All about Andorra Tax System
A brief explanation on the main characteristics of the Andorra Tax system currently in force
In the following post, we explain in brief the Andorra tax rates currently in force for individuals or companies tax resident in Andorra:
1. Personal Income Tax (IRPF) -
Tax rate: 10%
General Income Tax Base: Income from employment; Economic Activities or Real Estate leasings.
0-24,000 €- Exempt.
24,000-40,000 €.- Bonus of 50% (in practice, 5%)
As from 40,000 €.- 10%
Savings Income Tax Base: Income from financial investments or capital gains tax on financial assets.
First 3,000 €.- Exempt.
As from 3,000 €.- 10%
Please, fill free to calculate your estimated tax burden in Andorra and the average tax rate by filling the gaps to this tax calculator.
Controlled foreign company rules. By the moment, this is not applicable in Andorra.
General rate of 10% for corporations and 0% for collective investment vehicles.
3. Real Estate Tax or Capital gains on Real Estate transactions.
Decreasing tax rates from 15% to 0% if more than 10 years have passed since the property was acquired.
Specifically, the table of taxes to be paid would be:
15% up to 1 year.
14% between 1-2 years.
13% between 2-3 years.
12% between 3-4 years.
10% between 4-5 years.
8% between 5 and 6 years.
6% between 6-7 years.
4% between 7-8 years.
2% between 8-9 years.
1% between 9-10 years.
4. General indirect tax Andorra ("Value Added Tax Andorra").
General tax rate of 4.5%.
In Andorra, there is no wealth tax or inheritance and gift tax.
We have also found it useful to answer some frequently asked questions from some of our clients such as:
(i) What VAT rate is applicable in Andorra?
In Andorra VAT is better known as IGI or "Impuesto General Indirecto" and the applicable general tax rate is 4.5%.
(ii) What is the general tax rate applicable to Personal Income Tax in Andorra (IPRF)?
In Andorra, unlike other countries, the tax rate of personal income is not progressive but a fixed tax rate, i.e. 10% with the particularities that we have indicated in the first paragraph.
(iii) Who is the best tax advisor in Andorra?
It is difficult to answer a question like this, but I would say that the best tax advisor in Andorra is the one with the most significant experience in international taxation, as local taxation is not very complex.