IGI in Andorra: Rates, Invoices, and Returns

IGI, or Impost General Indirecte, is Andorra’s consumption tax. It works along lines similar to VAT, but with its own rates, thresholds, place-of-supply rules, and filing obligations.

The standard rate is 4.5%. Other rates apply to certain transactions: 0%, 1%, 2.5%, and 9.5%.

For a business, the main difficulty isn’t just knowing the rate. You need to determine whether the transaction is taxable in Andorra, whether the client is a business or a private individual, whether an exemption applies, and whether the IGI paid on purchases can be deducted.

IGI rates

Rate	Examples of general categories
0%	Certain expressly provided-for transactions and residential lettings under statutory conditions
1%	Goods and services benefiting from the reduced rate
2.5%	Certain activities or services at the special rate
4.5%	Standard rate
9.5%	Certain banking and financial services

The exact classification needs to be checked against the law. A commercial name alone isn’t enough to determine the rate.

Who is subject to IGI?

Those affected include, in particular, individuals or businesses regularly supplying goods or services as part of an economic activity.

The regime provides for a threshold for small entrepreneurs or professionals, currently set at around €40,000 of annual turnover, subject to calculation rules, exclusions, and options. Someone below the threshold may be exempt or may choose, under certain conditions, to enter the regime.

The choice needs to take into account:

• the client base;
• the amount of investment;
• recovering IGI on purchases;
• expected growth;
• administrative obligations.

A business mainly working with other businesses may benefit from opting into the regime to recover IGI. For an activity aimed at individuals, the impact on price needs to be calculated.

Output IGI and deductible IGI

The business charges IGI on its taxable sales and can deduct IGI paid on certain purchases linked to its activity.

Simplified example:

• sales excluding tax: €20,000;
• IGI charged at 4.5%: €900;
• business purchases: €8,000;
• deductible IGI: €360;
• net amount payable: €540.

Deduction requires, in particular:

• a compliant invoice;
• a purchase linked to the activity;
• use that qualifies for deduction;
• proper bookkeeping;
• meeting deadlines.

Personal expenses, or those allocated to exempt transactions, can be excluded or restricted.

Invoice requirements

An invoice needs to allow identification of:

• the seller;
• the client;
• the date and number;
• the nature of the goods or services;
• the taxable base;
• the rate;
• the amount of IGI;
• exemption or reverse-charge wording where applicable.

Invoice series need to be organised and sequential. Credit notes and corrections need to reference the original invoice.

Invoicing a foreign business client

An Andorran company invoicing a foreign client shouldn’t automatically apply 4.5%.

For a service, it’s necessary to identify:

1. whether the client is acting as a business;

2. where they’re established;

3. the general or special place-of-supply rule;

4. any reverse charge in the client’s country;

5. evidence of the client’s status and address. Many B2B services can be treated as supplied where the client is based. Others remain linked to the location of the property, event, transport, or where the work is carried out.

The contract, tax number, and evidence of location need to be kept.

Invoicing a foreign individual

B2C services can follow a different rule. Depending on the service, Andorran IGI may apply, or a registration requirement may arise in the consumer’s country.

Digital services, telecommunications, distance sales, events, lettings, and property-related services all require specific checking.

The fact that payment comes from a foreign account doesn’t determine the place of taxation.

Importing goods

Goods entering Andorra are subject to customs formalities and, in principle, to import IGI.

The taxable base can include:

• the value of the goods;
• transport;
• insurance;
• packaging;
• any customs duties;
• other costs up to the place set by regulations.

The business can deduct import IGI where the conditions are met and the customs documents are in its name.

Exports and sales of goods abroad

An export can benefit from specific treatment, subject to proving the goods left the country.

The business needs to keep:

• the invoice;
• the customs declaration;
• proof of transport;
• proof of receipt;
• commercial documents.

Without evidence, the authorities can challenge the exemption.

Real estate and lettings

Lettings intended exclusively for residential use can qualify for the 0% rate under the statutory conditions.

Commercial lettings, hotel services, short-term lets, and related services can be treated differently.

Purchase, works, and recovering IGI need to be considered alongside the property’s intended future use.

Returns and filing frequency

Filing frequency depends on turnover and the applicable regime. The business needs to:

• keep records;
• retain invoices;
• file returns;
• pay any balance due;
• correct errors;
• manage any credits.

A schedule needs to be set from the start of the activity. IGI obligations shouldn’t wait until the annual close.

Common mistakes

• applying 4.5% to every invoice;
• not checking the client’s status;
• deducting personal expenses;
• using a non-compliant foreign invoice;
• forgetting import IGI;
• confusing turnover with profit;
• exceeding the threshold without changing regime;
• omitting exemption wording;
• not keeping evidence of an export;
• ignoring foreign VAT obligations.

Frequently asked questions

Is IGI Andorra’s VAT? It’s the Principality’s general indirect tax. Its logic is similar, but its rules and rates are specifically Andorran.

Do all businesses charge 4.5%? No. The rate, threshold, and place of supply for the transaction all need to be checked.

Can IGI be recovered on a vehicle? Deduction depends on business use, restrictions, and supporting evidence.

Is an invoice to a French business outside the scope of IGI? Often, for certain B2B services, but not always. The nature of the service needs to be analysed.

To go further: Taxation in Andorra, Company formation, Accounting.