Why are YouTubers flocking to Andorra?
Why are YouTubers moving to Andorra, a small principality between France and Spain? Read on to find out.
3 min read
It’s no secret that the tax rates in Andorra, the small principality between France and Spain, are lower than those of their neighboring EU countries. For this reason, numerous content creators, specifically YouTubers, are living in Andorra in order to avoid paying steeper taxes on their income. Recently, Spanish content creator Ibai Llanos published a video in which he makes the claim, “it’s normal to take a lot of money from people who make a lot of money.” He asserts his own fiscal solidarity with other Spanish workers, saying that making the move to Andorra has nothing to do with a love of one’s country but more to do with a sense of justice.
A few days after these statements, news came out that influencer El Rubius had also decided to move to Andorra. He argued that it was not mainly for tax purposes, but because many of his friends and professional colleagues reside there. Personal reasons aside, one thing is certain: a national debate is underway, and it seems to have divided Spain into two.
While it’s a delicate subject with emphatic arguments on both sides, Ibai Llanos, despite having decided to remain in Spain, defended those who do the opposite. “I know that many people who criticize those who go to Andorra, probably 90 or 95 percent of them, would also leave if they were in our shoes,” he stated, “because it’s a country that’s two hours away and the financial difference is huge.”
If the debate on moving to Andorra has piqued your interest, we’ve broken down exactly how that decision would affect you financially. Keep reading to learn more.
What is the real difference between paying taxes in Spain and in Andorra?
In order to understand the situation, you have to start with the fact that in Spain, people who earn more than €300,000 per year are obligated to pay the maximum tax rate, which is 46.5% of your annual income. In Andorra, the maximum rate does not exceed 10%. Here’s a simple example: let’s assume that a person earns exactly €1,000,000 in a year.. If they reside in Spain, they would pay €465,000 in taxes to the government. If they are under the Andorran tax system, they would only pay €100,000. It’s easy to see why high-earners are tempted to switch their residencies.
Can any legal action be taken to control YouTubers who live in Andorra?
Since 2015, The Organisation for Economic Co-operation and Development (OECD) has been aiming to develop a global tax reporting framework for the new digital economy. One of the methods that the OECD can use to limit this kind of tax avoidance is determining the actual address of the activity or business, and not the specific physical address where the company (or content creator) is located. In other words, it is necessary to find and determine where the income is generated and where these content creators are economically present, rather than simply where they live.
In the case of content creators, this works this tends to work out in the same way. If you are a YouTuber who lives in Andorra but the audience for your work is in Spain, and so the different social media platforms direct your content to this country, then your substantial economic presence is not in Andorra but in Spain. Furthermore, if we add the fact that the collaborations with brands are Spanish and that remuneration for these campaigns comes from this country, then tax should be paid in Spain.
N26 Bank accounts for freelancers
At N26 we have three types of interest-bearing business accounts—from the free N26 Business, to our range of premium business accounts. Visit our plans page to find the business account that best fits your needs. All of these include cashback between 0.1% and 0.5% on all purchases made with your N26 Mastercard. For the moment, you can’t use this account to pay your taxes, or to receive your tax return from the government. However, we’re working to make this possible in the future and offer the most comprehensive service possible for freelancers and entrepreneurs.
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