This DTA, an agreement between the Principality of Andorra and the United Kingdom of Great Britain and Northern Ireland to eliminate double taxation on income and wealth taxes and to prevent tax evasion and avoidance, is of particular importance for the Principality of Andorra, given the potential volume of business represented by the United Kingdom and the importance of this country on a global level.

With this new double taxation agreement sign by Andorra with the United Kingdom, the Principality of Andorra has now signed 21 DTAs with other countries such as France, Spain, Portugal, Luxembourg, Liechtenstein, Malta, Cyprus, the United Arab Emirates, San Marino and Hungary, among others.

Andorra is currently in negotiations with the governments of Germany and Austria to sign a DTA in the near future.

The General Council of the Principality of Andorra reported on 30 April 2025 the proposal for approval of the ratification of the Andorra-UK DTA, with a deadline of 22 May 2025 for the submission of the proposal.

Sources of information on the DTA between the Principality of Andorra and the United Kingdom:

Conveni CDI Andorra – UK

Proposta d’aprovació de la ratificació del Conveni entre el Principat d’Andorra i el Regne Unit de la Gran Bretanya i Irlanda del Nord

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As we mentioned in our January post, by the end of 2020 negotiations with the Netherlands had resumed to agree on a new tax treaty between Andorra and the Netherlands. This week on October 14th 2021, the Government Spokesman Minister, Eric Jover, assured that the agreement to avoid double taxation between the two countries could be concluded very soon. He also reported that the Netherlands is one of the countries with which Andorra has been negotiating for some time.

In addition, he announced that there is interest on the part of Italy to formally begin negotiations on a non-double taxation agreement in the coming months.

On the other hand, the Parliamentary Chamber has ratified the agreement with San Marino.

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The Hungarian Minister expressed his support for the Association Agreement that Andorra is currently negotiating with the European Union. Minister Ubach, in a meeting with her Hungarian counterpart, indicated that they will continue to work on cooperation between the two countries, which she said “is very fluid”. She also reported that Hungary and Andorra have been meeting regularly at ministerial level for 25 years. Among the topics discussed are tourism, multilateralism and a point on which both countries are in agreement, which is the fight against climate change.

For more information on double taxation treaties and the treaties that Andorra currently has in force, please visit this link.

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This convention allows the companies and the residents of both countries to take advantage of the fiscal benefits and hence not be imposed twice on the same revenues (in each one of the countries). Without this agreement, the Spanish and Andorran citizens (French as well, thanks to the convention with the country that will be effective in 2016) that have collected profits or earned revenues from their professional activity in one of the countries involved in the said agreement or any other company that has performed transactions with other companies on the international scale in the two countries would have seen their earnings taxed in each of the two countries. Therefore, the DTA allows the economic and commercial activities to be more dynamic between both Spain and Andorra. Now both parties won’t see their activities held up by the fact that they would have to pay out an elevated amount of charges or taxes on their revenues.

The agreement has resulted especially beneficial for companies or professionals of the IT sector, sales, international commerce, sectors that ultimately perform business more on the international scale and that are hence exposed to that double taxation.

Alike, the quality of life in Andorra is the most elevated in Europe, due to the high level of revenue per capita, the low criminality level and the low cost of life in comparison with other European countries with generous fiscal systems. Its public health systems and bilingual education system rank amongst the best. Moreover, Andorra happens to be one of the few countries in the world to possess 100% optic fiber coverage.

This agreement has been beneficial on one side for the companies and citizens on both sides of the border that do business in the two countries, and on the other side for Spanish professionals with the intention of launching their own business in Andorra. The DTA has opened the door to those investors that want to take advantage of the fiscal advantages of the country of the Pyrenees. Note that Spain has 28% taxation on businesses, an IVA (tax on consumed goods) of 21% and a PIT of 49% while in Andorra these elevate only to the mere 10%, 4.5% and 10$ respectively; A difference of more than half points that make the creation of businesses very attractive in Andorra. However, in order to take advantage of the Andorran fiscal system, the tax residence is required.

The DTA also includes an article that establishes elements to facilitate the exchange of fiscal information between both countries, broadening points that had been decided upon in the agreement that was signed back in January of 2010. With these new specifications, the Finance department can now ask the Andorran government not only information regarding individual requirements but also about groups (ask for information about a series of Spanish citizens that possess a same financial product at an Andorran bank and that might have not declared it to the Spanish government). It can also request identification from the individual for whom information has been solicited.

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