Cryptocurrencies and blockchain in Andorra

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cryptocurrency blockchain bitcoin trading

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.

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. 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. 

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 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 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. 

In addition, 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 more about personal income tax and more Andorran taxes here.

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 an additional note, it is important to note that Andorra, as well as its banking system, has 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.

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