Andorra is an ideal place both for multinationals and SMEs. The law sets the corporate tax maximum at 10% and it can be reduced to 2% depending on the type of company. This makes it one of the lowest in Europe.

Creating a company in Andorra or establishing the headquarters of a company in the principality is an option to value for many.

Types of Taxes in Andorra

Andorran legislation has developed a complete framework of taxation on individuals and companies. Here below you will find the most common taxes that you will have to pay once settled down in the country.

• The Income Tax on Individuals (IRPF): IRPF in Andorra remains much lower than in most European countries. Income tax in Andorra does not exist unless wages reach up to 24,000€ a year. From that figure, it increases proportionately up to 10% in wages of more than 40,000€. This 10% is the highest rate of IRPF in Andorra, when this same maximum rate in Spain is at 53%.
• The Indirect General Tax (IGI): The IGI is the equivalent of VAT in Spain and Anglo-Saxon countries or TVA in France. It is intended to tax the added value of the products and services consumed by the end customers. It is, therefore, a tax that will be paid according to the volume of goods or services consumed. There are several IGI tax rates, depending on the good or service: the general rate is 4.5%; the reduced rate of 1% (e.g., food, water, books); the super-reduced rate of 0% (e.g., hospital services, social assistance, education); the special rate of 2.5% (e.g., certain transports and certain ticket sales); and the increased rate of 9.5% (financial services).
• Taxes on the purchase and sale of real estate: the Tax on Capital Gains in Property Transfers and the Tax on Patrimonial Transfers (ITP): The ITP is the tax levied on the sale of real estate by individuals. The tax rate is 4% of the agreed value and must be paid by the buyer. On the other hand, the Tax on Capital Gains from the property sale taxes the difference between the sale price and the purchase price of the property, and must be paid by the seller. This tax responds to a regressive rate based on the tenure of the property by the seller, ranging from 15% (purchase and sale in the short term) to 0% (holding for at least 12 years and one day).

Where to apply

Further information about Andorran social insurance record is available at the official tax office of the Andorran Government

Departament de Tributs i de Fronteres
Baixada del Molí, 26
(next to Andorra Television)
AD500 Andorra la Vella

Tel: +376 885 005
Webpage: Impostos.ad (Only in Catalan)
Contact: impostos@govern.ad

VAT in Andorra

VAT in Andorra is the lowest in Europe. Its general rate is 4.5%, being reduced to 1% in goods and services related to health, education, culture, food and rentals, the super-reduced rate of 0% (e.g., hospital services, social assistance, education); the special rate of 2.5% (e.g., certain transports and certain ticket sales); and the increased rate of 9.5% (financial services).

This means that the VAT in Andorra is much smaller than its neighbouring countries, France and Spain, with 20 and 21% respectively.

VAT Returns

There are three different ways to return the VAT:

• Through the same provider with the itemized invoice broken down
• By means of a document model Tax Free managed through a collaborating company authorized by the Tax Agency
• Those countries where VAT is returned through an airport, there are also companies installed there that allow the refund of the amount.

In the first case, the tax refund is produced in full, regardless of the percentage, but you must handle the process himself. Once the purchase has been made, you must request the Tax Free service and obtain the invoice with the Taxes correctly broken down. From here, you will have to go to customs and claim the seal as the products have been introduced in the Principality. Once certified, the final step is to redirect the sealed invoice to the commerce or supplier where the product was acquired and, this one, will have 15 days to return the corresponding amount.

In the second case, the service is faster and more convenient but the amount of money returned is less. This time, the store facilitates the specific Tax Free model that, after receiving the seal, and it can be charged to the Principality through the financial entity Crèdit Andorrà or through any of the various authorized entities (Premier Tax Free, Global Refund, Innova Tax Free, Travel Tax Free, Comercia Global Payments or La Caixa, among others). In this case, you might not receive the full amount of money.

Recommended Partners