One of the most common questions from our clients is whether it is possible to create a company in Andorra and operate in Spain. The answer is yes. In this article, we tell you everything you need to know and the nuances to consider if you decide to opt for this practice, which is so popular nowadays.

The keys to create a company in Andorra and operate in Spain

Andorra is a country that attracts many investors not only because of its low taxation, compared to, for example, Spain and France, but also because of its strategic geographical location, the quality of its services, and its life expectancy. However, doubts arise when setting up a business in the Principality and operating from Spain. Is it possible? This is one of the most common questions asked by Spanish investors who want to set up in the Principality but continue to operate in Spanish territory.

DeYou should know that it is possible to create a company in Andorra and operate in Spain, that is to say, to continue living in Spanish territory. And what happens with the tax issue? We explain that the tax company and the corresponding Corporate Tax would be paid in Andorra. However, the person would have to pay taxes according to the Spanish IRPF. Thus, as an individual, you would not be able to enjoy the tax benefits of the Principality.

Create a company in Andorra and operate in Spain is possible

On the other hand, not only can you create a company in Andorra and operate in Spain, but it is also possible to hire the services of Spanish suppliers. It is also feasible to import products from Spain to the Principality. However, in some cases, the corresponding customs formalities must be carried out for physical goods.

Invoicing from Andorra

Another question that arises for investors is whether, in addition to create a company in Andorra and operate in Spain, it is possible to invoice clients in Spanish territory but with invoices issued in the Principality. This is also possible, but to avoid possible legislative and tax complications, it is advisable to put yourself in the hands of experts such as MCA Assessors. Remember that it is best to always have advice to avoid possible fines and severe legal and economic consequences.

On the other hand, depending on the company and the clients, an agency can advise you on the best legal and fiscal option when setting up in Andorra. MCA Assessors will help you to get the best conditions for your business.

We invite you to consider settling in the Principality and establishing your tax residence here as an entrepreneur. Why is it a good idea to have this type of residence?

Advantages of Andorran tax residence

It is clear that it is possible to open a company in Andorra and operate in Spain and that the business benefits, fiscally, from Andorran taxes. For example, in the case of companies, this tax does not exceed 10%. In addition, there are exemptions and bonuses for some holdings. Undoubtedly, your business will already benefit, but what about individuals?

These are the benefits of moving to the Principality and acquiring tax residency:

In the case of imports, customs duties must be paid.

Personal income tax is taxed at 10%.
When net income is less than 24,000 euros, paying tax is unnecessary.
When net income is between 24,001 and 40,000 euros, the tax rate is 5%. In addition, a 50% rebate is applied to the 10% of the general rate, provided that the maximum is 800 euros.
Income from 50,001 euros and above will have to pay 10%.
In the case of savings income, the tax rate is 10%. They have the advantage of an exemption of 3,000 euros.
In the case of dividends resulting from Andorran companies, they are taxed at 0%.

On the other hand, it should be noted that in Andorra, there are no wealth or inheritance taxes, which in Spain, for example, would be the equivalent of the Inheritance and Gift Tax, whose purpose is to tax the increase of wealth inter vivos and mortis causa. And finally, one of the most attractive taxes in Andorra for individuals is the Andorran IGI or VAT. In the Principality, the general IGI amounts to 4.5%. In Spain, this tax is 21%.

Setting up a company in Andorra and operating in Spain: final considerations

As we have already seen, create a company in Andorra and operate in Spain. However, it is important to bear in mind the following:

It is quite costly to operate in Spain, having incorporated the company in Andorra to guarantee the economic substance it must operate in the Principality. The volume of operations must be high.
It is possible to contract Spanish services and suppliers, as well as to import goods. However, customs duties must be paid when dealing with physical goods.
You can invoice and sell in Spain, but when the sale takes place in Spanish territory, the applicable taxation will be the Spanish one and not the Andorran one. In this sense, consider whether it is worthwhile for you in terms of VAT.