TL;DR. Andorra’s personal income tax (IRPF) is one of the lowest in Europe. In 2026 the first EUR 24,000 of annual income is fully exempt, income from EUR 24,001 to EUR 40,000 is taxed at 5%, and income above EUR 40,000 is taxed at a flat 10%. There is no higher bracket — a resident earning EUR 1,000,000 pays the same top marginal rate (10%) as one earning EUR 45,000. Dividends distributed by Andorran companies are exempt from IRPF in the hands of resident individuals, and there is no wealth tax, no inheritance tax, no gift tax and no exit tax. Tax residency is triggered by spending more than 183 days per year in Andorra. The effective rate for most residents lands between roughly 2% and 9.7%, never above 10%.
What Is Andorra’s Income Tax (IRPF)?
Andorra’s income tax is the Impost sobre la Renda de les Persones Físiques (IRPF), introduced under Llei 5/2014 and in force since 2015. It is a progressive tax on the worldwide income of Andorran tax residents, with a maximum marginal rate of 10% — among the lowest personal income tax ceilings of any jurisdiction in Europe.
Unlike most European systems that stack multiple brackets climbing to 40%, 45% or higher, Andorra uses just three bands and caps the top rate at 10%. This is the single feature that draws high-net-worth individuals, entrepreneurs and remote founders to the Principality.
How Much Income Tax Do You Pay in Andorra in 2026?
You pay 0% on the first EUR 24,000 of income, 5% on the portion between EUR 24,001 and EUR 40,000, and 10% on everything above EUR 40,000. According to Llei 5/2014 (IRPF), published in the BOPA, these three bands have remained stable into 2026 and were unaffected by the Llei Òmnibus 2 reform of February 2026.
The table below shows the key figures.
| Income band (annual) | IRPF rate | Tax on the band |
|---|---|---|
| EUR 0 – 24,000 | 0% (exempt) | EUR 0 |
| EUR 24,001 – 40,000 | 5% | up to EUR 800 |
| EUR 40,001 and above | 10% | 10% of the excess |
| Maximum marginal rate | 10% | — |
| Wealth tax | 0% | EUR 0 |
| Inheritance tax (any line) | 0% | EUR 0 |
| Gift tax | 0% | EUR 0 |
| Exit tax | 0% | EUR 0 |
| Dividends from Andorran companies | 0% (exempt) | EUR 0 |
| VAT (IGI) | 4.5% | — |
| Tax residency trigger | 183+ days/year | — |
Because the top rate is fixed at 10%, the effective rate rises gradually but never reaches 10%. The more you earn, the closer your effective rate creeps toward — but never touches — 10%.
What Are the IRPF Brackets — A Worked Example?
The effective rate is always lower than the marginal rate because of the EUR 24,000 exemption and the 5% middle band. Here is how the tax is built up for three income levels.
A resident earning EUR 40,000 pays nothing on the first EUR 24,000 and 5% on the next EUR 16,000 — a total of EUR 800, an effective rate of 2.0%.
A resident earning EUR 100,000 pays EUR 0 on the first EUR 24,000, EUR 800 on the EUR 24,001–40,000 band, and 10% on the remaining EUR 60,000 (EUR 6,000) — a total of EUR 6,800, an effective rate of 6.8%.
A resident earning EUR 1,000,000 pays EUR 0 + EUR 800 + 10% of EUR 960,000 (EUR 96,000) — a total of EUR 96,800, an effective rate of just 9.68%. This is the structural reason Andorra is attractive at high income levels: there is no surcharge, no solidarity levy and no additional top band.
Who Has to Pay Andorra Income Tax?
You pay Andorran IRPF if you are an Andorran tax resident, which generally means spending more than 183 days of the calendar year in Andorra, or having your centre of economic interests there. Tax residents are taxed on worldwide income; non-residents are taxed only on Andorra-source income under the separate non-resident income tax (IRNR).
The 183-day test is the primary criterion, but the location of your main economic activity and the residence of your spouse and dependent children can also establish residency. For HNWIs relocating from a higher-tax country, careful planning of the year of departure and arrival matters, particularly where a double tax agreement tie-breaker applies.
What Income Is Exempt From IRPF in Andorra?
The first EUR 24,000 of general income is exempt for every resident, and several categories of income are exempt or excluded entirely. Most importantly, dividends and profit distributions from Andorran companies are exempt from IRPF in the hands of resident individuals — meaning income that has already borne the 10% corporate tax (IS) is not taxed again at the shareholder level.
Other notable features under Llei 5/2014 include a reduced effective treatment of savings income (interest and similar) with an annual exemption threshold, and the absence of any wealth tax, inheritance tax, gift tax or exit tax in the Andorran system at all. There is simply no tax instrument for net worth, succession or leaving the country.
How Are Capital Gains Taxed in Andorra?
