Income Tax, the tax rate is equal to 0%. 1.3 Determining Residence of Incorporated Businesses The residence of companies is determined according to three different criteria: if the company has been incorporated according to Andorran laws; if the company has its registered office located in Andorra; and if the company is effectively managed from Andorra (ie, the effective management headquarters are located in Andorra). 1.4 Tax Rates The general tax rate is 10%. However, SICAVs are subject to a 0% rate. If individuals receive proceeds as a consequence of an agreement to distribute dividends, they would be also fully exempt, according to law. 2. Key General Features of the Tax Regime Applicable to Incorporated Businesses 2.1 Calculation for Taxable Profits The accounting profit is very close to the tax profit, since the Andorra system does not regulate many adjustments to the accounting result. Some relevant adjustments are as follows: permanent adjustments: exemptions, fines, gifts, donations and unjustified expenses, double tax relieves, etc; and temporary adjustments: amortisation and depreciation, provisions, etc. 2.2 Special Incentives for Technology Investments There is a specific regime for investments in intangible assets if the following requirements are fulfilled: the company must apply those intangible assets to its business activities; the intangible assets can only be used by or destined for the business; the person trying to apply the regime must have all the records and books duly deposited; and the intangible asset must be developed in Andorra. The application of this regime must be requested from the government, which must authorise it expressly. 2.3 Other Special Incentives A special treatment is applied to new investments carried out after the Corporate Income Tax Act (CIT) entered into force. The treatment is more than a deduction or relief, and applies different criteria for the amortisation of those assets. 2.4 Basic Rules on Loss Relief Past tax losses that originated when the CIT was in force can be set off against the profits originated during a maximum term of ten years. 2.5 Imposed Limits on Deduction of Interest Andorra does not impose any limits on the deduction of interest. 2.6 Basic Rules on Consolidated Tax Grouping Consolidated tax grouping is an option: a group can be taxed globally if all the companies, directly or indirectly, have a minimum percentage of other companies of the group of at least 75%. 2.7 Capital Gains Taxation Capital gains are taxed at 10%. There is a full relief applicable to gains arising from the sale of shares of subsidiaries if, at the time of the sale, the parent company held at least 5% of the shares during the previous 12 months, and the subsidiary is subject to corporate income tax of at least 4% (ie, 40% of the general 10% corporate tax rate in Andorra). 2.8 Other Taxes Payable by an Incorporated Business VAT is applicable, at a rate of 4.5%. 2.9 Incorporated Businesses and Notable Taxes Incorporated businesses must also consider the fees of the notary and a flat stamp duty tax payable to the government. 3. Division of Tax Base Between Corporations and Non-corporate Businesses 3.1 Closely Held Local Businesses Normally, all businesses and entrepreneurs carry out business using a corporate form (either S.L. or S.A.). 3.2 Individual Rates and Corporate Rates The corporate tax rate is 10%. The rates of Personal Income Tax are as follows: 0% up to EUR24,000; 5% from EUR24,000 up to EUR40,000; and 10% from EUR40,000 upwards. 3.3 Accumulating Earnings for Investment Purposes There are no tax incentives for accumulating earnings for investment purposes. However, investments in fixed assets in Andorra generate a tax incentive of 5% of the total amount invested (under certain conditions). 3.4 Sales of Shares by Individuals in Closely Held Corporations Dividends are fully exempt if they have been distributed by Andorran companies to individuals who are resident in Andorra. Capital gains are exempt if, before the sale, the seller held up to 25%, or had maintained the shares for more than ten years. Otherwise, the capital gain would be subject to tax at a rate of 10%. 3.5 Sales of Shares by Individuals in Publicly Traded Corporations Normally, investments in stock-quoted corporations will not represent a stake of more than 25%, so the capital gain would be exempt in Andorra. If this is not the case, the gain would be subject to tax at a rate of 10%. 4. Key Features of Taxation of Inbound Investments 4.1 Withholding Taxes Only royalties are subject to withholding tax, at a rate of 5%. 4.2 Primary Tax Treaty Countries The primary tax treaty countries used by foreign investors to make investments in local corporate stock or debt are Spain, Portugal, France and Luxembourg. 