Andorra or Switzerland: two very different tax models

Andorra and Switzerland both offer a stable environment, a high quality of life, and a framework suited to certain entrepreneurs or investors. Their tax systems, however, are very different.

Andorra applies relatively uniform national rates. In Switzerland, the tax burden depends on the canton, the municipality, family situation, religious affiliation in certain cantons, and the level of income or wealth.

It's therefore misleading to talk about a single "Swiss rate". To discover the main Andorran taxes, our dedicated guide covers the whole system.

Swiss VAT applies a standard rate of 8.1%, a reduced rate of 2.6%, and a rate of 3.8% for accommodation. For a wealthy individual with no local activity, see the Andorran status for investors.

Why does the canton change the outcome?

In Switzerland, income tax is levied at several levels. The burden can vary significantly between Geneva, Vaud, Valais, Zug, Schwyz, Zurich, or Ticino.

The same principle applies to wealth tax, which falls under cantonal and municipal jurisdiction. The value of assets, allowable debts, deductions, and the scale therefore all depend on where you live.

A meaningful comparison needs to take into account:

• the specific Swiss municipality being considered;
• family situation;
• taxable income;
• net wealth;
• the nature of any shareholdings;
• any real estate income;
• professional status.

In Switzerland, certain capital gains realised as part of private wealth management can be exempt.

This exemption doesn't apply automatically. Frequent, organised, debt-financed activity, or trading with the characteristics of a professional securities business, can lead to reclassification and taxation. Gains linked to business assets are also treated differently.

Andorra needs to be compared asset by asset: securities, significant shareholdings, real estate, digital assets, or the sale of a business.

As of the date checked, Switzerland doesn't appear among the states linked to Andorra by a general double taxation treaty.

An agreement on the exchange of tax information does exist, but it doesn't allocate taxing rights in the same way a full treaty would.

This absence can matter for:

• Swiss dividends;
• interest;
• pensions;
• director's remuneration;
• professional income;
• recovering certain withholding taxes.

Swiss withholding tax is generally levied at 35% on certain capital income. Refund conditions differ depending on the beneficiary's residency and the applicable treaty.

Switzerland levies inheritance and gift taxes under cantonal rules. There's no general federal gift tax, but cantons can tax transfers depending on the family relationship and the situation.

Someone leaving Switzerland for Andorra should, in particular, have the following analysed:

• the canton of departure;
• any real estate retained;
• Swiss companies held;
• future dividends;
• pension contracts;
• planned gifts;
• heirs' residency.

Which environment should you prioritise?

Switzerland can suit an activity requiring a highly developed financial, industrial, pharmaceutical, technology, or international ecosystem.

Andorra can suit lighter structures, genuinely mobile directors, and projects where clear national taxation and a smaller-scale setup are what's being sought.

The choice shouldn't be based on a national average tax rate, particularly on the Swiss side.

ProGestió reviews your canton of departure, your shareholdings, your Swiss wealth and income, in order to identify the practical consequences of relocating. Would you like a personalised Switzerland-Andorra analysis?

Request a Switzerland-Andorra analysis