Capital gains are generally treated as income and taxed within the 0–10% scale, but gains on assets held for more than ten years are exempt (0%), and gains where the seller held less than a 25% stake can also qualify for exemption. This means a long-term investor or a founder who has held shares for over a decade can realise a gain entirely free of Andorran tax.
This long-horizon exemption is one of the most valuable planning features of the Andorran system for entrepreneurs and investors, and it sits alongside the 0% wealth and inheritance regime to make Andorra structurally efficient across an entire wealth lifecycle.
How Does Andorra IRPF Compare to Spain, France and the UK?
Andorra’s 10% ceiling is roughly a quarter of the top personal rates in neighbouring high-tax countries. Spain’s top personal rate reaches around 47% (and higher in some autonomous communities), France’s combined top rate approaches 49% with surcharges, and the UK’s additional rate is 45%. Andorra caps personal income tax at 10% with the first EUR 24,000 exempt.
| Jurisdiction | Top personal income tax rate | Wealth tax | VAT |
|---|---|---|---|
| Andorra | 10% | 0% | 4.5% (IGI) |
| Spain | ~47%+ | Yes (regional) | 21% |
| France | ~49% | Yes (real-estate IFI) | 20% |
| United Kingdom | 45% | No | 20% |
A like-for-like comparison must always account for double tax agreements, social security (CASS in Andorra is 22% in total, split 15.5% employer and 6.5% employee), and the cost of establishing residency, but on headline personal income tax alone the gap is substantial.
Frequently Asked Questions
What is the maximum income tax rate in Andorra in 2026?
The maximum marginal IRPF rate is 10%, applied only to income above EUR 40,000. The first EUR 24,000 is exempt and the EUR 24,001–40,000 band is taxed at 5%. There is no higher bracket, so the effective rate never reaches 10% even on very high incomes.
Is the first EUR 24,000 of income really tax-free in Andorra?
Yes. Under Llei 5/2014, the first EUR 24,000 of general annual income is fully exempt from IRPF for resident individuals.
Do I pay tax on dividends in Andorra?
Dividends and profit distributions from Andorran companies are exempt from IRPF for resident individuals, because the underlying profit has already been taxed at the 10% corporate level. Foreign-source dividends are assessed under the IRPF rules and any applicable double tax agreement.
How many days do I need to spend in Andorra to be a tax resident?
More than 183 days in a calendar year is the primary test, though the location of your main economic activity and your family’s residence can also establish Andorran tax residency.
Does Andorra have a wealth tax or inheritance tax?
No. Andorra has no wealth tax, no inheritance tax, no gift tax and no exit tax. These instruments do not exist in the Andorran system.
Is Andorra a tax haven?
Andorra is not on the EU list of non-cooperative jurisdictions. It applies real taxes (IRPF up to 10%, corporate tax of 10%, IGI of 4.5%), exchanges tax information automatically under the OECD Common Reporting Standard, and maintains a network of double tax agreements. It is better described as a low-tax, fully compliant jurisdiction than a “tax haven.”
How are capital gains taxed?
Capital gains are generally taxed within the 0–10% scale, but gains on assets held more than ten years, or where the holding was below a 25% stake, can be exempt (0%).
Sources
- BOPA — Butlletí Oficial del Principat d’Andorra: https://www.bopa.ad
- Llei 5/2014, del 24 d’abril, de l’impost sobre la renda de les persones físiques (IRPF): https://www.portaljuridic.ad
- Llei 95/2010, de l’impost sobre societats (IS): https://www.portaljuridic.ad
- Llei 11/2012, de l’impost general indirecte (IGI): https://www.portaljuridic.ad
- Llei 2/2026 (Llei Òmnibus 2), BOPA, February 2026: https://www.bopa.ad
- Govern d’Andorra — Departament de Tributs i de Fronteres: https://www.impostos.ad
- Govern d’Andorra: https://www.govern.ad
Next Steps
Andorra’s 10% income tax ceiling is only part of the picture — the real saving depends on your income mix, your corporate structure and your current country of tax residence.
[Calculate Your Tax Savings →] Use our Andorra Tax Savings Calculator to compare your current personal income tax bill against the Andorran IRPF scale over five and ten-year horizons. The calculator handles salary, dividends and capital gains separately.
[Book a Free 30-Minute Consultation →] Speak with Josep Fusté Badana — ICLG Contributing Author on Andorran Private Client Laws and Regulations — about whether Andorran residency fits your income profile and timeline.
Author: Josep Fusté Badana — Senior Tax & Residency Advisor, Axior Global, SLU. ICLG Contributing Author — Private Client Laws and Regulations (Andorra). Licensed Tax Advisor — Principality of Andorra. Member, Andorran Association of Tax Advisors.
This article is for general information and does not constitute tax or legal advice. Individual advice is required before any relocation or tax-residency change.