Andorra is a state in southern Europe, wedged between France and Spain. With a GDP per capital above the EU average, Andorra is considered a rich country. The tax system of the Principality of Andorra is somewhat special: there is no VAT, corporate profits are tax exempt, individuals do not pay income taxes, bank secrecy is sacred, companies are not obliged to publish their annual accounts, etc. Making it the Principality a tax haven.

According to the list of tax havens established by the OECD, Andorra is a country on the list “dark gray”. These countries agreed to respect international rules but have not yet signed over a dozen related agreements. Specifically, just as Lichtenstein and Monaco, Andorra has not yet committed to more transparency and effective exchange of information.


Andorra, A tax haven

For the Financial Stability Forum (FSF), Andorra is in the class II havens. More simply, it is among the countries where the laws are flexible tax products. Be aware that the country has adopted this regulation to attract foreign companies to a matter of survival associated with too small a territory, a lack of natural wealth and isolation due to difficult access.

As a result, many companies are headquartered in Andorra allowing them to reduce the cost of their income taxes. These companies believe that their country of origin apply excessive taxation. This is what is meant by tax evasion, a term not to be confused with that of tax evasion. However, Andorra does not want to be the tax haven in the Pyrenees. The Prime Minister of the Principality will shortly submit to Parliament a draft law on banking secrecy to be lifted no later than November 2009.

Avoid tax in Andorra

In France, companies are subject to a tax rate of over 30% on profits. A company wishing to reduce the tax burden can benefit from tax in Andorra. To do this, it changes its circuit buying as follows: it creates a shell company based in Andorra where the tax burden is minimal and the shell company is responsible for transferring the bulk of the profits to another company called “off shore “based in another country with a total exemption from tax. It is a complex process but in the end, the parent company saw its tax reduced considerably.

To benefit from this tax exemption in Andorra Some operators do not hesitate to leave their home country to settle in the Principality and create his own company. In addition to the benefits that are exempt from taxes, they take full advantage of the legislation of Andorra. For example, the misuse of corporate assets is not recognized. An operator can buy a car with money from his company and put it in his name. Subsequently, it can sell the car and pay the amount of the transaction on his personal account without anyone find anything wrong. Side bank, any operator is free to pay or to collect as much cash as they wish. Unfortunately, this tax system can also make illegal transactions, this is the case of money laundering.