Taxes in Andorra: types and rates

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 must also be borne in mind that not even due to the current situation in the world and by 2021 the Principality is going to carry out any tax increase, since that would harm its attractiveness for investment.

Advantages of Andorran taxes

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Personal income tax

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.

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Corporate tax

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.

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Corporate tax

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.

Comparison with other countries

Corporation Tax

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Andorra
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Spain
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France
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Portugal
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Germany
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United Kingdom

Maximum personal income taxes

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Andorra
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Spain
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France
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Portugal
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Germany
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United Kingdom

Consumption taxes

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Spain
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France
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Portugal
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Germany
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United Kingdom

The three main taxes

The General Indirect Tax (IGI) or VAT in Andorra

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 general tax rate is 4.5%. Equivalent to 21% in Spain, 20% in France, 19% in Germany or 23% in Ireland.
  • There is 0% super-reduced rate for certain medical and educational services, housing rentals, stamps and investment gold.
  • The type reduced by 1% It is applicable to food for human consumption, water for human and animal consumption and irrigation, and books, magazines and newspapers.
  • He too 2.5% special rate It applies to transport (except cable), libraries and archives, and finally art and cultural institutions such as museums, monuments and historical places, music, cinema and theater, objects of art, collection or antiquity. , etc.
  • Tax rate increased from 9.5% applicable only to banking and financial services.

Corporate tax

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:

  1. The first year any taxpayer has a 50% reduction of the settlement fee.
  2. For the taxpayers of this tax that are constituted as new entrepreneurs of a new business or professional activity and who have income less than 100,000 euros, the tax rate applicable during the First 3 years of activity it is:
      • The 5% for the part of the tax base comprised between 0 and 50,000 euros.
      • The 10% on the basis of taxation remaining.

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.

Personal income tax (IRPF)

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:

  • From 0 to €24,000 of the annual personal income is taxed at 0%
  • From €24.000 to €40.000 the rate is 5%
  • Any amount over € 40,000 has the obligation to pay the 10%, which is the general rate

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.

Other taxes and fees

Municipal or parochial taxes (Common)

  • The traditional tax of "foc i lloc" (fire and place). 
  • The property tax.
  • The tax on rental income.
  • The filing or location tax of commercial, business and professional activities.
  • The construction tax.
It should be noted that the municipalities or comuns have the power to create their regulation and local taxation, with which the taxes and their charge vary according to the municipality taken into consideration.
municipal, parish or community taxes

Indirect taxes

  • Property transfer tax (ITP)
  • Tax on the provision of insurance services
  • Special taxes

Direct taxes

  • Capital gains tax on property transfers (PLV)
  • Non-resident tax income tax (IRNR)
  • Taxation of savings income
  • Gambling tax
direct and indirect taxes

Fees

  • Fee on the Register of Holders of Economic Activities
  • Vehicle Ownership Tax
  • Immigration fees
  • Court fees
  • Trademark Office Fees Public Prices
  • Rate job applications
  • Animal health and food security rate
  • Consumption tax (customs)
  • Common external tariff (customs)
Costs and fees, customs

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. We hope that the article has been of interest and pleasure to you. In any case, you can read more detailed information about all the taxes that Andorra has and its advantages on our page. Do not hesitate to contact us to move your business to this small Principality.

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Frequent questions

❓ What are the most important taxes in Andorra?

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.

❓What percentage of taxes is applied in Andorra?

Personal income tax and corporation tax have a general rate of 10% and the IGI (VAT) on goods and services is 4.5% of the price of the product, although there are different exemptions, reductions and bonuses.

❓ Does Andorra have a personal income tax by sections?

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.

❓Are there other taxes in the Principality?

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.