Taxes in Andorra: Everything about Personal Income Tax, Corporate Tax, and IGI
Andorra has solidified its position as one of Europe’s most attractive destinations for living and operating a business, and its low-tax system is the cornerstone of this success. Far from its old “tax haven” image, the Principality offers a modern, OECD-compliant tax framework with full legal certainty, designed to attract talent, investment, and capital.
Key Takeaway: The Andorran tax system is not based on opaque exemptions, but on very low general tax rates and a simplicity that contrasts with the complexity of its neighboring countries. This translates into direct tax savings and simpler financial planning.
📊 Taxes in Andorra vs. the World: The Definitive Comparison
To understand the scope of Andorra’s tax advantage, there’s nothing better than a direct comparison with other economies. The difference is overwhelming and illustrates why so many entrepreneurs and investors choose to live in Andorra.
| Tax Item | Andorra | Spain | France | Portugal | United Kingdom |
|---|---|---|---|---|---|
| Personal Income Tax (Top Rate) | 10% | 47% | 45% (+4%) | 48% (+2.5%) | 45% |
| Corporate Tax | 10% | 25% | 25% | 21% | 25% |
| VAT / IGI (Standard Rate) | 4.5% | 21% | 20% | 23% | 20% |
| Wealth Tax | Non-existent | Yes (up to 3.45%) | Yes (IFI) | Non-existent | Non-existent |
| Inheritance Tax (direct line) | Non-existent | Yes (up to 34%) | Yes (up to 45%) | Non-existent (10% stamp duty) | Yes (up to 40%) |
👤 Direct Taxes: The Taxation of Individuals
Personal taxation is one of the biggest attractions. It is primarily structured around the Personal Income Tax (IRPF), with exceptional conditions.
Personal Income Tax (IRPF): The Income Tax (Maximum 10%)
The Andorran IRPF is known for its simplicity and low rates. It is divided into three clear brackets:
- ✅From €0 to €24,000: Completely exempt (0%). You pay nothing on the first €24,000 of income.
- ➡️From €24,001 to €40,000: A rate of 5% is applied to this bracket.
- ➡️Over €40,000: The maximum rate of 10% is applied.
Taxation of Savings and Investments (Dividends, Interest, Capital Gains)
Income from savings, such as interest or capital gains from the sale of assets (including cryptocurrencies), is also taxed at a flat rate of 10%. However, there are significant exemptions:
📈 Dividends from Andorran Companies
Dividends distributed by an Andorran company to a tax resident in Andorra are 100% exempt from personal income tax. This avoids double taxation and is a key advantage for entrepreneurs with active residency.
🏡 Real Estate Capital Gains
The tax on profit from the sale of a property decreases with the time of ownership, from 15% in the first year to becoming fully exempt (0%) after the tenth year of ownership.
📊 Capital Gains from Stock Sales
The taxation on capital gains from the sale of stocks in Andorra is exceptionally attractive, thanks to a key exemption: capital gains are completely tax-exempt (0%) if, at the time of sale, you own less than 25% of the company’s share capital. This means the vast majority of traders and individual investors pay no tax on their stock market profits. Only if this 25% threshold is exceeded would the capital gain be taxed at 10%.
₿ Taxation of Crypto Assets
Andorra offers a clear tax framework for digital assets. Capital gains generated from the sale of cryptocurrencies (Bitcoin, Ethereum, etc.) are taxed as savings income at a single rate of 10%. This clarity and low taxation is one of the major tax advantages for crypto traders.
🏢 Taxes for Businesses and Consumption
Andorra is not only attractive for individuals but also offers an ideal environment for creating and managing companies thanks to its competitive corporate taxation.
Corporate Tax (IS): A Flat 10%
The Corporate Tax levies a single general rate of 10% on the profits of Andorran companies. There are special regimes, such as for holding companies or international trading companies, which can further reduce the effective tax burden.
General Indirect Tax (IGI): The Lowest VAT in Europe
The IGI is Andorra’s equivalent of VAT. Its standard rate is 4.5%, a figure much lower than the European average (over 20%). There are also reduced rates:
- 🛒Reduced Rate (1%): Applied to food, water, books, and newspapers.
- ❤️Super-Reduced Rate (0%): Applied to healthcare and educational services, and housing rentals.
- ✈️Special Rate (2.5%): For transportation services and cultural or artistic activities.
🏆 The Big Absences: Taxes You WON’T Pay in Andorra
Just as important as what you pay is what you don’t. The absence of certain taxes is what truly solidifies Andorra as a tax haven… in the best sense of the word: a place with low tax pressure.
🚫 ZERO Wealth Tax
Unlike in Spain or France, in Andorra there is no tax on your accumulated wealth or net worth. Your capital can grow without the burden of an annual tax on its value.
🎁 ZERO Inheritance and Gift Tax
The transfer of assets to direct heirs (spouses, children, parents) is completely tax-exempt. This ensures that your legacy is transferred in full without the state taking a portion.
❔ Frequently Asked Questions about Andorran Taxation
Here we answer the most common questions that arise when considering a tax move to the Principality. If your question isn’t here, don’t hesitate to contact us.
Officially, no. Andorra was removed from all EU and OECD lists of non-cooperative tax havens after implementing transparency and signing information exchange agreements. Today, it is defined as a low-tax jurisdiction, which is different from an opaque tax haven. It offers full legal security and international compliance.
Capital gains from the sale of crypto assets (Bitcoin, Ethereum, etc.) are considered capital gains and are therefore taxed under personal income tax at a flat rate of 10%. This is a much more favorable framework than in neighboring countries, where rates can exceed 25%.
Yes, this is a fundamental requirement. To be taxed under the Andorran system, you must obtain tax residency in Andorra. This implies, among other requirements, living in the country for more than 183 days a year and having Andorra as your center of economic and vital interests.
There is no problem at all. In fact, it’s a very common scenario. Your Andorran company will be taxed at 10% on its profits, regardless of where your clients are located. Andorra is an excellent base for digital service companies, e-commerce, or international consulting.