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Andorra - Taxation

Andorra is Europe's least known tax haven. There is no income tax - although the new deposit system for passive residents effectively loses you the interest on 24,000 Euros. There is a new property purchase tax of 1.25% but no capital gains tax, no inheritance tax, no wealth tax, no profits tax, no value added tax. Consider what you are presently paying in tax annually and compare that with the above advantages. It is easy to see why so many people choose to base themselves in Andorra!

If there are no taxes, how does the Government raise the revenue to run the country? Well, first of all, not a lot of money is necessary to run a country with a population of 65,000 residents. Andorra is a neutral state and has no army to maintain. Its defence budget is non-existent. Secondly, a small customs duty is levied on all items imported into Andorra. The Principality receives approximately 8 million visitors each year. Many of them spend a lot of money on purchases carrying the duty which provides the state with its revenue. The duties vary from 3% to 40%. On consumables they range from 3% to 12%, with building materials, books and furniture at 4%, cars, computers and leather goods at 7% and jewellery at 12%. Alcohol and cigarettes bear a special rate of between 12% and 40%. Gasoline incurs a heavy duty.

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