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Trader in Andorra: the advantages of trading

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One of the standardized types of customer, Insiders, is the broker. For all those people who base their professional and / or business activity trading frequently whether acting as a "trader" with its own capital or as a "broker" with foreign capital, Andorra is a very attractive destination. The possibility of carrying out the activity of financial advisor and analyst and wealth manager regardless of physical location, enables many professionals in the sector move their residence to the Principality of Andorra.

These professionals find in Andorra a highly competitive jurisdiction from a tax point of view, an excellent internet connection throughout their territory and an environment of security and comfort, which enable their activity on the stock exchange to be carried out in a manner optimal, fast and at the highest performance and profitability. Next we will write the biggest advantages of trading in Andorra.

Stock market operations in Andorra in 2020. Trader, broker and financial analyst.

Tax advantages for the trader

Obviously the first advantage of trading in Andorra is the attractive taxation. If you still did not know the bases of Andorran taxation, you can visit our page on taxes in Andorra. Very relevant is the fact that Andorran personal income tax does not tax the capital gains generated by the purchase and sale of shares and exchange-traded funds. To be more precise, any capital gain generated by the sale of shares or participations, when the seller has not held more than 25% of participation in the entity, is completely exempt.

It is important to note that this exemption not only applies to the actual sale and purchase actually made, but to all activities through which a profit is obtained with listed shares, provided that the instrument used represents ownership of said shares. It is because of that, in certain cases cases are not considered and therefore the exemption does not apply. Access to this exemption will depend on the specific form, method or platform used to operate. We recommend resorting to professional advice for a better treatment of your particular situation and correct tax planning.

Thus, specifically for a trader or broker, who carry out low participation operations, equity transactions are usually tax exempt, fact that allows them to significantly increase their net financial profitability, and therefore, represents an unquestionable increase in their economic capacity. In Spain, this type of profit is taxed between 19% and 23%.

On the other hand, assets other than shares and investment funds are taxed at a maximum of 10% on capital gains, thus being very attractive. In addition, the fact that the exemption also applies to investment funds, allows the possibility of benefiting from it by investing in funds that in turn operate with the assets in which you want to invest. For example, although this exemption does not apply to earnings from fixed income operations, it does apply to investment funds that manage fixed income assets.

In addition to the planned exemption, for participations over 25%, a total exemption is also foreseen applicable on the gain derived from the sale of shares or participations, in any case, if the holding period has been greater than 10 years. 

Furthermore, the entry into force of Agreement to Avoid Double Taxation between Spain and Andorra, eliminates the possibility of Spain taxing profits of the natural persons resident in Andorra, when they derive from the sale and purchase of listed shares (in general, shares or participations in companies where they hold less than 25%, provided they are not companies whose main asset is made up of real estate located in Spain).

This second advantage applies to the capital gains of all the countries with which Andorra has signed a Double Taxation Agreement (CDI)There are currently eight and several in negotiations. However, for the other countries, although these earnings are exempt in Andorra, the countries of origin may apply taxes on said earnings even if the subject is resident in a foreign country.

Because we recommend studying it and doing international tax planning, with experts both nationally in Andorra and internationally such as the collaborators and associates of Andorra Insiders, who have already dealt with numerous similar cases. We optimize your taxation and taxes according to current legislation, in a safe and strict way.

State-of-the-art Internet connection

The fact that Andorra has 100% fiber optic coverage implemented in every household in the country is more than relevant for all those entrepreneurs who need a fast and secure internet connection. The case of a broker, financial analyst or other who does home trading is one of them. Andorra has been constantly improving its telecommunications technologies since 2012 to easily attract digital businesses, and is currently a world pioneer in this regard. We have more Andorra advantages here, as well as the transformation that the country has carried out in the last decade here.

Starting with a symmetric Internet rate of 300 Mbps at home for € 25 and with the possibility of reaching up to 1Gbps symmetric for business, in Andorra you will be able to be permanently connected. Also, the mobile network reaches 98% of the country's territory despite being in the middle of the Pyrenees, so that it could operate from anywhere in the country and at any time by hiring the internet on mobile. You can learn more about the Principality's telecommunications at the company's website, Andorra Telecom.

Physical and legal security

Andorra has traditionally been and throughout its history very outstanding for its war neutrality, its political, physical and legal stability and its pacifism. Staying neutral in all war conflicts has always been a priority of the country, which has more than seven centuries of peace. Not only that, but his no crime and criminality and its demilitarization they have always been exemplary for most countries in the world.

On the other hand, legal certainty is a principle recognized and protected by the Andorran Constitution  de1993, being thus guaranteed by its legal system and its institutions. Also, with the new reforms legal certainty has been reinforced of international investments in the Principality of Andorra with the liberalization of foreign investment and the negotiation of double taxation agreements.

