Much is being said in recent weeks about the youtubers who are moving to Andorra to be able to pay taxes in the neighboring country. But do we really know what are the advantages of paying taxes in Andorra ? In this article, beyond whether this type of action is morally acceptable, we are going to see what these advantages consist of and why more and more people are heading to Andorra to live and pay less taxes.
🏦 Corporation tax
The Corporation Tax (IS) is the tax that companies pay on the profits obtained during a calendar year. Normally these youtubers or athletes who go to Andorra constitute an SL on their brand and invoice everything through it.
In Spain the IS is 25%, although for newly created companies it is 15%. In Andorra this tax is 10% . So if a company gives € 100,000 profit, the difference to be paid for this tax between the two countries would be as follows:
- Spain : € 25,000
- Andorra : € 10,000
Plus € 15,000 just for living in Andorra.
If the company has given benefits, after paying the Corporation Tax, the resulting tax can be sent to reserves and increase the capital of the company or distributed among the partners. In Spain, this second option also has a tax and is 19% on the total profit. In Andorra you do not have to pay to receive dividends .
- Spain : € 19,000
- Andorra : € 0
The total savings so far would be € 34,000.
😌 Income tax (IRPF)
In addition to these two taxes at the business level, individuals also have to pay taxes every year on their income. This occurs both in Spain and in Andorra. In both countries it goes by sections, but in Andorra the maximum is 10% , while in Spain it is 45%.
In this way, the € 34,000 seen in the previous point would also be increased.
In addition to these taxes that we have just seen, we must also bear in mind that VAT in Andorra is 4.5% and in Spain 21%. So in the purchase of merchandise and personal products, there would also be great savings.
Andorra is a very small country that needs few services, so it can afford these very low tax rates. Although thanks to its collaboration agreements with Europe and its total transparency, it is not considered a tax haven .
If the profits of the companies / professionals exceed millions of euros, as is being said about the salaries of certain youtubers, the difference in paying taxes between one country and another can be considerable .
However, it is necessary to take into account certain expenses such as the permanent home necessary to be able to declare taxes in Andorra that can reduce these benefits, especially the first years. It will also be necessary to reside in the neighboring country more than 168 days a year .