FISCAL RETENTIONS AND DOUBLE TAXATION TREATIES
WHAT ARE THE DOUBLE TAXATION TREATIES AND WHAT ARE THEY FOR?
Agreements to avoid double taxation are bilateral, inter-country agreements that allow companies to obtain better fiscal conditions in their international relations. These mainly prevent companies from having to pay twice for the same concept (double taxation). And, in addition, they deal with issues such as rules for determining tax residency, means of communication between tax administrations, and so on.
For example, if an Andorran company has a subsidiary abroad, it may be that, when the latter wants to distribute dividends to its parent company, it finds a retention that charges the dividend to be paid. Such retention could be reduced or even eliminated by a convention to avoid double taxation (ILC).
How many treaties to prevent double taxation has Andorra signed?
For example, when an Andorran company wants to provide services to a Spanish company under the agreement to avoid double taxation, the Spanish state does not apply any retention, in its origin, when paying that invoice. Similarly, if an Andorran company has a Spanish subsidiary, when the subsidiary wants to distribute dividends to its Andorran parent, it must hold 5% (if the share exceeds 10%), rather than 19%, which is the percentage established by Spanish regulations for residents.
MORE ON THE DOUBLE TAXATION TREATIES
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