The Principality of Andorra began an ambitious economic opening project passing the foreign investment law in June 2012. It was the start of an important legal and tax mutation for its harmonization with international standards.
The country has today 7 agreements in force with France, Spain, Luxembourg, the United Arab Emirates, Portugal, Malta and Liechtenstein.
What’s the purpose of CDIs?
The double taxation conventions (CDI) are international treaties that aim to prevent situations of double taxation internationally through a series of criteria, involving the two Contracting States. CDIs facilitate foreign investment and promote the competitiveness of domestic companies abroad.
Conventions apply to residing individuals and legal entities of any of the signatory states and affect income and heritage taxes, payable for each of the contrasting states and / or their political and administrative subdivisions. The CDIs conforms which of the two states has the competence to tax the incomes.
To ensure the correct functioning of a CDI, both the tax system, legislation on transparency, and accounting laws of the two signatory states must be compatible. These agreements represent a major step forward for the Principality of Andorra ending tax deductions at source that certain governments, such as the French or the Spanish, were applying to Andorran companies exporting their services to these countries.
It is therefore essential for the country’s economic opening.
