Andorra new Tax Reform

Jose Maria Alfin
October 6, 2023

Summary on the new tax law approved by Andorra and published on February 9, 2023

The official gazette of the Principality of Andorra published on February 8th a very relevant tax reform.

The key points of this new law can be summarized as follows: 

Personal Income Tax

Introduction of Controlled Foreign Company rules in the Andorra Tax System.

Eliminate the special tax related to capital gains arising from Real Estate Assets.

New benefits for businesses related to Digital Economy.

Tax rates remain the same: 10%.

Corporate Income Tax

Introduction of Controlled Foreign Company rules.

Limitation on the deductibility of financial expenses.

Special benefits for Digital businesses.

The maximum amount of loss carry forward per year is limited to 30% or 500.000 €

As a common point, the traditional Special Capital Gains Tax over Real Estate transactions is eliminated and substituted by adding this income to the tax base of the Personal Income Tax or Corporate Income Tax. This applies to tax residents in Andorra (individuals); companies resident in Andorra, or individuals non-resident in Andorra.

The key points are:

The tax Rate remains at 10%.

A surcharge on speculation is applicable in case the timing of the purchase and sale is minor or equal to 2 years. The surcharge is 5%

Reductions as from 5-10 years.

As from the 10-year, full exemption.

The law will enter into force on 1 January 2024. However, some aspects related to Corporate Tax will enter into force on February 9th 2023.

Please, contact us for any further information or clarification.

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