Distance selling from Andorra and VAT

Andorra benefits from a very attractive taxation for international B2B commerce, nevertheless more and more interest has been showed to develop other type of business models such as B2C (retail business) from Andorra. The requests we receive about online distance selling from Andorra are generated thanks to the competitive 4.5% VAT figure the Principality offers, which is a regular rate but not always applicable. It is highly important to determine which type of sale will the transaction involve, who are the economic parties and where are they located. This is a very difficult field which requires detailed advice depending on each case.

Distance selling

Distance selling or e-commerce sales take place without the simultaneous or physical presence of buyers and sellers. The seller’s offer and the buyer’s approval are transmitted by means of distance communication such as internet or the telephone. Different models are being used, fulfillment of your own, FBA Amazon or dropshipping.

Special regime of distance selling inside the European Union

The European Union has a special regime to facilitate and simplify VAT’s complex situation, in terms of its different values depending on the EU country. Transactions subjected to European standards are sales and services contracts when there is no direct contact, such as online, telephone, email, fax or letter contractual agreements, or in the case that the seller makes a deal with the client outside of his company’s premises (definition from europa.eu).

Thanks to the special regime of distance selling, a passive resident living in any state of the European Economic Community can make sales with private individuals (B2C), who are located in another member state, and without having to identify himself in the destination state and applying the indirect taxes of origin (meaning, the country where he is located). The shipping to the destination state must be operated by the seller’s company or by a third party at his own expense.

Nevertheless, given that the Principality of Andorra does not belong to the European Union, some special cases have to be considered. Read more on specific e-commerce models.

Please do not hesitate to contact Andorra Solutions if you need further information about how to create an e-commerce company in the principality, our experts in distance selling and VAT will be delighted to help you.