Tax

Andorra tax on financial investments

By
Jose Maria ALFIN
on
April 20, 2022

Explanation on the tax treatment coming from savings (investments) according to the the current income tax system for individuals

Andorra Tax on Financial Investments for Individuals

The general tax rate in Andorra is very low (10%), but the tax arising from financial investments is even more attractive. In this summary, we will explain only the tax treatment of an individual tax resident in Andorra according to the tax system currently in force.

The Andorran income tax system is based on progressive tax rates for income subject to the general income base (employment, income from business activities and real estate leasings). The brackets can be summarized as follows:

As from 0-24,000 fully exempt or 0%

As from 24,000-40,000 the tax rate applicable to income is 10% but adding a bonus of 50%, the effective tax rate is 5%.

As from 40,000 in advance, the tax rate is 10%

However, income from savings (income from capital gains, dividends or interests) is taxed on the basis of a flat tax rate of 10% considering the first 3,000 € fully exempt.

We will explain the five categories of income taxable and the tax treatment of each of them on the basis of the current Andorra Tax System.

(I) Deposits / Interest-bearing bank accounts / Structured products

The proceeds of this source are subject to Personal Income Tax at the rate of 10%

(II) Andorran Equity UCIs (Andorran Pooled investment funds or SICAVs)

Income arising from investments in pooled collective investment vehicles located in Andorra is treated as follows.

Dividends: Fully exempt.

Capital Gains: Exempt if the individual held less than 25% or if he maintained the investment for at least 10 years as from the acquisition.

(III) Equity from UCIs non-Andorran

Income arising from investments in pooled collective investment vehicles located out of Andorra is treated as follows.

Dividends: Subject at the rate of 10% (applying the elimination of the double taxation which in Andorra is a complete elimination).

Capital Gains: Exempt if the individual held less than 25% or if he maintained the investment for at least 10 years as from the acquisition.

(IV) Fixed income securities (bonds or any other financial asset coming from non-equity and producing interests, etc.)

This income is subject to the rate of 10%

(V) Equities

If the company is non-resident, then the dividends are taxed at the rate of 10%,

In the case that the company is resident, then the dividends are fully exempt.

(VI) Currencies or Cryptocurrencies

Income coming from trading in official currencies or cryptocurrencies are subject to income tax in Andorra at the rate of 10%.

The key matter is the moment of the accrual of the tax. The Andorra Tax Authority has determined that any exchange of a currency or cryptocurrency is subject to income tax at the moment of exchange and it is not necessary to wait until the currency or cryptocurrency has been converted in official currency.

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