Although Andorra is no longer a tax haven, its taxes are much lower than the average for other European countries. Andorran taxes are comparable to those of other European countries, but at a much lower nominal rate. No tax increases have been implemented for years in order to make Andorra more attractive to potential investors.
Tax advantages in Andorra
- Personal income tax 10%:
Andorra offers the IRPF tax on earned income is the lowest in Europe. It offers a extinction for incomes below 24.000,00€.. A bonus for incomes between 24.000,00 and 40.000,00€..
- Corporate tax 10%:
Andorra offers very attractive reductions on the Andorran corporation tax for new businesses, special regime on the tax base, and in addition possible exemptions for avoiding double taxation.
- Corporate tax 4,5%:
The well-known IGI, the Andorran indirect tax, is particularly distinguished by the fact that it is simple and easy for bidders to pay. The tax in general can be of type 0%, 1%, 2,5% and 9,5%.
Comparison of taxation with other European countries:
Corporate income tax:
- 10% ANDORRA
- 20% UNITED KINGDOM
- 25% SPAIN
- 29.8% GERMANY
- 33.3% FRANCE
- 31.5% PORTUGAL
Personal income tax (maximum):
- 10% ANDORRA
- 40% FRANCE
- 45% SPAIN
- 45% GERMANY
- 45% UNITED KINGDOM
- 48% PORTUGAL
Excise tax:
- 4.5% ANDORRA
- 19% GERMANY
- 20% FRANCE
- 20% UNITED KINGDOM
- 21% SPAIN
- 23% PORTUGAL
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The three essential taxes:
1. The IGI (General Indirect Tax) or VAT in Andorra:
The General Indirect Tax is equivalent in Spain to VAT. (Value added tax). In European countries it is the main indirect tax. Like VAT, IGI offers different rates depending on the service or product taxed:
- The general tax of 4.5%: is the equivalent of 21% VAT in Spain.
- The 2,5% excise taxapplied to services such as transport (except cable car), libraries, places of art and historical or tourist interest (museums, cinema, theatre, exhibitions, etc.).
- The super-reduced tax of 0%: is applicable to some educational and medical services, for rentals of real estate, among others to be consulted.
- The reduced 1% tax: applied to feed and foodstuffs for animal and human consumption. It is also used in press and irrigation.
- The increased tax of 9,5%: applies only to financial and banking services.
2. The IS (Corporate Income Tax):
It is the IS tax (Impost de Societats), is a general fixed rate of 10%. But depending on the case, the following may apply bonuses and are important to take into account for those who want to become future residents of Andorra:
The first yearany natural or legal person can benefit from the 50% reduction on the liquidation quota.
For natural or legal persons who form a new company with a new business or professional activity in Andorra and who have the income over €100.000,00the tax to be applied to them for the first 3 years of its activity shall be of:
- The 5% for those taxed between €0 and €50,000.00.
- The 10% for those over €50,000.00.
It is important beforehand to read the article of the law on the tax or to consult Only Andorra professionals in order to be well informed about the procedure and the exact requirements in each case. It is very important to take into account the municipal taxes. In addition to following the correct procedure for setting up a company in Andorra.
Personal income tax (IRPF):
Andorran personal income tax is well known because it is one of the lowest in Europe. In brief, it is as follows:
- From 0 to 24.000,00€ is taxable 0%
- From 24.000,00 to 40.000,00€ 5% is payable.
- Amount over € 40.000,00 is taxable 10%The general Andorran personal income tax is taken into account.
It is also important to bear in mind that any dividend received from an Andorran company is taxable at 0%. This avoids double taxation.
You can find more information in our explicit article on Andorran personal income tax.
4. Other Taxes and Fees in Andorra:
4.1 Municipal or parish taxes (Comuns) in Andorra:
Depending on the municipality (comuns) the corresponding percentage of regulation and taxation may vary:
- Property tax.
- The tax on rental income.
- The construction tax.
- The fire and place tax (foc i lloc).
- The location tax on business, professional and commercial activities.
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4.2 Indirect taxes in Andorra:
- Excise duties
- Tax on the provision of insurance services
- Tax on the transfer of real estate assets (ITP)
4.3 Direct taxes in Andorra:
- Tax on gambling activities
- Tax on income of non-residents for tax purposes (IRNR)
- Taxation of savings income
- Capital gains tax on the transfer of real estate (PLV)
4.4. Fees in Andorra:
- Tax on the Register of Owners of Economic Activities
- Consumption tax (customs)
- Vehicle Ownership Tax
- Court fees
- Job application rate
- Immigration fees
- Common External Tariff (customs)
- Animal health and food safety levy
- Fees of the Trade Mark Office Public prices
Finally, it should be noted that the above-mentioned fees and taxes are generally annual or fixed cash payments or taxes that replace the three main taxes mentioned at the beginning.
In Andorra a direct cash rate of 10% is paid on any income, taxation on consumption is low. The amount of municipal taxes and fees are usually fixed between 500,00 - 1.000,00€.
For all these reasons, Andorra is considered an advantageous country in terms of taxation compared to its neighbouring countries Spain and France. Here you can read more about the tax comparison between Andorra and Spain
If you have any questions or doubts, please do not hesitate to contact us.
