Andorra

Andorra

A Personal & Banking tax haven jurisdiction – The Principality of Andorra is a rather unusual jurisdiction in that technically it is not a tax haven as it does not recognise nominee managers/directors, which means that it is not particularly suitable for non-residents to use local company structures. However, as a place of genuine fiscal residence or for private banking it is certainly attractive since it has no personal income taxes and its banks have not been affected by the European sovereign debt crisis.

Synopsis

The landlocked Principality of Andorra is one of the smallest states in Europe, nestled high in the Pyrenees Mountains between the French and Spanish borders. For 715 years, from 1278 to 1993, Andorrans lived under a unique co-principality, ruled by French and Spanish leaders (from 1607 onward, the French chief of state and the Spanish bishop of Seu d'Urgell). In 1993, this feudal system was modified, with the titular heads of state retained, but the government transformed into a parliamentary democracy. In the late 20th century, Andorra became a popular tourist destination. An estimated 10 million people visit each year drawn by the winter sports, summer climate, and duty free goods. Andorra has also become a wealthy international commercial centre because of its banking facilities, low taxes, and lack of customs duties. However, recent economic hardships have required Andorra to start taxing foreign investments and to implement stricter economic policies but there is still no personal income tax. Andorra is not a member of the European Union, but enjoys a special relationship with it and uses the Euro as its national currency (Source The CIA Factbook).

Star Ratings

Corporate registration efficiency

3

Cost

4

Confidentiality

5

Local Banking facilities

5

Legal system

5

Political stability

5

Reputation

4

andorra

Location

Andorra is located in the middle of the Pyrenees with France to the North and Spain to the South.

Relationship with the UK

Andorra has an Embassy in London but generally has few significant business or non-touristic relations with the UK with the relationship with France and Spain being far more important.

The Benefits of Andorra

From a tax planning perspective Andorra is of little use given its lack of a double taxation treaty network or ability to provide substantive management and control facilities for non-residents that would satisfy OECD requirements. As stated, it is also not suitable as a Tax haven jurisdiction but it is income tax free for residents and many items are sold on a duty free basis. However, the greatest benefit for non-residents is no doubt the local banks, which provide a high degree of confidentiality especially for those who are not residents of neighbouring France or Spain.

Domestic Corporate Tax

Not applicable

Personal Tax

Andorra does not impose income, capital gains, gift or inheritance tax on individuals.

Administration & Accountancy Services

Not applicable

Managed & Non-Managed Companies

Not applicable

Fully Managed & Branch Registrations

Not applicable

Set-up & Annual Maintenance Fees

Not applicable

The Ownership of Bahamian Companies

'Overhead' Discretionary Trusts or Private Interest Foundations

Not applicable

For more information on discretionary trusts and/or private interest foundations please refer to the trust and private interest foundation sections.