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Cryptocurrencies and bitcoin in Andorra

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Just like with the case of brokers and tradersAs all cryptocurrency and token related businesses and various blockchain applications are purely digital and do not require a physical location, they are a very frequent target client to go to live in Andorra.

This, of course, has also come as a consequence of the the country's efforts to open up internationally and attract the most innovative sectors and markets like Big Data or, in this case, blockchain. What Andorra is a jurisdiction that bets on cryptocurrencies and blockchainThis is demonstrated by the fact that a bill to regulate the sector is currently in the parliamentary process. 

In this article we will discuss the situation and the advantages of doing a business in this sector in the Principality. Of course, the main and most obvious advantage is the fiscal one, but it is not the only one.

Update and Bitcoin in 2021

With the price of Bitcoin at almost 60,000$ and with the first international institutional support already made, Bitcoin is slowly coming of age. Some continue to say that it is a bubble, but they are the same that they said when it was at 300$ and they are the same as when it fell from the peak of 20,000$ of 2017 to approximately 10,000$ they said "I told you so", even though 10,000$ it should also be a supposedly exorbitant amount for them.

The frequency of profiles of Bitcoin investors and hodlers and in general cryptocurrency traders who move their business to the Principality of Andorra has increased a lot in 2021, a year already marked by a strong boom and a maximum of new residents due to the pandemic, the economic crisis, the poor management of both by the governments of Spain, teleworking and trend set by El Rubius.

The importance of fund traceability

However, from Andorra Insiders we must insist that the source of funds must be clear when someone who owns these crypto assets wants to settle in any currency, especially if the objective is to operate with said funds again through the banking system and acquire goods and services with them.

Specifically speaking of the Principality, we already reflected in other articles how meticulous and strict Andorran banks are. This has always happened because the Andorran banks have investments of great wealth and businesses from all over the world, and their prestige is highly valued, image and brand for investors of all kinds as a serious, respectable and responsible bank.

Therefore the banks they are always cautious and put problems in all activities considered morally doubtful (for them): from online games, casinos and others related to gambling, to adult themes and pornography, through tarot and fortune telling businesses. In addition and as we also commented, after the BPA crisis that led to the transformation of the country, these controls have been intensified.

The case of cryptocurrencies is therefore not an exception, quite the opposite. Due to their properties and anonymity and how new they are, these assets are highly susceptible to money laundering and therefore for banks to accept the income and cash flows generated with them, it must always be proven that the ultimate origin of the funds resides in an entity of the banking system or that somehow the completely legal origin can be certified thereof.

Intermediate operations are taxed

The cryptocurrency exchange per se generates a taxable income that must be declared in personal income tax, regardless of whether whoever transmits the cryptocurrency obtains a legal tender currency (fiat), another cryptocurrency or another type of asset. That is to say: that when someone sells for example bitcoin, even if they obtain another cryptocurrency such as Ethereum, that operation per se is already subject to tax and constitutes a capital gain or loss that must be declared.

This fiscal impact, for many still unknown, has been clearly exposed by the tax authorities of practically all of Europe, including Andorra. In fact, in Spain, the verification of all operations, which includes the exchange of information with other jurisdictions such as Malta and Estonia, are part of the tax control plan for this year, and therefore, it is foreseeable that tax inspections will intensify in the sector.

The operation is therefore relatively simple and it works like this both in Andorra and in most countries of the world: each time a certain amount of cryptocurrencies, tokens or crypto assets is liquidated or sold, the holder of them obtains a capital gain / loss calculated as the value of the crypto in the sale operation minus the value in the purchase. At the end of the fiscal year, gains and losses from all operations are offset and the net income subject to tax is obtained.

We insist that this treatment is applicable regardless of the asset obtained And regardless of whether they are on a specific platform or exchange and the funds have not been withdrawn from the bank.

