A double taxation agreement happens to be an international agreement that offers measures to prohibit two or more states from recording similar income or taxable occasions. When many states collect income taxes for the same event and period, this is called double taxation. The CDI applies to all direct income taxes, such as corporate income tax, personal income tax (IRPF), income tax on non-residents, and property transfer tax (capital gains).
Andorra’s tax system has experienced a major transition, beginning in 2012 with the opening of foreign investment and the ratification of unprecedented tax legislation, but that began to be consolidated with the implementation of the law on personal income tax in Andorra (IRPF). The Principality has steadily changed its legislation to satisfy all of the requirements necessary by supranational institutions (EU and OECD) and, as a result, has ceased to be included on tax haven blocklists (an objective that has been partially realized but has been definitively solidified).
One of the most significant achievements has been the negotiation of multiple double taxation agreements with other countries near the Principality to avoid international double taxes.
The Andorran tax administration has the authority to issue tax residence certificates
It is possible to receive it once the tax residence in Andorra has been considered consolidated (6 months and one day after receiving the residence permit from the immigration service). It is a document that verifies the applicant’s status as a tax resident of the country. It should be emphasized that the certificate of the double taxation agreements has a strong probative value because it is issued under the applicant’s country of origin’s double taxation treaty, even if proof to the contrary is acknowledged. And this is why all of these procedures must be advised and handled by a legal services consultancy such as Andorra Advisors, which specializes in all aspects of business formation and management in Andorra.