Andorra has one of the most attractive tax regimes in Europe, offering low tax rates for both individuals and businesses. The country is designed to foster a business-friendly environment, with streamlined procedures and tax benefits that make it an appealing location for international investment, entrepreneurs, and Andorran residents.
| Tax Type | Details | Rate |
|---|---|---|
| Corporate Tax (Impuesto sobre Sociedades) | Tax on business profits | 10% |
| Value Added Tax (IGI – Impuesto General Indirecto) | Tax on consumption of goods and services | 4.5% (standard rate) |
| Capital Gains Tax | No tax on the sale of assets such as shares and property | None |
| Personal Income Tax (IRPF) | Tax on individual income, ranging from wages to investment income | 0% to 10% (progressive rates) |
| Wealth Tax | No tax on the total value of assets | None |
| Inheritance Tax | No tax on inherited assets | None |
| Social Security Contributions | Employee and employer contributions to social security | Employee: 5%, Employer: 10.5% |
| Self-Employed Taxes (Impuestos Autónomos) | Taxes and social security contributions for freelancers and self-employed individuals | Similar to employee rates, with specific conditions for freelancers |
Andorra is known for its low number of taxes and straightforward tax system. The country imposes only a few key taxes on individuals and businesses, each designed to foster a competitive economic environment while maintaining a sustainable government revenue base. Here are the main taxes paid in Andorra:
Andorra offers a very attractive corporate tax regime. The general corporate tax rate is 10%, which is one of the lowest in Europe. There are also tax exemptions and reduced rates for specific industries, such as international businesses, which makes it particularly beneficial for entrepreneurs and foreign investors. Axior Global can help your business navigate Andorra’s corporate tax system, ensuring you take full advantage of the available tax exemptions and optimized rates for your industry.
The IGI is the Andorran equivalent of VAT (Value Added Tax), and it is one of the lowest in Europe. The standard IGI rate is just 4.5%. This low rate makes Andorra a favorable location for both businesses and consumers, as it helps to keep the cost of goods and services lower compared to countries with higher VAT rates. Our tax consultants at Axior Global can advise you on how to structure your business operations to minimize the impact of indirect taxes, keeping your costs competitive in the global market.
In Andorra, there is no capital gains tax on the sale of shares for individuals or businesses, making it a highly favorable tax environment for investors. This makes the country an attractive destination for those looking to invest in the stock market or buy and sell shares without incurring hefty tax liabilities. If you’re considering investing in Andorra, Axior Global can provide expert guidance on how to optimize your investment strategy in the absence of capital gains tax.
Self-employed individuals (autónomos) in Andorra are subject to a simplified tax system. The tax rates for freelancers or entrepreneurs are progressive, with a maximum rate of 10%. Social security contributions are also applicable, but the overall tax burden remains lower than in many other European countries. This low taxation encourages entrepreneurship and attracts freelancers looking for a favorable environment to establish their businesses. At Axior Global, we offer comprehensive tax advice for self-employed individuals, ensuring you are in full compliance with Andorran regulations while minimizing your tax burden.
Andorra has a very favorable personal income tax system. The personal income tax (IRPF) rates range from 0% to a maximum of 10%, depending on income levels. This progressive tax structure means that individuals with lower earnings pay little to no tax, while those with higher earnings are taxed at a very competitive rate. With no wealth tax or inheritance tax, Andorra is highly attractive for individuals seeking to optimize their tax situation. Axior Global can assist you with personal income tax planning, helping you structure your income to take full advantage of Andorra’s tax rates and exemptions.
When compared to Spain, Andorra offers a significantly more favorable tax regime. Spain has higher corporate and income tax rates, with a corporate tax rate of 25% and personal income tax rates as high as 47%. In contrast, Andorra has a flat corporate tax rate of just 10%, and personal income tax rates are capped at 10%. Andorra also stands out for having no wealth tax or inheritance tax, while Spain imposes both. Additionally, Andorra’s VAT rate is much lower at 4.5%, compared to Spain’s 21%.
Overall, Andorra offers a much more tax-efficient environment for both individuals and businesses compared to Spain. On this page, we offer a more comprehensive analysis of the taxation differences between Spain and Andorra. If you are considering relocating to Andorra or establishing a business, Axior Global provides expert tax advisory services to guide you through the tax landscape and help you maximize savings.
When compared to the United Kingdom, Andorra’s tax system is considerably more favorable. The UK has higher corporate and income tax rates, with the corporate tax rate standing at 19%, and personal income tax rates reaching up to 45%. In contrast, Andorra offers a corporate tax rate of just 10%, personal income tax rates capped at 10%, and no inheritance or wealth taxes. Additionally, the value-added tax (VAT) in Andorra is much lower than in the UK, with a standard rate of 4.5% compared to the UK’s 20%. Go to this page for a more extensive explanation of the taxation differences between Spain and the UK.
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