Difference between trader and broker

Both a trader and a broker can fix their residence in Andorra, constituting a commercial company to develop their activity and obtaining a self-employment residence permit. However, the broker, acting on behalf of clients, must obtain an authorization from the Andorran Financial Authority (AFA), since its activity is an activity regulated and supervised by said authority. However, if the natural person carries out the trading activity with his own assets, he does not require any authorization. 

Andorra Insiders has already advised and established various similar trader and broker profiles in the Principality, and has the support of the best professionals in tax, commercial and regulatory law. Furthermore, the country is just now in a process of international economic opening that will bear fruit in the coming years. Do you want to take advantage of this situation and come now, or do it when the reforms have worked and it is too late? We have already made the decision, now is the time for yours. If yes, you can contact us here and tell us your case, you will receive personalized attention and information and comprehensive support.  

14 thoughts on “Trader en Andorra: las ventajas del trading”

  1. Hello,

    My name is Adrian,

    I would like to know how the fact of being a trader and operating with accounts funded by a company that is dedicated to it is taxed in andorra.

    I would also like to know if you guide traders to take the step of changing residence from Spain to Andorra.

    Thank you

    Reply
    • Hello Adrian.

      To answer your question, we would need some more information about your activity.
      Therefore, it would be better if you contacted us through our email, contact form or WhatsApp.

      Regarding whether we help traders to establish themselves in Andorra, of course. Like any other type of business that is feasible and attractive to carry out in Andorra. We have already dealt with many profiles of this type. In any case, it is better to treat it personally since each case has its peculiarities. You can contact us at contact@andorrainsiders.com same.

      Regards.

      Reply
  2. Hi.
    From what I understand, stock trading is not taxed, but CFD trading is.
    Spain is becoming impossible and I was considering going to Ireland, but being away from my parents so much makes me a little scared when they start to get older and need more help.

    Thank you. A greeting.

    Reply
    • Hi Hector, thanks for commenting.

      Indeed, contracts for difference, like most financial derivatives, do not imply ownership of the shares or representations thereof, which means that the exemption does not apply. In any case, the tax on income and capital gains is 10% with the first € 3,000 of income exempt, which is also quite attractive.

      Thanks to you and best regards!

      Reply
  3. Hello, so for a trader to apply for abitual residence, he does not need to form a commercial company, right? It's only for brokers, right?

    Reply
    • Hello david,

      No: both must form a commercial company if they only have that business model because it is the only way they have to justify their residence in the Principality of Andorra, except if the passive residence permit is obtained.

      In other words: although trading activities can be carried out as a natural person and with personal assets, in order to obtain a residence permit and self-employment in Andorra, it must be justified in this case through the participation and administration of a company. On the other hand, effectively, the broker activity can only be carried out through a collective investment vehicle and a legal entity.

      The fundamental difference between both activities is that broker activities, when managing third-party capital, must obtain a license from the Andorran Financial Authority (AFA), which controls and regulates these activities.

      I hope I have helped you, you can also contact us at contact@andorrainsiders.com.

      Thank you.

      Reply
  4. If you invest your money as a trader, is it necessary to create a company or can it be as a natural person?
    the benefits obtained as a natural person would be exempt from income taxes

    Reply
    • Hello Justo, thanks for commenting.
      As we mentioned to David, it can be done both as a natural person and through a partnership. Now, in order to obtain a residence permit and self-employment in Andorra, a company must be constituted, so if the only business model you have is trading, you must also create a company.

      I hope I have helped you, thank you very much.

      Reply
  5. Здравствуйте, думаю о переезде в Андорру, занимаюсь торговлей опционами. Какой налог на прирост капитала от опционных контрактов? Спасибо.

    Reply
    • Здравствуйте, прирост капитала и доход по опционным контрактам облагаются подоходным налогом в размере 10% для физических лиц, имея 3000 евро освобожденного дохода.

      Reply
  6. HELLO
    My question is, what tax treatment does the shares of companies listed on the Spanish market have in Andorra, which have been acquired, being resident in Spain and sold once residence in Andorra is obtained, how the capital gains obtained on the sale are taxed as well as the dividends obtained.
    Thank you

    Reply
    • Hello david,
      Well, it depends a bit on the specific case and its size, but in general, since you have sold as an Andorran resident, you have obtained the capital gains and returns as an Andorran resident, and therefore these income are taxed under the double taxation agreement between Spain and Andorra, which In the case of capital gains from shares LISTED on the stock market or if less than 25% of the total participation of a company not listed on the stock exchange is owned (usual case of trading), they are taxed exclusively in Andorra, either by personal income tax or by IS in case of legal persons.

      Reply
    • Hello Diego, all financial derivatives are taxed at 10% with € 3,000 exempt income. The exemption only applies to property or similar titles, assets that underlyingly represent ownership of shares and participations (that is, shares and funds). Thank you very much for commenting!

      Reply

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Andorra Insiders is a professional legal, tax and accounting services platform, specialized in creating companies and establishing people in the Principality. 

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