Andorra, the country with the second lowest tax burden in the euro zone
Andorra is distinguished by being right at the top of the list of euro zone countries with the lowest taxation; at less than 25%, second only to Ireland. Taxation is homologated and competitive, measured in consolidated parameters and with deployment of the tax framework fully completed, thus maintaining the Principality as a very attractive and competitive placement for the creation of new enterprises.
Andorra offers a great many advantages, particularly in relation to the adjacent countries, with which there are long-standing financial connections, and which are also the source of the most significant investments. The principal taxes are charged at the lowest rates in Europe and this means that the Principality is the country where citizens and businesses suffer the least onerous tax bill.
At 4.5%, the tax on sales (IGI) is, by a long way, the lowest among all European states. Rates vary between 17% in Luxembourg, the next lowest after Andorra, to the 27% charged in Hungary. Countries such as Spain, France and the United Kingdom are in the middle band, with 21% in Spain and 20% as a general rate for this tax in the other two.
The same situation is repeated in the case of Corporation Tax. With a single 10% rate, Andorra is, with Bulgaria, the country with the lowest tax on business profits. Furthermore, there are tax deductions which can be applied in certain sectors and depending on the type of company. While Malta is the state with the highest rate for this tax, at 35%, our neighbouring countries, such as Spain and France, apply rates of 25% for the first, and 31% for the second – rising to 33.33% when profits are over 250 million euro. United Kingdom business profits are taxed at 19%.
Finally, the tax which affects most people directly, IRPF or Personal Income Tax, is also kept down, at a rate below the tax in most European countries. And all earned income below 24.000 euro is exempt from taxation. Above that figure, different tax rates apply depending on how the income is sourced, up to a maximum percentage of 10%. This is the same as the rate in Bulgaria and well below the rates in Spain (21.3% to 43.5%), France 28.7% to 55.6%) and the United Kingdom (23.4% to 47%).
This comparison confirms that Andorra is a really good location for enterprising businesses. IS21 is ready to give advice on the processes of creating and setting up new businesses in Andorra.