Record of operations with cryptocurrencies

In this sense, we recommend have a record of all operations carried out with bitcoin and other cryptocurrencies at hand in order to certify and justify, when the funds are to be settled and reintroduced into the financial system in current currencies, that the origin of the funds is lawful. It should be noted that you can have these cryptos in an external wallet, as long as it can be shown how that capital has gotten there.

Numerous clients and people around the world have a huge wealth in cryptocurrencies, especially in Bitcoin, but because they bought in the early days of this technology through low-traceable platforms and methods, they cannot liquidate and reintroduce the funds back into the financial system. Y Currently there is no use in owning Bitcoin if you cannot trade with it.

Taxes on cryptocurrencies in Andorra for trading

Cryptocurrencies in Andorra

For practical purposes, cryptocurrency trading is usually done in a personal capacity, except in cases in which a group of investors deposit a joint capital in a company, in which case it is the company that carries out the trading. 

Specifically, in the case of Andorra at the moment, and pending specific legislation, cryptocurrencies are considered as one more normal asset, and therefore obtained as individuals, they are taxed on the basis of personal income tax savings as capital gains, which is a 10% on net profit with € 3,000 exempt income. As a society the profits of the company are taxed to the 10% as well.

Thus, the gains obtained by trading cryptocurrencies in Spain are subject to personal income tax at a rate between 19% and 23%, while the maximum rate applicable in Andorra is 10%. Less than half, certainly a significant savings. You can read about Andorran taxes in greater depth here.

The main difference however is that In jurisdictions such as Spain, the cryptocurrency must be declared in the Wealth Tax, that is, it is taxed for the simple fact of owning cryptocurrencies in one's own patrimony. In Andorra there is no wealth tax, nor on inheritance and donations, with which the mere possession of these crypto assets is exempt from tax.

Crypto platforms used

The most famous exchange used in Andorra is Coinbase, although Binance is also very established. También están los bancos haciéndose con Kraken. En general, recomendamos que verifiquen que la plataforma en la que operan permita Andorra como país de residencia de la cuenta y que sea una plataforma fiable, segura y cuya trazabilidad de fondos quede clara. En general, debe ser una plataforma con reputación y que aporte confianza a los bancos andorranos de tal forma que entiendan que no hay posibilidad de realizar blanqueo de capitales u otro tipo de fraude con ellas.

The new legislation that is brewing

Due to the covid-19 crisis, Andorra has prepared a package of measures or plan for 2023 called "Horitzó 23" with which it intends to face the dire consequences that this pandemic has caused, especially as regards the economic ones. One of the 77 initiatives of the plan is the modification of the Law 35/2014, on electronic trust services to include in these all systems blockchain.

This law was passed in 2014 and seeks to regulate those electronic services that require trustnamely: electronic signatures and seals, certificates of authentication, and electronic delivery services and time stamps. Thus, the modification of the law would give all cryptocurrencies and other blockchain-based technologies the legal value of being reliable and usable.

Although the implications of the measure are quite unpredictable, for example, it would be a first step to be able to create cryptocurrency brokers in the country, to allow smart contracts, legal support and protection for crypto holders and traders, documentary validity in trials, etc.

That is, the implications of the law they go far beyond cryptocurrencies, since it implies admitting the value of distributed consensus that technology itself manages to make a reality. If we continue along these lines, we may be talking a few years from now about legally granting notarial and contractual validity, registration and exchange, etc. to all the tools that use blockchain and even to be able to issue cryptos. Not bad, although we will see what it really translates into.

Finally, it should be noted that the implementation of a license from the Andorran Financial Authority (AFA) that can be requested by companies that operate with cryptocurrencies in the same way that occurs with brokers, investment funds and financial advisers. This regulation would allow the growth of a very strong fintech sector in the Principality and the diversification of the banking system.

Mining, mentoring and blockchain business in Andorra

Other activities related to cryptocurrencies such as mining or mentoring related to blockchain has also reached Andorra. The type of residence that this type of profile usually takes advantage of is the self-employment, by means of the creation of a society to develop its activity.

