TL;DR: Andorran corporate tax — the Impost sobre Societats (IS) — is a flat 10% on company profits in 2026, one of the lowest headline rates in Europe. Certain activities qualify for special regimes taxed as low as 2%. On top of IS, companies deal with IGI (VAT) at 4.5%, social security (CASS) totalling 22% (15.5% employer + 6.5% employee), and personal income tax (IRPF) of 0–10% on salaries and dividends drawn by resident owners. There is no wealth, inheritance, gift or exit tax, capital gains can reach 0% after a 10-year holding period, and Andorra has 22 double taxation treaties in force. The legal basis for IS is Llei 95/2010.
Key Facts: Andorra Corporate Tax (2026)
| Item | 2026 figure | Legal basis |
|---|---|---|
| Standard corporate tax (IS) | 10% flat | Llei 95/2010 |
| Special-regime corporate rate | As low as 2% | Llei 95/2010 & special regimes |
| General consumption tax (IGI / VAT) | 4.5% | Llei 11/2012 |
| Personal income tax (IRPF) | 0–10% | Llei 5/2014 |
| Social security (CASS) total | 22% (15.5% employer + 6.5% employee) | CASS framework |
| Capital gains after 10-year holding | 0% | Andorran tax framework |
| Wealth / inheritance / gift / exit tax | 0% | Andorran tax framework |
| Self-employed (compte propi) minimum investment | EUR 50,000 | Llei 2/2026 (Òmnibus 2) |
| Double taxation treaties in force | 21 | Govern d’Andorra |
What Is Andorra’s Corporate Tax?
Andorra’s corporate tax is the Impost sobre Societats (IS), a tax on the net profits of companies that are tax-resident in Andorra. According to Llei 95/2010, the standard rate is a flat 10% — the same headline figure regardless of how large the profit is. There are no progressive corporate brackets: a company earning EUR 100,000 and one earning EUR 10 million both face the same 10% headline rate on taxable profit.
This flat, low rate is the centrepiece of Andorra’s appeal for entrepreneurs and holding structures. Combined with a personal income tax capped at 10% and the absence of wealth, inheritance and gift taxes, it lets owner-managers retain a far larger share of what their business generates than in most of Western Europe, where combined corporate-plus-distribution burdens frequently exceed 40–50%.
How Much Is Corporate Tax in Andorra?
Corporate tax in Andorra is a flat 10% of taxable profit under the standard regime. According to Llei 95/2010, that single rate applies to the company’s net taxable base after deductible expenses, depreciation and allowable adjustments. Andorra does not layer on municipal trade taxes or state surcharges of the kind seen in Spain, France or Portugal, so the headline 10% is close to the effective ceiling for most ordinary trading companies.
For comparison, the 10% IS sits well below the EU average. Typical mainland corporate rates in neighbouring jurisdictions run from roughly 21% to 28% before surcharges, which is why Andorra is increasingly used as a base for service businesses, e-commerce, consulting, intellectual-property holding and family investment companies.
When Is Andorran Corporate Tax Only 2%?
Certain qualifying activities benefit from special regimes that can reduce the effective corporate rate to as low as 2%. According to the special-regime provisions within Andorra’s corporate tax framework, reduced taxation has historically targeted activities such as the international exploitation of intangible assets and certain intra-group financial and holding functions, where a large share of the taxable base is exempted, leaving an effective rate well below the 10% standard.
These regimes are deliberately narrow and conditional: they require genuine economic substance in Andorra, qualifying activity, and compliance with Andorra’s commitments on international tax transparency. They are not a blanket discount, and eligibility must be assessed case by case. Any company contemplating a 2% effective rate should obtain a formal analysis before relying on it, because misapplied special regimes are precisely the kind of structure tax authorities scrutinise.
Who Has to Pay Corporate Tax in Andorra?
Companies that are tax-resident in Andorra pay IS on their worldwide profits. According to Llei 95/2010, a company is generally Andorran-resident if it is incorporated under Andorran law, has its registered office in Andorra, or has its effective place of management in the country. Resident companies are taxed on global income; non-resident entities are taxed only on Andorran-source income, typically through the separate non-resident income tax.
This is why substance matters. A company that is merely registered in Andorra but actually managed elsewhere risks being treated as tax-resident in that other country. To stand on solid ground, an Andorran company should have real decision-making, and ideally real operations, staff and premises, inside Andorra. The 2026 immigration and self-employment rules reinforce this by requiring effective management and genuine activity for the people behind the company.
What Does It Cost to Set Up a Company in Andorra?
Setting up an operating company usually goes hand in hand with active (self-employed or company-based) residency, and the headline financial threshold for the self-employed route is a EUR 50,000 investment. According to Llei 2/2026 (Llei Òmnibus 2), the self-employment (compte propi) route requires committing capital of around EUR 50,000, holding a majority participation in the company, and demonstrating effective management and real economic activity in Andorra.
Beyond that committed capital, founders should budget for company incorporation and registry costs, foreign-investment authorisation where required, professional and notarial fees, accounting, and ongoing compliance. The EUR 50,000 is an investment into your own business rather than a fee paid away, but the surrounding professional and administrative costs are genuine expenses. A licensed Andorran advisor typically coordinates the foreign-investment approval, incorporation, bank account and residency file together.
How Are Dividends and Salaries Taxed for Owners?
Once the company has paid 10% IS, an owner who is an Andorran tax resident pays personal income tax (IRPF) of 0–10% on the salary they draw, and Andorran-source dividends are designed to avoid a second full layer of tax. According to Llei 5/2014, IRPF is progressive: the first EUR 24,000 of income is effectively exempt, income between EUR 24,000 and EUR 40,000 is taxed at 5%, and income above EUR 40,000 at 10%. Andorra’s system is built to relieve economic double taxation on dividends distributed out of already-taxed Andorran corporate profits, so resident shareholders are not taxed twice on the same earnings in the way many countries impose.
The practical result for an owner-manager is a combined burden that, even at the top, stays in single-to-low-double digits — a flat 10% at company level, then a capped 10% personally, with relief on qualifying dividends. That is the core arithmetic behind Andorra’s reputation among entrepreneurs.
What About Social Security (CASS)?
Companies and workers contribute to Andorra’s social security fund, the CASS, at a combined rate of 22%. According to the CASS framework, the split is 15.5% paid by the employer and 6.5% paid by the employee on salary. This funds healthcare and pension entitlements and is a real, recurring cost of employing people (including owner-employees) in Andorra.
CASS is separate from corporate and income tax and should be modelled explicitly in any payroll plan. For a founder paying themselves a salary, both the employer and employee portions effectively come out of the business, so the all-in cost of remuneration is higher than the headline IRPF rate alone suggests. Even so, total labour and tax costs in Andorra remain low by Western-European standards.
What Other Taxes Will an Andorran Company Face?
The main additional tax is IGI (Andorra’s VAT), at a general rate of just 4.5%. According to Llei 11/2012, the IGI applies to most supplies of goods and services at 4.5%, with reduced and special rates for specific categories and a higher rate for certain banking and financial services. At 4.5%, Andorra’s general consumption-tax rate is among the lowest in Europe, well below the 20–23% common across the EU.
Companies should also be aware of the IEI (foreign real estate investment tax) if they acquire Andorran property — 6% on a first property and 10% on additional properties under the 2026 IEI Regulation adapted to Llei Òmnibus 2 — and of the various registry and notarial duties on incorporation and transactions. There is, importantly, no annual wealth tax and no inheritance, gift or exit tax, which simplifies long-term planning for company owners.
How Does Andorra Avoid Double Taxation Internationally?
Andorra has built a network of 22 double taxation treaties (CDIs) in force, which allocate taxing rights and reduce or eliminate withholding on cross-border flows. According to the Govern d’Andorra, this network now covers a broad range of European and other partners, giving Andorran companies and their owners treaty protection on dividends, interest, royalties and business profits in many key markets.
A new CDI between Andorra and Austria was signed on 28 May 2026 in Vienna, but as of this article it still has to complete the internal ratification procedures in both countries and be published in the BOPA before it enters into force — so it does not yet add to the count of treaties in effect. For any cross-border structure, the applicable treaty should be checked against the specific income type, because the relief available depends on the exact treaty and circumstances.
Frequently Asked Questions
1. What is the corporate tax rate in Andorra in 2026?
The standard corporate tax (IS) rate is a flat 10% on company profits, under Llei 95/2010. Certain qualifying activities can access special regimes with effective rates as low as 2%.
2. Is Andorra’s corporate tax really only 10%?
Yes. The headline IS rate is 10%, with no municipal trade tax or state surcharge added on top, so 10% is close to the effective ceiling for ordinary trading companies. Special regimes can be lower.
3. How much does it cost to start a company in Andorra?
The self-employed (compte propi) residency route under Llei 2/2026 (Òmnibus 2) requires around EUR 50,000 of committed capital, majority ownership, and genuine management and activity in Andorra, plus incorporation, professional and registry costs.
4. Do I pay tax again when I take money out of the company?
An Andorran tax-resident owner pays IRPF of 0–10% on salary, and the system relieves economic double taxation on dividends paid out of already-taxed Andorran profits, so qualifying dividends are not taxed twice in full.
5. What is CASS and how much is it?
CASS is Andorra’s social security system. Contributions total 22% of salary — 15.5% paid by the employer and 6.5% by the employee.
6. Does an Andorran company pay VAT?
Yes, the IGI (Andorra’s VAT) applies at a general rate of just 4.5% under Llei 11/2012, among the lowest in Europe.
7. Are there wealth or inheritance taxes on company owners?
No. Andorra has no wealth, inheritance, gift or exit tax, and capital gains can reach 0% after a 10-year holding period.
Sources
- Llei 95/2010, de l’impost sobre societats (IS), Portal Jurídic d’Andorra — https://www.portaljuridicandorra.ad
- Llei 5/2014 (IRPF) & Andorran tax framework, Impostos.ad — https://www.impostos.ad
- Llei 11/2012, de l’impost general indirecte (IGI), Portal Jurídic d’Andorra — https://www.portaljuridicandorra.ad
- Llei 2/2026 (Llei Òmnibus 2), Portal Jurídic d’Andorra — https://www.portaljuridicandorra.ad/L2026002
- Corporate tax & special regimes, Govern d’Andorra (Impostos i taxes) — https://www.govern.ad/ca/tematiques/impostos-taxes-i-duana/impostos-en-andorra
- Social security (CASS), Caixa Andorrana de Seguretat Social — https://www.cass.ad
- Double taxation treaties (CDIs), Govern d’Andorra — https://www.govern.ad/ca/tematiques/impostos-taxes-i-duana/impostos-en-andorra/convenis-per-evitar-la-doble-imposicio
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This article is for general information only and does not constitute legal or tax advice. Figures reflect Llei 95/2010, Llei 5/2014, Llei 11/2012 and Llei 2/2026 (Llei Òmnibus 2) as of the publication date. Special corporate regimes are conditional and require case-by-case analysis. Always confirm your personal position with a qualified advisor.