International trading company in AndorraImport & Export Trading

import-export-andorra
A Chinese national is looking to establish an import-export operation between China and Europe for the distribution of electronic equipment within the mobile industry.

Our client was able to use the special tax regime for international trade based in Andorra. The operation was set up within 3 months and the corporate tax savings are above 20% while the top shareholders benefit from the dividend taxation exemption being tax residents in Andorra and working as directors for their own business.

challenge

An Andorran entity needed to be created and the request for obtaining this special scheme permission has to be submitted to the Ministry of Finance of Andorra, which has a six-month period to give a favorable answer. If the special regime is granted, the validity of the scheme begins retroactively from the time of making your request.

The company in Andorra needs to identify itself in the European Union when invoicing for goods that are sold to any EU country. Therefore it needs to register through a tax representative in a European Union country. Our firm is specialist for these procedures and has a network across multiple European jurisdictions to obtain the EU VAT identification number necessary.

  • Incorporate an Andorran company (more info here)
  • Request the special taxation regime for trading companies with the Andorran authorities
  • Meet the requirements of sufficient substance concerning office space and human resources
  • Request an European Union value-added tax identification number in a member state

solution

According to the Andorran Law of Companies, a company that actively is involved in trading of goods that do not cross the Andorran borders, can benefit from a special tax regime which implies a 80% exemption of corporate tax on the total taxable base. Therefore, the nominal rate of 10% becomes an effective rate of 2%. The Andorran VAT (value-added tax) is not applicable because the product does not pass through the country. Dividends received by the trading company are not taxed in Andorra.

Special conditions are applicable for trading companies, see here.

results

The international trading company in Andorra was incorporated within less than 2 months. The director and main shareholder received his active residency within 2 weeks after the company was registered as actively trading.

By the numbers, the results:

  • Effective corporate taxation at 2%
  • Income tax on dividends for Andorran residents 0%
  • Part-time employee hired in Andorra¬†
  • Office rental of at least 20 sqm in Andorra

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