4.3 Use of Treaty Country Entities by Non-treaty Country Residents As far as is known, local tax authorities have never challenged the use of treaty country entities by non-treaty country entities. However, the Andorran tax authorities could well challenge such cases, since Andorra is a BEPS jurisdiction and is complying with all the duties arising from BEPS. In this case, they have the obligation to check that a transaction is carried out in a normal way, avoiding artificial structures with the aim of avoiding or minimising the tax payable (treaty shopping). 4.4 Transfer Pricing Issues Linked transactions must be carried out at a fair market value. Taxpayers are obliged to request a valuation report from an independent expert, evidencing that the transaction has respected the standards of the market. There are no specific obligations to document the transfer pricing transaction, but this would be necessary in the case of a tax audit. 4.5 Related-Party Limited Risk Distribution Arrangements As far as is known, the Tax Agency has not challenged the use of related-party limited risk distribution arrangements for the sale of goods or the provision of services locally, but there is a risk it could because the law is clear in this regard. 4.6 Comparing Local Transfer Pricing Rules and/or Enforcement and OECD Standards Andorra's policy towards local transfer pricing rules is the same as that established by the OECD, and those parameters have been incorporated into the law. 4.7 International Transfer Pricing Disputes The Tax Agency has confirmed that there have been no international transfer pricing disputes in Andorra resolved through double tax treaties and mutual agreement procedures. 5. Key Features of Taxation of Non-local Corporations 5.1 Compensating Adjustments When Transfer Pricing Claims Are Settled The Tax Agency has not been very active in challenging transfer pricing matters, so it is hard to know how it would act in such matters. 5.2 Taxation Differences between Local Branches and Local Subsidiaries of Non-local Corporations The tax base for local branches of non-local corporations and local subsidiaries of non-local corporations is calculated through the same system, with the tax rate for both being 10%. However, the local branches have certain limitations on deducting expenses related to the parent company. 5.3 Capital Gains of Non-residents Capital gains arising from the sale of stocks in local corporations by non-residents are taxed at a rate of 10%. However, if the seller has held less than 25% of the company during the last 12 months, the capital gain will be exempt. However, if more than 50% of the company's assets are made up of real estate assets located in Andorra, a special tax for capital gains arising from the stock transactions applies, which is regressive from 15% in the first year down to 0% if the sale is more than ten years after the acquisition. 5.4 Change of Control Provisions This is not applicable in Andorra. 5.5 Formulas Used to Determine Income of Foreign-Owned Local Affiliates Any formulas used to determine the income of foreign-owned local affiliates selling goods or providing services are normally determined by an independent expert, who drafts the Master File determining the market price of the transaction. 5.6 Deductions for Payments by Local Affiliates Transfer pricing rules apply on transactions related to management and administration expenses. 5.7 Constraints on Related-Party Borrowing Related-party borrowing by foreign-owned local affiliates to non-local affiliates is subject to the same rules as apply to other linked transactions. 6. Key Features of Taxation of Foreign Income of Local Corporations 6.1 Foreign Income of Local Corporations The foreign income of local corporations is not exempt from corporate tax per se, but the withholding at the source, if that is the case, is deductible up to a certain limit (effective taxation in Andorra on this income). 6.2 Non-deductible Local Expenses This is not applicable in Andorra. 6.3 Taxation on Dividends from Foreign Subsidiaries Dividends from foreign subsidiaries of local corporations are exempted from tax by applying the participation exemption principle, under certain conditions (minimum participation, length of participation and effective taxation or existence of double tax treaty). 6.4 Use of Intangibles by Non-local Subsidiaries Intangibles developed by local corporations can be used by non-local subsidiaries in their business without incurring local corporate tax, provided that the foreign company pays the linked company the fair market price. The profit for the transferor is taxed at a rate of 5% if the transfer as considered a royalty, or at 10% in all other cases, except for other dispositions under double tax treaties. 6.5 Taxation of Income of Non-local Subsidiaries Under CFC-Type Rules Andorra has not yet incorporated any CFC rules into its tax system. 