Thanks to new technologies, knowing what is going on in your company no longer depends on being there in person, but on having access to the information. Nowadays it is common to check bank accounts, sales reports, orders, accounts receivable, etc. from anywhere, simply by having a computer and Internet access. For this reason, it is viable to have your company in Spain and live in Andorra, taking into account the fiscal responsibilities that both the company and the administrator have.

Let’s explore the following options:

1. Living in Spain and having your company in Andorra
   The formation of companies with foreign capital is allowed in Andorra, so a resident in Spain can create a company in Andorra, as long as certain requirements are met. It is important to clarify that the company will have tax obligations in Andorra since it is the location of its tax domicile and the investor will maintain its tax residence in Spain, following the tax regulations of his country.
2. Living in Andorra and having your Company in Spain
   By law, every company incorporated in Spain must have its registered office and tax domicile in Spain. The company pays taxes in Spain since its fiscal domicile is there, but, if you are a fiscal resident in Andorra, your personal taxes would be paid in Andorra. It is not that complicated. In Spain, it is possible to create a company by designating a person living abroad as a director.

From our perspective, Andorra offers many more fiscal advantages compared to other countries. The personal income tax in Andorra is one of the lowest in Europe and for this reason it attracts many people. In addition, the corporate tax in Andorra is usually 10% and sometimes less depending on the type of activity in which it is involved. So why not make the most of it by moving both your personal residence and your company to Andorra?.

Another alternative is to create a holding company in Andorra. The Andorran resident has shares in foreign companies, for example in Spain, whose dividends generated are not taxed on income tax and profits generated outside Andorra are exempt from tax. These are part of the advantages that a holding company in Andorra can offer you.

Moreover, there is a double taxation agreement between Spain and Andorra that clarifies this type of international transfer of business activity between the two countries with different residences. In any case, the applicable international taxation should be studied with possible deductions depending on the agreement and the country of origin of these transfers.

Economic substance

It is important to know that a company without substance in a low tax country can be considered as an offshore or shell company. This interpretation can lead the taxation of the company to the tax residence of the manager. This is why we recommend an operation with substance in the country. Find here more information on the requirements of substance in Andorra.

We understand that the information provided is general and may not be fully adapted to your current situation. We therefore suggest you contact our specialists in taxation and company formation in Andorra to analyze your case in depth and offer you the most appropriate solution.