Cryptocurrencies and blockchain in Andorra

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cryptocurrency blockchain bitcoin trading

Just like with the case of brokers and tradersLike all cryptocurrency and token-related businesses and the various blockchain applications are purely digital and do not require a physical location, they are a very frequent target customer to come 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. That Andorra is a jurisdiction that bets on cryptocurrencies and blockchain, is demonstrated by the fact that a bill to regulate the sector is currently in parliament. 

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.

Cryptocurrency and token trading in Andorra, taxation

Cryptocurrencies in Andorra

For practical purposes, cryptocurrency trading is usually done on a personal basis, except in cases where a group of investors deposit capital as a whole in a company, in which case it is the company that performs the trading. 

The exchange of cryptocurrencies generates, per se, a taxable income that must be declared in personal income tax, regardless of whether the person who transmits the cryptocurrency obtains a legal tender currency (fiat), another cryptocurrency or another type of asset. 

This tax 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 expected that tax inspections will intensify in the sector. 

The main difference 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 its own equity. 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. 

In addition, the profits obtained by cryptocurrency trading in Spain are subject to personal income tax at a rate of between 19% and 23%, while the maximum applicable rate in Andorra is 10%. Less than half, certainly a significant savings. You can read more about personal income tax and more Andorran taxes here.

Mining, mentoring and blockchain business in Andorra

Other cryptocurrency-related activities such as mining or blockchain-related mentoring have also reached the principality. The type of residence that this type of profile usually uses is residence on its own, through the creation of a company to carry out its activity.

The taxation of the company, as in the case of a natural person, is 10% on the profit obtained. This percentage is applied regardless of the activity to be carried out with cryptocurrencies, and can also deduct all expenses related to the activity.

High-tech Internet connection

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

Thus, you can trade in quasi-instantaneous operations without having to worry about the connection, despite being in a lost house in the Pyrenees. As if that were not enough, the mobile network of the country's teleco 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 an additional note, it is important to highlight that Andorra, as well as its banking system, has a restrictive position in money laundering prevention policy. In other words, the origin of the funds must be justified, as well as the traceability of the operations. For this, it is important to have the most experienced and knowledgeable professionals in the sector, since overcoming the bank 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 extensive experience in blockchain and cryptocurrencies. With our legal, fiscal 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.

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