6.6 Rules Related to the Substance of Non-local Affiliates Andorra has not yet incorporated any CFC rules into its tax system. 6.7 Taxation on Gain on the Sale of Shares in Non-local Affiliates Capital gains are taxed at 10%. There is a full relief applicable to gains arising from the sale of shares of non-local subsidiaries if, at the time of the sale, the parent company held at least 5% of the shares during the previous 12 months, and the subsidiary is subject to corporate income tax of at least 4% (ie, 40% of the general 10% corporate tax rate in Andorra). 7. Anti-avoidance 7.1 Overarching Anti-avoidance Provisions Andorra has a set of anti-avoidance provisions in the General Tax Act. The most important provisions are as follows: transactions must be carried out for valid economic reasons and not just for tax reasons; transactions with the sole purpose of avoiding the tax applicable to the real business are prohibited; and presumptions or valuations are fixed by law. 8. Audit Cycles 8.1 Regular Routine Audit Cycle Audits are carried out without any prior notice, and there is no regular cycle. 9. BEPS 9.1 Recommended Changes All the BEPS recommendations have been implemented, although the incorporation of CFC rules into the Andorran tax system is still pending, and some other pending items will be implemented very soon. One of the most important amendments that is still pending is the introduction of CFC rules into the Andorran tax system. 9.2 Government Attitudes Andorra is fully compliant with BEPS, and the government agrees 100% on the spirit of BEPS in order to avoid fraud or artificial transactions with the sole aim of reducing or eliminating taxation in the most expensive jurisdiction. 9.3 Profile of International Tax International tax has a high profile in Andorra. Andorra did not have any experience in tax matters before 2011, and consequently needs the guidance of the OECD and countries with many years of experience. 9.4 Competitive Tax Policy Objective It is likely that the tax pressure will be increased, but this decision will be implemented very slowly to avoid internal conflicts. 9.5 Features of the Competitive Tax System It could be suggested that the 0% taxation of SICAVs makes no sense and the CFC rules must be implemented as soon as possible. 9.6 Proposals for Dealing with Hybrid Instruments Andorra is following the calendar agreed with the OECD to implement BEPS and is fulfilling the changes at the due time. To date, Andorra has not implemented the item related to hybrid instruments but the government has a timeframe within which to approve the relevant laws. 9.7 Territorial Tax Regime Andorra does not have a territorial tax regime. Income is taxed following the principle of worldwide income for residents and, in certain cases, non-residents are subject to real taxes when they make deals with real estate properties. 9.8 CFC Proposals As Andorra does not have a territorial regime, the CFC proposals are not relevant here. The next tax reform will target potential evasion by Andorran residents (individuals or corporations) through companies located in countries where passive entities owned by non-residents are not subject to tax. 9.9 Anti-avoidance Rules All the double tax conventions are the same in terms of following the OECD model and, in some cases, the UN model. 9.10 Transfer Pricing Changes The transfer pricing rules are very clear in the law, and no relevant changes in this regard are expected. 9.11 Transparency and Country-by-country Reporting The proposals for transparency and country-by-country reporting are essential for tax justice and a more efficient distribution of tax resources among countries. 9.12 Taxation of Digital Economy Businesses Andorra has not implemented any criteria in this matter, but it will follow the relevant recommendations of the OECD. 9.13 Digital Taxation Andorra fully supports the proposals made by the OECD. 9.14 Taxation of Offshore IP All the provisions regarding the taxation of offshore IP that were originally included in the law have been abolished as a consequence of the amendments introduced to the law following the BEPS recommendations. FINTAX2020 Avinguda del Pessebre, 52.1.1. Escaldes-E Andorra +376 323 320 Espanya perd crèdit diàriament per la falta de nivell i coneixements d'alguns polítics Actualització: 11 de febrer Els polítics espanyols ara al Govern o donant suport a el Govern Soci-Comunista i molt especialment el partit anomenat Unides Podem (estranyament van decidir canviar el nom anterior de la formació per la forma femenina en un hipòcrita exercici de feminisme mal entès) estan demostrant, un cop més, la seva falta de preparació. En el pitjor dels casos, es podria argumentar que els impostos no són l'àmbit d'especialitat de certs polítics, però quan cal parlar o discutir sobre un assumpte de gran