A comparison of corporate tax, compliance, banking and operational digital infrastructure for EU-based businesses.
Each jurisdiction leads on different priorities. The right answer depends on what the business optimises for.
Andorra applies a 10% corporate tax rate, while Spain applies 25% (15% for new companies, temporarily). The gap is real — but so are the trade-offs below.
Spain is a full EU member. Andorra is not in the EU (customs union for goods only), and the EU VAT system does not apply in Andorra.
Andorra still allows relatively flexible structures, but substance expectations have increased significantly. It is no longer a "zero-substance" jurisdiction.
Andorra's banking sector is stable but small and conservative. Spain offers deeper financial infrastructure and EU banking passporting.
| Compare | Spain (ES) | Andorra (AD) |
|---|---|---|
| Personal tax regime (founder relocation) | ||
| Special regime for new residents | Beckham Law (approx. 24% flat up to threshold) | No impatriate-style regime; low flat IRPF (max 10%) |
| Duration | Up to 6 years | Not applicable (standard low-rate regime) |
| Scope | Employment income primarily | General personal income, low progressive rates |
| Corporate taxes | ||
| Corporate income tax | 25% standard; 15% for newly incorporated (first profitable years) | 10% (general rate) |
| VAT (standard rate) | 21% | 4.5% (IGI) |
| Dividend withholding (non-resident) | 19% | 0% in most cases |
| EU Parent-Subsidiary Directive | Fully applicable | Not applicable (non-EU) |
| Shareholders, directors & capital | ||
| Minimum share capital | €3,000 (can be contributed after incorporation) | €3,000 (fully paid before incorporation) |
| Number of shareholders | Minimum 1 | Minimum 1 |
| Corporate shareholders allowed | Yes | Yes |
| Foreign shareholders | Fully permitted | Allowed, but foreign ownership must be approved by the Andorran government before incorporation (several weeks) |
| Director residency requirement | No mandatory Spanish residency | At least one local director often required in practice |
| Minimum number of directors | 1 (Administrador Unico possible) | 1 (Administrador / Director) |
| Public notary for incorporation | Yes | Yes |
| Company name approval | RMC reservation, 1-2 days | Registre de Societats, several business days |
| What else matters | ||
| Director social security | Mandatory registration (often RETA regime) | Andorran CASS if economically active |
| Special regional regime | Canary Islands (REF / ZEC), reduced corporate tax | No |
| Language in official communication | Spanish required in formal filings | Catalan required in official filings |
| Electronic tax filing | Mandatory, fully integrated (Agencia Tributaria) | Digital filing available but less centralised |
| Digital certificates | Essential for corporate operations | Digital signature required for formal filings |
| E-invoicing evolution | Increasing regulatory intensity | No real-time government-controlled e-invoicing system |
The headline rate rarely decides the real cost. These four drivers often matter more.
Spain: operational substance is flexible within the EU framework.
Andorra: authorities increasingly require real economic presence, with management and control genuinely located in Andorra.
Spain: full access to EU directives and the VAT framework.
Andorra: no access to the EU Parent-Subsidiary Directive; cross-border structuring may rely on treaties only.
Spain: EU banking passport and a broader financial ecosystem.
Andorra: a smaller banking system with enhanced scrutiny for international clients.
Spain: a standard EU jurisdiction.
Andorra: improved reputation, but still scrutinised in certain compliance environments.
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