Verified Facts
Andorra has a relatively low tax environment with a range of tax rates and incentives for individuals and businesses, making it an attractive destination for expats and foreign investors.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
Andorra operates a territorial taxation system, where only income earned within the country is subject to tax, except for worldwide taxation for residents who have been living in the country for more than 183 days in a calendar year. Residency rules for tax purposes are based on the individual's domicile, which is determined by their physical presence, family ties, and economic interests in the country. Individuals who are considered residents are required to file a tax return and report their worldwide income, while non-residents are only taxed on their Andorran-sourced income.
The tax system in Andorra is designed to attract foreign investment and promote economic growth, with a range of incentives and exemptions available to individuals and businesses. The country has a low-tax environment, with a maximum income tax rate of 10% and a corporate tax rate of 10%. Additionally, Andorra has a network of double taxation treaties with several countries, which helps to prevent double taxation and fiscal evasion.
Personal Income Tax
| Income Bracket (EUR) | Tax Rate |
|---|---|
| 0 - 24,000 | 0% |
| 24,001 - 40,000 | 5% |
| 40,001 - 60,000 | 7% |
| 60,001 - 100,000 | 8% |
| 100,001 and above | 10% |
| Individuals are entitled to various deductions and allowances, including a personal allowance, mortgage interest relief, and charitable donations. Tax returns must be filed by March 31st of each year, and taxpayers can choose to file electronically or by post. It is essential to note that tax rates and brackets are subject to change, and individuals should consult the Andorran tax authority or a qualified tax professional for the most up-to-date information. |
Corporate & Business Tax
- The corporate tax rate in Andorra is 10%, which applies to all companies registered in the country.
- Small business incentives are available, including a reduced corporate tax rate of 5% for companies with an annual turnover of less than EUR 100,000.
- Andorra has free zones, which offer a range of benefits, including exemptions from customs duties and value-added tax.
- Companies must register with the Andorran Commercial Register and obtain a tax identification number to operate in the country.
- Foreign companies can establish a permanent establishment in Andorra, which is subject to corporate tax on their Andorran-sourced income.
VAT / Sales Tax
- The standard VAT rate in Andorra is 4.5%, which applies to most goods and services.
- Reduced rates of 1% and 2.5% apply to certain goods, such as food, pharmaceuticals, and hotel services.
- Exemptions are available for certain activities, including financial services, insurance, and education.
- Andorra has a tourist refund scheme, which allows non-EU visitors to claim a refund of VAT on certain purchases.
For Expats & Foreign Workers
- Tax residency rules are based on the individual's physical presence in the country, with residents required to file a tax return and report their worldwide income.
- Andorra has a network of double taxation treaties with several countries, which helps to prevent double taxation and fiscal evasion.
- Social security contributions are mandatory for employees and employers, with rates ranging from 5.5% to 14.5% of gross salary.
- Remittance rules are in place to prevent tax evasion, with individuals required to report foreign-sourced income and assets.
- Expats may be eligible for a special tax regime, which offers a reduced tax rate of 5% on foreign-sourced income.
- Foreign workers may be required to obtain a work permit and register with the Andorran tax authority.
Crypto & Investment Income
- Investment income, including dividends, interest, and capital gains, is subject to income tax, with rates ranging from 0% to 10%.
- Cryptocurrency is considered a financial asset, and gains from its sale are subject to capital gains tax, which is included in the income tax return.
- Dividends received from foreign-sourced investments are subject to a withholding tax of 5%, which can be reduced or eliminated under a double taxation treaty.
- Andorra has a registration requirement for cryptocurrency exchanges and other financial institutions, which must comply with anti-money laundering and know-your-customer regulations.