The taxation of the company, as in the case of an individual, is the 10% on the profit obtained. This percentage applies regardless of the activity to be carried out with cryptocurrencies, You can also deduct all expenses related to the activity.

High-tech Internet connection

To attract capital and people from digital businesses from around the world, Andorra started a telecommunications modernization program in 2012 which today has culminated in a total coverage of fiber optic in the homes 100%, with 700 Mbps symmetric internet at home and up to 1 Gbps symmetric in the case of business. They also removed the facilities and the copper cable telephone network and also the ADSL when the total coverage was finished.

So that, you can trade quasi-instantaneous trades without having to worry about connection, despite being in a lost house in the Pyrenees. As if that were not enough, the mobile network of the country's telecommunications company, Andorra Telecom, has a reach in 98% of the territory, with which you can access and operate literally from anywhere in the Principality. We recommend seeing the rates in this regard.

Prevention and prudence

As a summary, although crypto assets are innovative and interesting, it is important to note that Andorra and its banking system have a restrictive positioning in money laundering prevention policy. In other words, in any case, the origin of the funds must be justified, as well as the traceability of the operations. For this, it is important have the most experienced and knowledgeable professionals in the sector, since passing the banking regulatory compliance procedure is an essential procedure to be a resident and be able to operate in Andorra.

At Andorra Insiders we have the best professionals in Andorran law and taxation, many of them also with a extensive experience in blockchain and cryptocurrencies. With our legal, tax and accounting services, the safest and most carefree establishment in the Principality of Andorra is completely guaranteed. Of course and as always, we offer you comprehensive support from the first to the last moment. May contact us and tell us your particular case here, and can read part of the services we offer here.

13 thoughts on “Criptomonedas y bitcoin en Andorra”

  1. Hola
    Hace 14 años que resido en Andorra, hace unos días me descargue la app de Binance, cuando te pide la identificación básica puse país Andorra, la dirección que aparece en el carnet de conducir andorrano y me la verificaron correctamente.

    El problema lo estoy teniendo al aumentar al siguiente nivel de identificación y aumentar el capital para las operaciones, solo te dejan aportar el pasaporte, que al ser residente no lo tengo, y la gran mayoría que no hemos nacido allí tampoco.
    Cambio el país al mío de origen España pero no me deja aportar la documentación me la deniega (DNI) , supongo que porque en la primera identificación he puesto Andorra.
    Sabéis cómo puedo hacer para aportar la documentación? Y así subir de capital
    Thank you

    • Hola Sonia, gracias por comentar.
      Ser residente no exime de tener el pasaporte español, se debe tener igualmente y se solicita y renueva en la Embajada de España en Andorra. Tampoco es cierto eso de que no lo tienen «la gran mayoría que no han nacido aquí». Simplemente debe actualizar su pasaporte en la Embajada como residente en Andorra y aportar el pasaporte a Binance.

  2. Buenas

    Respecto a la tributación del IRPF, tanto de criptomonedas como de cualquier otro activo, entiendo que solo tiene que declararse en cuanto se superan los 3000 euros de beneficio después de cerrar cualquier operación durante el año fiscal en curso, si no se cierra dicha operación y se siga manteniendo el activo, no habría que hacer ningún tipo de declaración, ¿cierto?

    Muchas gracias

    • Hola Dani, gracias por comentar.

      El funcionamiento es el siguiente: hay que declarar el IRPF de un determinado período fiscal (IRPF) cuando el beneficio neto de todas las operaciones realizadas durante el mismo supere los 3.000 € positivos. Efectivamente, en cuanto a ganancias y pérdidas de capital hasta que no se realiza la venta no se considera cerrada la operación y por lo tanto dicha operación concreta no se cuenta.

