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Andorra’s Corporate Tax Overhaul: Key Takeaways

Andorra, a small principality nestled in the Pyrenees mountains between France and Spain, has introduced significant changes to its corporate tax framework. The amendments aim to simplify the tax regime, boost economic activity, and prevent aggressive tax planning.

According to Alberto Gil, a partner at Cases & Lacambra, Andorra’s leading law firm, the new measures will have a substantial impact on non-resident entities operating in the country.

Key Developments

  • Introduction of an economic activity threshold: Companies must demonstrate a minimum level of economic activity, including personnel, equipment, assets, and facilities, to qualify as a resident entity.
  • Application of Controlled Foreign Corporation (CFC) rules: These regulations aim to prevent tax evasion by imposing taxes on foreign subsidiaries controlled by Andorran entities. However, the CFC rules will not apply if less than one-third of a non-resident entity’s income consists of certain categories, such as passive real estate investments or interest from non-qualifying subsidiaries.
  • Prevention of set-off of negative tax bases and application of tax credits: This measure ensures companies pay a minimum level of tax (currently 3% of the positive tax base) while still allowing for offsetting amounts not deducted in the future.

Impact on Businesses

  • The new measures will promote transparency and fairness in Andorra’s corporate tax system, according to Alberto Hinojosa, another partner at Cases & Lacambra.
  • The changes will benefit a wide range of entities, from multinational groups to small and medium-sized enterprises, providing greater certainty and flexibility for businesses operating in Andorra, as noted by Pablo Lloret, an associate at the firm.

About the Authors

  • Alberto Gil: Partner at Cases & Lacambra, specializing in international tax advisory, HNWI tax planning, and tax proceedings.
  • Albert Hinojosa: Partner at Cases & Lacambra, with extensive experience in tax advice and corporate law. He previously served as head of the Department of Taxation and Borders for the Government of Andorra.
  • Pablo Lloret: Associate at Cases & Lacambra, focusing on tax and corporate matters, wealth management, and tax planning.

About Cases & Lacambra

Cases & Lacambra is a leading law firm in Andorra, providing expert advice in various areas, including corporate tax, wealth management, and dispute resolution. The firm’s team of experienced lawyers has extensive knowledge of Andorran law and international taxation regulations.

Contact Us

For more information on Andorra’s new corporate tax regime or Cases & Lacambra’s services, please visit our website at www.caseslacambra.com or contact us directly: