Andorra vs France: A Comparison of Tax Systems – Fully Expanded and Updated January 2025

When it comes to taxes, Andorra and France are worlds apart. Andorra, a small principality nestled in the Pyrenees mountains, has become a popular destination for individuals and businesses looking for tax efficiency, while France, with its larger economy and extensive social services, imposes a significantly higher tax burden on its residents and businesses. In this updated blog post, we’ll compare the key elements of the tax systems in Andorra and France, including personal income tax, corporate tax, VAT, capital gains tax, and social security contributions. This comprehensive comparison will help you understand the advantages and disadvantages of each system, particularly if you’re considering relocating, investing, or doing business in either country. At Axior Global, our tax advisors can assist you in making informed decisions based on your goals and the specific nuances of these tax systems.  

Tax Overview: Andorra vs France

Tax Type	Andorra	France
Corporate Tax	10%	15% to 25% (depending on profits)
Personal Income Tax	0% to 10%	11% to 45%
Capital Gains Tax	10% (general rate); property tax varies	30% (standard, incl. social charges)
VAT	4.5%	20% (standard); Reduced: 5.5% – 10%
Wealth Tax	Not applicable	Levied on assets over €1.3 million
Inheritance Tax	Not applicable	Up to 60%
Social Security	22% (6.5% employee, 15.5% employer)	Up to 25% (employee), 40% (employer)

1. Personal Income Tax

Andorra employs a progressive tax system with very low rates, making it ideal for high-income individuals, retirees, and entrepreneurs. Here’s how it works in 2025:

• €0 – €24,000: 0%
• €24,001 – €40,000: 5%
• €40,001 and above: 10%

Savings income (e.g., interest, dividends) is taxed separately under specific conditions.   France has a progressive income tax system with the following brackets for 2025:

• €0 – €10,777: 0%
• €10,778 – €27,478: 11%
• €27,479 – €78,570: 30%
• €78,571 – €168,994: 41%
• €168,995 and above: 45%

Social charges can add an additional 15% to 20% to the effective tax burden.  

2. Corporate Tax

Andorra’s standard corporate tax rate is 10%. Special tax regimes apply to sectors like international trading, financial services, and R&D.   France’s standard corporate tax rate is 25% for profits above €500,000. Small businesses pay 15% on the first €42,500 of profits.  

3. Value Added Tax (VAT)

Andorra’s standard VAT rate is 4.5%. Reduced rates apply to essentials like food, books, and healthcare.   France’s standard VAT rate is 20%. Reduced rates of 5.5% and 10% apply to specific goods and services.  

4. Capital Gains Tax

Andorra:

• General rate: 10%
• Real estate sales: 15% if sold within 1 year; reducing progressively to 0% after 10 years
• Stock and investment sales: General rate 10%. Exemptions may apply depending on holding period and transaction type
• Short-term speculative investments: Surcharge of 5% can apply if sold within 2 years

France:

• Standard rate: 30% (including social charges)
• Real estate: Exemptions after 22 years for capital gains tax, and 30 years for social charges

5. Social Security Contributions

Andorra:

• Employees contribute 6.5%
• Employers contribute 15.5%
• Total: 22%

France:

• Employees pay up to 25%
• Employers pay up to 40%

Conclusion

Andorra’s low tax rates make it an ideal destination for high-net-worth individuals and businesses seeking efficiency. France, with its higher tax rates, provides extensive social services that may appeal to those prioritizing comprehensive benefits over tax efficiency. For expert guidance on structuring your finances efficiently in Andorra or France, contact Axior Global.