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

When considering where to live or base your business, the tax system of a country is a crucial factor to take into account. Andorra, a small principality nestled in the Pyrenees mountains, is renowned for its low tax rates, making it a popular destination for wealthy individuals and businesses looking to reduce their tax burden. On the other hand, Russia has a more complex tax system with both advantages and challenges, depending on your personal or business circumstances. In this post, we’ll compare the key elements of the tax systems in Andorra and Russia, including personal income tax, corporate tax, VAT, capital gains tax, social security contributions, and other relevant factors. By the end of this comparison, you’ll have a better understanding of how each country’s tax policies can impact your finances, whether you’re an individual, investor, or business owner.

Tax Overview: Andorra vs Russia

The table below highlights the key differences between the tax systems in Andorra and Russia:

Tax Type	Andorra	Russia
Corporate Tax	10%	20% (standard); 6% for small businesses
Personal Income Tax	0% to 10%	13% to 15%
Capital Gains Tax	0% (except property sales); 10% in specific cases	13% (individuals); 20% (corporations)
VAT	4.5%	20% (standard); Reduced rates: 0% – 10%
Wealth Tax	Not applicable	Not applicable; property taxes may apply
Inheritance Tax	Not applicable	0% – 20%
Social Security Contributions	22% (6.5% employee, 15.5% employer)	13% (employee); 22% to 30% (employer)

1. Personal Income Tax

Andorra

Andorra employs a progressive personal income tax system with very low rates. Here’s the breakdown for 2025:

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

This system ensures that high earners only pay a maximum rate of 10%, and savings income such as dividends, interest, and capital gains is tax-free, making Andorra an attractive location for investors.

Russia

Russia applies a flat income tax rate of 13% on most income for residents. High earners (above 5 million rubles annually, approximately €55,000) are subject to a rate of 15%. Dividends and interest income are also taxed at 13%, making the system straightforward but higher compared to Andorra.

2. Corporate Tax

Andorra

Andorra’s corporate tax rate is one of the lowest in Europe at just 10%. Special tax regimes for startups, R&D-focused businesses, and international trade reduce rates further, enhancing its appeal to entrepreneurs.

Russia

Russia’s standard corporate tax rate is 20%, but small businesses with revenues under 7 million rubles (approximately $100,000) may qualify for a reduced rate of 6%. Regional authorities may impose additional taxes, which can increase the total tax burden.

3. Value Added Tax (VAT)

Andorra

Andorra applies a low VAT rate of 4.5%, making it one of the lowest in Europe. Certain essential goods and services, such as healthcare, are exempt.

Russia

Russia’s VAT system includes a standard rate of 20% and reduced rates of 10% for items like food and medicine, with 0% applying to some exports.

4. Capital Gains Tax

Andorra

Capital gains are generally taxed at 10% in Andorra. However, property sales are subject to progressive taxation, starting at 15% if sold within the first year and decreasing to 0% after 10 years. Additionally, a flat 10% tax applies to certain share sales where the seller owns more than 25% of the company.

Russia

Russia imposes a capital gains tax of 13% for individuals and 20% for corporations. Exemptions may apply to real estate sales if the property has been owned for over 3 years.

5. Social Security Contributions

Andorra

Employees contribute 6.5% of their gross income to social security, while employers contribute 15.5%, for a total of 22%. This covers healthcare, pensions, and unemployment benefits.

Russia

Social security contributions in Russia are higher, with employees paying 13% and employers contributing 22% to 30% depending on the sector. These contributions fund a comprehensive social safety net, including pensions and healthcare.

6. Inheritance and Wealth Tax

Andorra

Andorra does not impose inheritance taxes or wealth taxes, making it a favorable jurisdiction for wealth preservation and transfer.

Russia

Russia has no wealth tax but does impose property taxes. Inheritance taxes range from 0% to 20%, depending on the heir’s relationship to the deceased.

Conclusion

Andorra’s tax system is designed for simplicity and efficiency, with low rates and no taxes on capital gains, inheritance, or wealth. Russia, while offering a flat income tax rate and competitive corporate tax rates, imposes higher taxes on social security, capital gains, and VAT. Investors and businesses prioritizing tax efficiency may find Andorra more appealing, while Russia offers access to a larger market and extensive public benefits.