Tax system: the short Guide that sums up the taxes and duties in Andorra

The tax system in Andorra is strict and clearly defined. Reputed among the most profitable in Europe for people who live there, it is known for its transparency and simplicity, for both households and entrepreneurs. Let’s review the big parts of the Andorran tax system.

Overall information

Here are the main lines about the tax system in Andorra, the taxes and the duties imposed in the Principality on both the employer and employee:

• the amount of the main Andorran tax (the IRPF, the personal income tax) is up to 10% of declared annual resources;
• the corporation tax (IS), the main axis of Andorran taxation in the entrepreneurial sector, is at most 10% of the profits made each year;
• the VAT rate (the IGI, indirect general tax) is 4.5%, it is the lowest in Europe;
• the tax system of Andorra does not include the wealth tax (ISF) or inheritance tax;
• the amount of social security contributions (CASS) is low compared to what is practiced in other European countries. The Andorran protection system is even considered the best in the world!

Taxes and duties for tax residets and non-residents in Andorra

The IRPF

The tax system, taxes and duties in Andorra with regard to tax residents mainly concern the IRPF. This is the main tax in Andorra.

Personal income tax in Andorra is imposed at a general rate of 10% of income. There is 0% under the threshold of 24,000 euros of annual income and 5% for the range between 24,000 and 40,000 euros of annual income.

Modification of the tax system of Andorra

It should be noted that the IRPF integrates the income received by entrepreneurs or the result of economic activities. These were up to a few years ago levied by the IAE (Taxes on Profits from Economic Activities).

For non-tax residents: the IRNR

If you do not live in Andorra (you have not obtained tax resident status), you will probably have to pay the IRNR (Non-Resident Income Tax).

Its general rate is 10%. It mainly concerns border workers from Spain or France who work in the Principality daily.

Corporations and leaders of the companies

In Andorra, the corporation tax (IS) concerns the main levy applied to companies on the profit made. Its rate is 10% maximum. In force since 2012, it obeys certain adjustments provided by law.

The IS ranges, the main professional tax in Andorra

• the first 50,000 euros in profits are taxed at the rate of 5% if the turnover realized by the company is less than 100,000 euros during the first 3 years;
• for profits over 50,000 euros, the maximum tax rate is 10%, regardless of the amount of turnover.

Taxes and duties in Andorra: double taxation agreements between France and Andorra

It is important to point out that, since 2016, France and Andorra have been bound by a bilateral non-double taxation agreement with regard to corporate taxation. This rule also applies to households.

Tax system in Andorra: other levies

The following taxes and duties also exist in Andorra but only represent a small part of the overall tax system operating in the country. They are therefore minors. These include:

• Taxation of capital gains: this amounts to a fixed percentage of 10% and is applied to financial capital gains;
• Tax on capital gains in real estate transfers: it is levied in the event of an increase in the value of real estate during transmissions, its rate varies from 8 to 15%;
• Tax on the register of holders of economic activities: operating in Andorran corporate tax system, it ranges from 20 to 800 euros per year depending on the legal form of the company (SA, LLC, liberal professions, etc.).

Local tax system: the taxes of Andorra levied by parishes

Some taxes and duties are levied in Andorra by the parishes that make up the territory of the Principality: Canillo, Encamp, Ordino, La Massana, Andorra la Vella, Sant Julia de Loria, Escaldes-Engordany. These include, among others:

• the tax of location of commercial, entrepreneurial and professional activities: it depends on the location of the company and the nature of the activity;
• the tax on rental income;
• the built property tax;
• the tax «foc i lloc »: due to people aged between 18 and 65, the amount varies according to the parishes.

That is all about taxes and duties in Andorra and the generalities of the tax system of the Principality. If you would like to have more information on the subject, do not hesitate to contact Set Up, Private Concierge, the expert in expatriation in Andorra. We can also advise you, among other things, for the search for housing, help with business creation, day-to-day management, etc. See you soon in Andorra!