A Guide to Taxes in Andorra
- elizabethhelenpier
- Dec 3, 2024
- 5 min read
Updated: Feb 19
Andorra offers a very tax advantageous position for its residents on top of a fairly basic tax structure. Understanding what taxes to pay, and when is not a complicated matter although you likely will not do the tax filing yourself. Are you wondering what personal taxes you must pay in Andorra and/or what company taxes exist in Andorra? What would your personal finance structure look like as an Andorran resident? Read on for more information.
What taxes to pay as an individual in Andorra?
a) IGI (VAT)
IGI is the VAT equivalent in Andorra. If you are purchasing anything in Andorra, the rates go from 0% up to 9,5%.
4.5%: general rate
0%: public services such as healthcare, rent, secondhand property and secondhand car sales
1%: some products not including meat or plant sourced food, water and books
2,5% Transportation, education and art dealings
9,5% bank fees and charges
IGI out of Andorra
As an Andorran resident you have the right to buy VAT free in Europe or any other country. In order to process this, you must purchase from a store psychically out of Andorra and not online unless they are prepared to import into Andorra for you. If bought in person abroad, you will be given a tax-free document, and you will have to process this with either the tax-free company in charge or possibly your bank. They will send the VAT paid back to your Andorran account with some delays. You are exempt of having to pay IGI on importation if the product is valued at less than €900.00.
b) IRPF
IRPF is your personal income tax in Andorra. There are 3 thresholds for income tax in Andorra. The first is set at 0% for the first €24,000, the second is 5% for income between €24,000 and €40,000. Lastly any annual income above €40,000 is taxed at a 10% rate. If you are an employee, your HR department will inform you when and how to pay. If you are a business owner, you will likely have an accountant who will include the IRPF declaration for you in your annual fees.
c) Capital gains
Capital gains tax in Andorra most importantly affects property sales as this is the transaction most looked upon by the tax office. The capital gains tax rate is on a sliding time scale where the rates begin at 15% and drop to 0% after 15 years. You will pay this tax via the notary upon sale of your property. Have a look at our capital gains on property in Andorra for more information.
d) ITP
This is the patrimonial transaction tax, ergo stamp duty on property. The rate stands at 4% currently. You will pay this tax via the notary upon purchase of a property. We discuss in detail in our A Guide to Buying Property in Andorra.
e) Vehicle tax
A small annual vehicle tax. The rate which depends on the horsepower of the vehicle, goes from €52.00 a year up to €169.50. This tax is deducted from your bank account by the government.
f) Foc i lloc communal tax
Sweetly named the fire and home tax. It is in fact a residency tax for anyone who lives in Andorra. It ranges in price depending on the parish you live in but is between €23-25.00 in every parish apart from Sant Julia where the cost is over €40.00 a year per person. This tax is deducted from your bank account by the local parish.
g) Rental tax
This tax is for owners of rental property. The tax rate changes depending on the parish your property is in but stands between 1.75% and 4%. Furthermore, there are thresholds in certain parishes meaning you will pay 1% extra tax on rental income above €40,000.00 in Andorra la Vella and Escaldes-Engordany. This tax is deducted by the local parish from your bank account.
h) Property owner tax
Anyone who owns property whether principal or secondary must pay the property owner tax in Andorra. The rate is based on m2 and stands between €0.52 and €0.65/m2 in all parishes apart from Andorra la Vella. Andorra la Vella instead has different thresholds depending on the total size of the property that go from €0.32/m2 up to €1.28/m2. This tax is deducted from your bank account by the local parish.
What taxes to pay as a company in Andorra?
a) IS (corporate tax)
The Andorran corporate tax has a flat percent rate of 10% on any profits. There is no threshold with the IS tax. The IS declaration is usually carried out by your accountant and it is done on a yearly basis presented in the first 6 months of the following fiscal year. The fiscal year in Andorra starts on January 1st and ends on 31st December.
b) IGI
Any purchase made or invoice produced must on the outset include IGI in the corporate world. This includes B2B transactions within Andorra unlike in the EU where business to business invoices are VAT free. You will have to make your IGI declaration most likely with the help of an accountant either monthly, quarterly or twice yearly. The time frame you must do your declaration within will depend on the profits and turnover of your business.
c) Commercial tax
You will pay a flat commercial tax rate on opening the company and every year following. This rate depends on the type of company you are opening; limited company / private corporation / commercial activity. The rates start at €201.80 for basic commercial activity up to €881.30 for private corporations. This commercial tax should be taken out of your account by the government on a yearly basis.
Can I do my taxes myself in Andorra?
Given many of the above taxes in Andorra are automatically deducted from your bank account, there is in reality only three taxes you need to worry about filling as a company owner in Andorra:
IRPF, IS and IGI
It is possible to do Andorran tax filling yourself, but the main issue occurs with the language barrier as all tax declarations must be done in Catalan. The government tax office is not a public advice point as in some countries so you may find it difficult to work out how, when and where to file your taxes. If you are head strong and have time on your hands, you can always give it a go. We would suggest for any complicated books, always working with a professional accountant.
How much do accountants charge in Andorra?
Accountants will charge a minimum fee of 110-150€ a month in Andorra. This figure will increase with activity and invoicing. It is not unusual to pay €200-250 a month for an accountant in Andorra, especially one who offers a multilingual service ergo an English-speaking accountant.