rellevància, el Sr. Echenique va donar tota una lliçó de falta de prudència. Si no sap d'alguna cosa, no opina. I si es vol opinar, aquest senyor hauria d'estar tancat a casa uns dies preparant-se i entenent com funciona un sistema fiscal, que és un paradís fiscal i com funcionen les regles bàsiques internacionals en matèria de fiscalitat. Però aquesta gent es creu legitimada per opinar de tot. Fins i tot en assumptes en què no tenen els mínims coneixements per dir coses raonables. Com a conseqüència que molts YouTubers nadius espanyols porten dècades traslladant-se a Andorra per motius principalment fiscals (la qual cosa és perfectament lícit). L'únic requisit és que han de complir les normes establertes en les legislacions d'Andorra, Espanya, els preceptes de l'Conveni per evitar la Doble Imposició entre Espanya i Andorra i respectar els principis de tributació internacional regulats en els comentaris als models de tractats de l'OCDE . I en aquest tema, independentment de la meva opinió sobre certs YouTubers a nivell personal (els hi ha millors i pitjors), tenen tot el meu respecte i suport perquè exerceixen el dret fonamental a establir-se on vulguin i pels motius que vulguin. També, crec convenient aclarir que és Andorra a dia d'avui. Andorra és un país plenament transparent. He sentit en diversos mitjans de comunicació diverses imprecisions que no han deixat de sorprendre. Andorra va deixar de ser paradís fiscal per a Espanya en 2011 quan va entrar en vigor l'acord d'intercanvi fiscal a demanda entre Espanya i Andorra, requisit que exigia la llei de prevenció de blanqueig de capitals per ser exclòs de la llista. A continuació va signar 14 acords per a l'intercanvi tributari a demanda amb diversos països importants; posteriorment va signar CRS, una norma que establia l'obligació que els bancs o autoritats financeres dels respectius països informessin automàticament a través de fitxers enviats pel Govern receptor dels actius i capitals de no residents reportant anualment a totes les persones que mantinguessin comptes o actius financers en un país diferent a el del seu país de residència. Més tard, Andorra es va comprometre amb el projecte BEPS o projecte adreçat a la lluita contra l'erosió de bases imposables de les multinacionals. No sembla pecaminós i hauria de respectar-que un ciutadà que compleixi la normativa, pugui tributar en un país en què l'Impost de Societats és de l'10% i l'impost per a persones físiques (tipus màxim) també de l'10%. Casos molt diferents són els de certs personatges públics que formalment van comunicar el seu trasllat a Andorra, però que en realitat no complien la normativa. I gràcies a aquests defraudadors (ells sí van ser defraudadors), el Parlament espanyol va fer pagar a justos per pecadors establint una mesura general per a tots els espanyols que traslladessin la residència a Andorra, obligant-los a tributar l'any de l'desplaçament i els 4 següents. És a dir, el fraudulent comportament de certes persones va provocar que el pobre empleat amb un humil sou, hagués de tributar a Espanya, tot i residir a Andorra, la qual cosa és sens dubte injust. Però convé esmentar i, és bo no oblidar que Andorra ha estat durant molts anys un paradís fiscal on els diners no declarat era dipositat amb garanties d'opacitat. Però ara les regles han canviat, tot i que a alguns no els agradi. Andorra està en procés d'acordar una associació amb la Unió Europea i fa uns mesos el Sr. Pascal Saint Amand (cap d'assumptes fiscals de l'OCDE) va felicitar Andorra pel treball realitzat i l'esforç en favor de la transparència i la cooperació internacional . No obstant això, el passat en ocasions resulta difícil d'oblidar, però benvolguts lectors, la realitat actual és la que és. Finalment, recomanaria a Unides Podem i, especialment al Sr. Echenique, que estudiï una mica més com funciona la definició de residència fiscal (els 3 punts principals); com funciona l'OCDE i els punts de connexió regulats en els tractats. Probablement, s'adonaran que el que va dir l'altre dia Echenique és una afirmació ignorant i conseqüència d'una falta extraordinària d'anàlisi i coneixement. Segur que en 2 hores té ja clar com funciona aquest món si s'estudia la llei d'IRPF Andorrana, Espanyola i l'article 4 de l'conveni. I si tingués dubtes, l'OCDE i la Unió Europea segur que se les poden aclarir fàcilment. Sr. Echenique, Espanya no és sobirana per decidir quin país és o no un paradís fiscal. Aquest criteri part de l'acció coordinada de la UE i de l'OCDE. Estudiï una mica, si us plau. ######################################## Reflexions abans de decidir traslladar la residència a Andorra Actualitzat: 7 d'abril La decisió de traslladar la residència a Andorra ha de considerar molts factors a part de l'estalvi fiscal. Donada la meva experiència en l'assumpte, ja que he vist milers de casos de tot tipus, m'agradaria fer unes reflexions més de caràcter personal-familiar que jurídiques. És a dir, un conjunt de preguntes que tot ciutadà que estigui pensant en traslladar-se a Andorra o un altre país ha de tenir a la tauleta com el decàleg que convé recordar de tant en tant. El que hauria de plantejar-qui està pensant en anar-se'n és: a) Reflexions Personals. 