For a long time, the Andorran tax system has been surrounded by myths and ignorance. However, the current reality is very clear: Andorra has a modern, transparent, internationally recognized and highly competitive tax framework within the European Union and the global environment.
At Gestoria Bon Consell we explain how Andorran taxation really works, what the main taxes are and why the Principality has become one of the best options to live and invest in 100% legally.
The great myth: tax haven
No, Andorra is not a tax haven.
For years, Andorra has been off the OECD and European Union tax haven blacklists. The country has signed numerous Double Taxation Agreements (DTAs) (with countries such as Spain, France, Portugal, among others) and complies with all tax information exchange standards.
What makes Andorra attractive is not the lack of rules, but a low, simple and efficient tax system.
The three pillars of taxation in Andorra
The Andorran tax model is mainly based on three basic tax figures:
1. IRPF (Personal Income Tax)
Personal income tax is levied on income earned by tax residents in Andorra. The tax rates are among the lowest in Europe:
- Up to €24,000: 0% (exempt).
- From €24,001 to €40,000: 5% (thanks to a 50% bonus).
- Over €40,000: 10% (maximum rate).
In summary: No one in Andorra pays more than 10% of their personal income.
2. IS (Corporate Tax)
If you have a company or are thinking of creating one in the Principality, Corporate Tax is the tax that is applied on business profits:
- General rate: 10% maximum.
- Reduced rates and bonuses: During the first years of activity or for certain sectors (such as asset management or innovation), the effective rate may be considerably reduced.
3. IGI (General Indirect Tax)
The equivalent is the Spanish VAT or the French TVA. It is the tax on the consumption of goods and services:
- General rate: 4.5% (the lowest in Europe).
- Super-reduced / reduced rate: Between 0% and 1% for basic services such as healthcare, education or rental of primary residence.
Other taxes and fees to take into account
Beyond the three main ones, in Andorra there are other minor taxes, mainly local or patrimonial:
- Communal taxes: Hygiene tax, lighting tax or commercial activity tax (managed by the Municipalities of each parish).
- ITP (Property Transfer Tax): It is applied to the purchase of real estate and is set at 4%.
- No wealth tax or inheritance tax: In Andorra there is no wealth tax, nor on donations or direct inheritances.
In this link here you can consult all the taxes in the Andorran tax system.
What is needed to benefit from the Andorran tax system?
To pay taxes in Andorra, it is not enough to open a company or a bank account; you must meet the criteria of economic substance and real residence:
- Tax residence: Living in the Principality for more than 183 days a year (or having the main center of economic interests there).
- Real activity: Companies must have a physical headquarters and real material/human resources in the country.
Do you want to plan your tax future in Andorra?
The key to taking advantage of Andorra's advantages in a calm and safe way is to do so with professional advice adapted to current regulations.
At Gestoria Bon Consell we accompany you throughout the entire process: from residency procedures and company creation to day-to-day accounting and tax management.
Contact us for an initial personalized consultation and discover how we can help you optimize your project.
