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- ANDORRA
OFFSHORE ACTIVITIES
- ANDORRA CASE
STUDIES
Andorra'a
economic policy encourages information technology
operations. There are already a number of Internet
Service Providers in Andorra, and clear interest
is being shown in e-commerce development. See
below for specific information on e-commerce in
Andorra, or go to Offshore-e-com.com
for an extensive analysis of the commercial possibilities
and the legal background.
Andorra Offshore
Activities
The natural bonding of the Internet and Offshore
stems from the fact that both, of their nature,
manage to avoid tax. Businesses which can operate
on the Internet without, so to speak, touching
ground in a high-tax jurisdiction will naturally
migrate to offshore jurisdictions; while businesses
that already have offshore existence will find
it highly convenient to be able to use the Internet
to trade with their high-tax customers without
having to make a landing in their countries.
By
locating websites in offshore jurisdictions to
carry out functions previously based in high-tax
jurisdictions such as sales and marketing, treasury
management, supply of financial services, and
most of all, the supply of digital goods such
as music, video, training, software etc, businesses
can take advantage of low rates of taxation for
increasingly substantial parts of their operation.
In
many countries, the distribution of goods from
a warehousing facility does not constitute the
carrying on of a trade or business in that jurisdiction,
so that even for physical goods, in many case
it will be possible to avoid a permanent establishment
(taxable presence) altogether in many high-tax
jurisdictions where trading activities currently
take place.
As
a major 'low-tax' jurisdiction with tens of thousands
of enterprises already installed, Andorra certainly
has the opportunity to become a centre of e-commerce
activity. The country's geographical location,
its good telecommunications links and its modern
business infrastructure add to its suitability
as an entrepot.
However,
the Andorran rules insisting on majority local
ownership of enterprises and trading ventures
will act as a disincentive to external e-commerce
operations, when so many other competing jurisdictions
have more straightforward regimes. It remains
to be seen whether the government will adjust
its laws to favour e-commerce development. This
could be about to change, however, with the enactment
of new laws allowing 100% foreign ownership of
companies in a wide variety of industries.
In
March, 2004, discussions began of proposed changes
to the law under which the limit on foreign participation
would be raised to 40%, and non-Andorrans would
be able to own 100% of certain types of company,
including: audio-visual production and marketing,
technological and scientific research, production
of medicines, E-commerce, and broadcasting. Further
sectors may also be opened up.
In
November 2008, Andorra introduced the
Foreign Investment Law, which has opened
up 200
sectors of the Andorran economy to entrepreneurs
and businesses from other countries. As a result
of the new legislation, foreigners can now hold
100% of a business in one of the 200 designated
economic sectors, including among others, industrial
production, research and development, e-commerce,
audiovisual production, plastic surgery and education
and training. Previously the limit was 33%.
In
February 2009, Experiencr, an online seller of
extreme and adventure sport gift experiences to
the Andorran, Spanish and French markets, became
the first foreign investment to be received by
the Andorra's e-commerce sector. The investment
has been managed by the Bureau for Business Innovation
through its 'Welcome Plan,' which has been involved
in almost sixty foreign projects.
For information about the impact of e-commerce
on a number of the main activities that take place
offshore, click
on a link below to go to our specialist E-commerce
site Offshore-e-com.com
Sales and Distribution of Physical Products
Sales
and Distribution of Digital Products
Banking
and Financial Services (including Investment
Funds)
Corporate
Support Functions
To
see an analysis of the current state of legal
and tax issues surrounding offshore e-commerce,
click
here.
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