1. A part dels grans estalvis fiscals que el meu trasllat pot suposar, realment m'agrada aquest país o em moriré d'avorriment ?; 2. La meva dona està d'acord ?; 3. Tinc nens dependents i els vull escolaritzar en aquest petit país (que és més petit que el meu poble ...). 4. Podré seguir practicant les meves aficions o esports? b) Consideracions jurídiques i fiscals 1. He tingut en compte si em s'aplica o no el exit tax? 2. Estic en condicions de poder acreditar que vaig a romandre a Andorra 183 dies durant l'any natural? I quan dic acreditar, no em refereixo a si has estat de veritat (cosa que dono per suposada), si no si s'és capaç de provar-ho. Perquè si Hisenda sotmet a el nou immigrant andorrà a un tercer grau, la presumpció de la qual partirà serà que no. 3. Les meves fonts de renda i patrimoni on estan localitzats fonamentalment? 4. Vull viure de rendes o tinc interès en seguir desenvolupant negocis a Andorra de forma activa? 5. Em quedaré de manera indefinida o tinc un horitzó temporal i els meus plans són tornar a país d'origen en un termini determinat? El que està clar és que un assalariat per una empresa espanyola difícilment podrà residir a Andorra; un empresari amb un patrimoni empresarial i immobiliari important radicat a Espanya, ho tindrà molt complicat. És a dir, hi ha sectors que per la seva naturalesa estan molt arrelats al territori. També, en l'àmbit econòmic, és complex que grans centres o empreses de logística puguin instal·lar-se a Andorra, atès que no hi ha espai material per poder instal·lar-se. En canvi, altres sectors com el de les noves tecnologies en totes les seves variants; YouTubers; start ups de negocis tecnològics; escriptors; esportistes no lligats a un país determinat; artistes i altres professionals que no impliquen un arrelament a el territori, ja que poden fer el seu treball des de qualsevol lloc, són idònies per poder plantejar-se l'opció de l'trasllat, si el país els agrada. A sota teniu un link per poder visualitzar un vídeo a YouTube en què explico a grans trets els requisits per a l'adquisició de la residència a Andorra i faig una ràpida comparativa a tipus impositius a nivell d'IRPF en diferents països. Bona nit i una cordial salutació, Jose Maria ALFIN Adjunt enllaç a l'vídeo incloent subtítols en anglès i català. Jose Maria ALFIN MARTIN-GAMERO Advocat i assessor fiscal (Andorra i Espanya) Soci gerent Jose Maria va començar la seva carrera com a representant legal davant la Unió Europea per desenvolupar un projecte relacionat amb una licitació de projectes per harmonitzar la normativa comercial entre els membres de la finca per facilitar el moviment d’empreses al territori de la UE i altres reestructuracions corporatives. Més tard, va assumir el càrrec d’assessor general de General Motors per a Espanya. Quan va decidir traslladar-se a Andorra, va treballar per a un dels principals bancs d’Andorra com a assessor general i director de planificació patrimonial i serveis fiscals. Després d’aquesta etapa, es va incorporar a Cases Lacambra com a soci encarregat de la planificació fiscal i patrimonial a l’oficina d’Escaldes-Engordany i recentment va decidir iniciar la seva pròpia oficina. Jose Maria Alfin ha impartit classes a la Universitat d’Esade durant els darrers quatre anys sobre el màster del compliment. L’àrea clau era el compliment fiscal, CRS, FATCA i assumptes relacionats. Els dos últims mestres, Jose Maria Alfin, van compartir classe amb el seu col·lega i prestigiós assessor fiscal Marc Urgell. Així mateix, José Maria ha impartit diverses conferències a l'associació economista de professionals centrant les seves intervencions en qüestions relacionades amb els darrers desenvolupaments en fiscalitat nacional i internacional. Jose Maria és un advocat admès a exercir a Espanya o a Andorra. Així mateix, és membre de l'Associació Espanyola d'Assessors Fiscals; Associació Andorrana d’Assessors Fiscals; Associació Fiscal Internacional i Associació de Dret Financer. JMaria va ser nomenada el 2016 com a corresponsal de tributació andorrana de la FIBI (International Bureau of Fiscal documentation) i el 2019 de l’impost de Bloomberg.​ Jose María ALFIN està classificat a Chambers Global i Chambers Europe 2021 com un dels millors experts en transaccions fiscals, corporatives, bancàries i transfrontereres. Àrees clau d’assessorament: banca; Finances; Corporatiu; Transaccions internacionals i transfrontereres; Planificació fiscal i patrimonial

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