Andorra and Iceland sign the Double Taxation Agreement
Andorra and Iceland sign a Double Taxation Agreement that strengthens fiscal cooperation and legal certainty between the two countries.
Elysium TEAM
🕒 Reading time: 3 minutes
💡 Introduction
The Principality of Andorra and the Republic of Iceland have signed a Double Taxation Agreement (DTA), expanding Andorra’s international tax treaty network and reinforcing its commitment to transparency and cooperation.
The agreement entered into force on 10 May 2024, following the exchange of diplomatic notifications, and was officially published in the BOPA on 5 June 2024, granting it full validity under Andorran law.
⚖️ 1) How the agreement was reached
The Agreement between the Principality of Andorra and the Republic of Iceland was signed in Geneva on 28 February 2023 under the auspices of the OECD.
- For Andorra: signed by César Marquina, Secretary of State for International Financial Affairs.
- For Iceland: signed by Guðmundur Ingi Guðbrandsson, Minister of Social Affairs and Labour Market.
The text was ratified by the Consell General on 20 December 2023 and published in the BOPA No. 7 on 17 January 2024.
After the completion of domestic procedures, the treaty entered into force on 10 May 2024, according to the edict published in the BOPA No. 62 on 5 June 2024.
🧩 2) Key provisions of the DTA
Following the OECD Model Convention, the treaty covers both income and wealth taxes, ensuring clarity and legal consistency.
Main provisions include:
- Tax residency: clear criteria to prevent dual residency conflicts.
- Methods to avoid double taxation: reciprocal tax credits or exemptions.
- Exchange of tax information: enhanced cooperation between tax authorities.
- Anti-abuse clauses: safeguards against treaty misuse.
It also regulates the taxation of dividends, interest, royalties, capital gains and pensions, providing predictability and legal protection for cross-border activities.
🕊️ 3) Entry into force
Under Article 28 of the Agreement, the treaty entered into force on 10 May 2024, when Iceland confirmed receipt of Andorra’s notification completing its legal procedures.
Its official publication in the BOPA on 5 June 2024 confirmed its domestic enforceability in Andorra.
The DTA will apply for tax purposes:
- To withholding taxes on income paid or credited from 1 January 2025, and
- To income and wealth taxes for fiscal years beginning on or after 1 January 2025.
🌍 4) Importance of the agreement
Although economic relations between Andorra and Iceland remain limited, this treaty reinforces Andorra’s status as a transparent and internationally aligned jurisdiction.
Key implications:
- For Andorra: expands its tax treaty network and credibility.
- For Iceland: encourages investment and provides legal certainty for residents.
- For companies: prevents double taxation and facilitates capital mobility.
The agreement is consistent with Andorra’s alignment with OECD and BEPS standards, promoting fiscal cooperation and predictability.
🧭 Conclusion
The Double Taxation Agreement between Andorra and Iceland marks another step in Andorra’s international fiscal integration.
From 2025 onwards, it will provide a stable, transparent and cooperative environment for businesses, investors and residents.
📚 Related articles
- Taxation in Andorra: structure, rates and real advantages — Comprehensive overview of the Andorran tax system.
- Tax residency in Andorra: requirements and benefits (2025) — Practical guide to determining effective tax residency.
- Double Taxation Treaties (DTTs) in Andorra (2025 update) — Updated overview of Andorra’s active bilateral agreements.
Last revision date: October 2025
