Andorra’s banking and taxation system is everyone’s wish nowadays.
Nestled into the Pyrenees and its tax-free system this micro nation became a safe harbor for people wanting to escape the high taxation of their countries.
After tourism banking is the second biggest industry of this tiny principality, and is being constantly ‘fed’ with more and more expats running away from high taxes. Banking industry of Andorra is made of five banking groups: one specialized credit entity, 8 investment undertaking management entities, three asset management companies and 29 insurance companies, 14 of which are branches of foreign insurance companies authorized to operate in the principality. Andorran banks make it 16% out of country’s GDP.
There are six banks operating in Andorra and they are: Credit Andorra, CaixaBank, Banc Agricol i Comercial, Banca Mora-Internacional, Banca Privada and Banc Sabadell. Foreign banking institutions may not open branches in Andorra. Lack of exchange control allows you banking in any currency but all exchanges are based towards euro.
So who can open a bank account in one Andorran bank? Do not be fooled by some ‘online ways’ to open a bank account in Andorra – first of all you need to be there in person, in some cases representatives can be sent, and you need to have a deposit of 100 euros.
What does it mean ‘a tax free country’? In Andorra it means next: there is no income tax, no capital gains tax (except on Andorran property held for less than 10 years), no wealth tax and no inheritance tax. Under the pressure of the EU, from 2015 Andorra had to introduce some new tax laws and now the ‘tax haven’ got some regulations.
A tax free income is by new regulations everything under 23.999 euros, above that number to 39.999 euros you are obliged to pay a 5% tax, and above 40.000 euros there is a fee of 10%. For married couples income above 40.000 euros is taxed at 10%.