      • Muchísimas gracias por su rapidez en contestarme, has resuelto mi duda, me pondré en contacto con ustedes pronto, saludos

  3. Todo esto es muy interesante, digamos que “Hipotéticamente “ quiero sacar un valor de 100.000€ de cualquier moneda (la que sea), pero claro “hipotéticamente” no tienes registro de tu inversión debido ha que al cambiar de una cartera fría a una Exchanger como Coín base x ejemplo se pierde el registro o movimientos realizados y parte de la comisión por el movimiento tmb se pierde, en conclusión la pregunta sería. ¿Quiero sacar 100 monedas por un valor de 100.000€, recordando que “Hipotéticamente todo me costó 500€ pero no lo puedes mostrar”, cuál sería la operación y penalización a seguir?

    Gracias x su tiempo, y me parece post muy Internaste.


    • Hola Jaime, gracias por comentar.

      En primer lugar y en cuanto al origen de los fondos, el cambio de un exchange a una cartera fría no implica necesariamente la pérdida de la trazabilidad de los mismos, siempre que esas monedas se compraron en su día en el propio exchange antes de extraerlas y por tanto hay transacción registrada y pruebas de dónde salieron las monedas. De forma similar, si se compra de otro sitio y se puede demostrar que esas monedas que se tienen se compraron en su momento en ese otro sitio y ahora se han revalorizado, esos fondos son lícitos y plenamente usables.

      Tanto respecto al origen de los fondos como respecto al tratamiento fiscal se requiere obviamente y como bien dice el registro de todas las operaciones. Le corresponde a usted demostrarlo todo y corroborar tanto frente a una futura inspección fiscal como frente a una entidad bancaria para que pueda aceptarle los fondos e introducirlos en el sistema bancario. En este sentido, puede usar registros de exchange y wallets, pruebas en escáners de blockchain, gráficos de precios, etc. Hay muchas formas de demostrar la proveniencia de las criptos porque usualmente sus blockchains son muy transparentes.

      Finalmente, las penalizaciones dependerán de muchas cosas y del caso concreto, no podemos especificar tanto. Insistimos en que la operación a seguir es mantener un registro de todos los activos en posesión, calcular bien las ganancias/pérdidas de capital y por tanto las plusvalías y declararlo todo. La comisión o la extracción de los activos a una cold wallet no es ninguna excusa para no hacerlo. Un saludo.

  4. Compre Monero en 2017 y quiero venderlo ahora, el problema es que lo compre en Bitgrail el cual ya no esta operativo por lo que no puedo extraer los registros de compra. Como deberia de proceder?

    • Hola Victor, muchas gracias por contactar. Pues no hay forma de proceder lamentablemente. Como usted bien sabrá, y si no lo sabe debería, Monero es un criptoactivo totalmente anónimo y opaco, y esas son sus características definitorias. Si ha perdido cualquier enlace con el sistema bancario, no hay ninguna forma de proceder.

  5. Buenos días,

    Tengo una duda respecto a la tributación. Si he comprado las criptomonedas en España, y años después (con suerte) se revalorizan, ¿Podría cambiar mi residencia fiscal a Andorra (obviamente cumpliendo todos los requisitos necesarios) y declarar esas ganancias en Andorra? O por el contrario, al ser adquirido en España las ganancias se deben declarar en España?


    • Hola Nicolás, muchas gracias por comentar.

      Efectivamente, podría hacerlo sin problema. A nivel de impuestos sobre la renta (IRPF) y en este caso respecto a las ganancias de capital, las rentas se producen una vez se cierra la operación en cuestión. Es decir: cuando se vende.

      De esta forma, poseer criptomonedas no tributa por IRPF, solo por Impuesto de Patrimonio (si aplica). Si tiene criptomonedas siendo residente fiscal en España pero no cierra operaciones y luego se muda a Andorra, se hace residente fiscal aquí y una vez residente vende esas criptomonedas, la tributación por IRPF sería efectuada completamente en Andorra (10% con 3.000€ de renta exentos).

    • Hola Nicolás,

      Como le he contestado en el otro comentario, no necesariamente. La operación que implica renta sujeta a tributación se considera realizada una vez se liquidan los activos comprados, así que podría venir a Andorra y venderlos aquí, de tal forma que tributaría los rendimientos aquí.


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