ANCEI | CRYPTOCURRENCY TAXATION IN ANDORRA

With its favorable political stability, strategic location, and regulatory environment, Andorra offers substantial opportunities for businesses entering the crypto industry.

Although cryptocurrencies are not recognized as legal tender, the sector benefits from a robust regulatory structure and a government proactively and actively updating its legal framework for digital assets. Andorra’s regulatory approach underscores its commitment to fostering technological innovation while ensuring robust compliance with legal and financial standards in the digital asset sector.

Andorra´s journey towards digital regulation began in 2020 with the government’s action plan Horitzó 23. Horitzó is a government action plan initiated by Andorra in 2020 with the goal of modernizing the country and positioning it as a forward-thinking hub for digital innovation and economic diversification. The plan encompasses a range of legislative and regulatory reforms aimed at fostering digital transformation, attracting international investment, and encouraging growth in emerging sectors like digital assets and blockchain.

One significant outcome of Horitzó 23 is the Digital Assets Law (Law 24/2022), which provides a legal framework for cryptocurrency and blockchain activities in Andorra, including regulatory guidelines for businesses and protections for investors. This law exemplifies Andorra’s commitment to creating a clear and progressive regulatory environment as part of its larger vision to embrace technological and economic shifts through Horitzó 23.

CRYPTOCURRENCY AND THE TAX AUTHORITIES

It’s important to know that unless you live in a country where gains from holding or exchanging cryptocurrencies are not taxed at all, you will have to record your cryptocurrencies, as well as find out how to pay taxes for them correctly, before the next tax season. Therefore, if you own bitcoins or any other cryptoactive, you should know the regulation that cryptocurrencies must be subject to in your country, since, probably, you should be paying taxes on your accumulated income or you could be falling into a crime of tax evasion, among others. In Spain, for example, the sale of cryptocurrencies can be understood as the sale of currencies or stocks. Therefore, if you are spanish or french, and subject to capital gains to such taxation, you will be paying considerably more than anyone else in the world. As holding cryptocurrencies can be assimilated to currencies or stocks, you can consequently take them with you if you change residence, taxed on said gain, for tax purposes, where you end up effectively residing.

Are cryptocurrencies subject to the exit tax?

The exit tax is a tax or levy that affects those Spanish residents who (fulfilling a series of requirements) decide to transfer their tax residence to a country that does not belong to the European Union (such as Andorra) or to the European Economic Area. This tax especially affects large estates. For example, those who own shares in companies valued at more than € 1,000,000 or a portfolio of shares of more than € 4,000,000 must pay the exit tax. Which can lead us to the following approach: if cryptocurrencies in Spain must be taxed as shares, should I pay the exit tax if I have more than a million in crypto assets? NO. Although cryptocurrencies must be taxed as shares, because they are not subject to a specific regulation, cryptocurrencies are not shares and, therefore, you will not have to pay the exit tax for their possession. Which greatly facilitates your residence transfer to a country like Andorra.

CRYPTOCURRENCY TAXES IN ANDORRA

In Andorra, cryptocurrency taxation is quite favorable compared to its neighbors, France and Spain.

Personal Income Tax (IRPF): In Andorra, individuals who realize capital gains from cryptocurrency transactions are subject to a personal income tax rate of up to a maximum of 10%. This low, flat rate makes Andorra an appealing destination for crypto investors. In contrast, France and Spain apply higher tax rates on capital gains. In France, capital gains from crypto are typically taxed at around 30% under the flat tax (prélèvement forfaitaire unique), which includes social contributions. In Spain, capital gains on crypto range from 19% to 26%, depending on income brackets. This makes Andorra’s 10% rate notably competitive, particularly for high-net-worth individuals and frequent crypto traders

Corporate Tax: Businesses engaged in crypto activities, such as mining, trading, or consulting, are also subject to favorable corporate tax rates in Andorra. The corporate tax rate is capped at 10%, offering a stable environment for crypto-based companies. By comparison, France’s corporate tax rate is currently at 25%, and Spain’s is around 25%, significantly higher than Andorra’s rate. This differential positions Andorra as a more attractive jurisdiction for businesses operating in the crypto space.

Andorra’s favorable regulations, political stability, and strategic location make it an appealing destination for cryptocurrency entrepreneurs. By adhering to the legal framework and seeking professional tax advice, businesses can navigate the cryptoregulatory landscape and achieve success.

IN ANDORRA

INCOME AND CORPORATE TAX ARE A MAXIMUM OF 10%

THERE IS NO PROPERTY TAX

NO SUCCESSION NOR DONATION TAX

THE IGI (LIKE VAT OR VAT) IS 4.5%

YOU WILL NOT HAVE TO SUBMIT THE FORM 720

YOU WILL NOT PAY EXIT TAX FOR YOUR CRYPTOS

YOU WILL BE TAXED A MAXIMUM OF10%

CRYPTOCURRENCY TAXED AT 10%

WE WILL HELP YOU WITH YOUR CHANGE OF RESIDENCY

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