Andorran Taxation

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.

Key Tax Rates in Andorra

Tax Type

Details

Rate

Corporate Tax

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 (on property)

Tax on real estate sales

15% (1st year), decreasing annually to 0% after 10 years

Capital Gains Tax (on shares or other investments)

Applies to sale of company shares or significant investments

10%

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: 6.5%, Employer: 15.5%

How Many Taxes Are Paid in Andorra?

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:

1. Corporate Tax in Andorra (Impuesto sobre Sociedades)

Andorra offers a very attractive corporate tax regime. The general corporate tax rate is 10%, one of the lowest in Europe. There are also tax exemptions and reduced rates for specific industries, such as international businesses, making it particularly beneficial for entrepreneurs and foreign investors.

2. IGI (Impost General Indirecte) in Andorra

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.

3. Capital Gains Tax in Andorra

On Real Estate: A progressive tax of 15% in the first year, decreasing annually to 0% after 10 years.
On Shares and Investments: A 10% tax applies to the sale of company shares and other significant financial investments.

4. Self-Employed Taxes in Andorra (Impuestos Autónomos)

Self-employed individuals (autónoms) 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, with a fixed monthly fee contribution.

5. Personal Income Tax (IRPF) in Andorra

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.

Comparison of Taxes: Andorra vs. Spain

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.

Comparison of Taxes: Andorra vs. United Kingdom

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 25%, 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%.

Conclusion

Andorra’s tax regime is one of the most attractive in Europe, offering significant benefits for individuals, entrepreneurs, and businesses. With low rates, no wealth or inheritance taxes, and a simplified system, Andorra is a premier destination for tax optimization and economic growth. At Axior Global, we provide expert tax advisory services to help you navigate Andorra’s tax landscape and maximize your financial potential.

BOOK WITH US

Book a Virtual Consultation

Easily book a 30-minute video consultation online today to receive a comprehensive analysis of your case and a concrete plan of action for your business.