Although Andorra it is no longer a tax haven, has much lower taxes than the countries around it and the European average: it is one of the lowest taxes in the world. His tributes are homologated with those of any European country, but with substantially lower and attractive nominal and effective rates applicable.
It should also be borne in mind that not even due to the current situation in the world and by 2022 the Principality is going to carry out any tax increase, since that would harm its attractiveness for investment. The current rates are those that allow it to approach positions with the European Union and at the same time maintain low rates to attract capital from abroad.
With a maximum rate of 10%, he Andorran personal income tax it is one of the lowest in Europe. Applied on earned income, there is also a € 24,000 exempt minimum and a 50% rebate for rents between € 24,000 and € 40,000.
Attractiveness general rate of 10% of Corporation tax in Andorra It is much more so when taking into account reductions for new businesses, special regimes based on taxation and exemptions to avoid double imposition.
Famous and named as IGI, the Andorran indirect tax stands out especially for its simplicity and ease in settlement by the bidders. The general rate is 4.5%although it also has 0%, 1%, 2.5% and 9.5% rates.
The General Indirect Tax, equivalent to the tax known as VAT (Value Added Tax) in the countries of the European Union, is the main indirect tax. As with its European counterpart, the IGI has different types depending on the product or service taxed:
The quintessential tribute to corporation taxes from Andorra is the IS or impost of societats, and corresponds to a fixed general rate of 10%. However, as we commented in the article we did about corporation tax there are some interesting bonuses to take into account for future residents, among others:
We recommend reading the tax law o consult with professionals as the Andorra Insiders associates, since there are different nuances to go to these bonuses as well as to correctly present the tax. We also suggest finding out about municipal taxes, as well as the procedure to follow to creating a company in Andorra.
Well known to all, the Andorran personal income tax it is one of the lowest taxes in all of Europe. It is a tax made up of sections that are applied on the tax base, similar to that of neighboring countries. Without going into the many details of the tax and in a simplified way:
On the other hand, an interesting fact is that any dividend received from an Andorran company is taxed at 0% in Andorra, thus avoiding double taxation. You can read much more about this tax at our article dedicated exclusively to personal income tax in Andorra.
Lastly, it should be noted that despite the existence of these taxes and fees, most are of an annual amount or fixed cash or taxes that replace the three big ones previously mentioned. In the end taking all the tributes and as a summary, in Andorra a direct cash rate is paid on any income less than 10%, taxation on consumption is usually low (and therefore so is the cost of living) and fixed municipal and state maintenance taxes amount to only around € 500-1000 per year.
As we see it is a very advantageous tax framework, especially compared to the other European countries and specifically France and Spain, which make Andorra an option to seriously consider. You can read a comparison between the taxes of Andorra and Spain here. We hope that the information has been of your interest and pleasure.
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The IGI as indirect consumption tax (similar to VAT), the Personal Income Tax (IRPF) on personal income, and the Corporate Tax that taxes the profits of companies and corporations. Read more.
Income Tax and Corporation Tax have a general rate of 10% and IGI (VAT) on goods and services is 4.5% of the product price, although there are different exemptions, reductions and bonuses.
Despite the general rate of 10%, there is a personal minimum of € 24,000 of income exempt from income tax payment and € 16,000 more with a 50% bonus (effective rate of 5%), as we discuss here.
Yes, there are other state taxes and municipal taxes that depend on each parish, although they are usually of a fixed and affordable amount that never usually exceed € 1,000 per year.
