Taxation in Andorra: taxes, rates and key rules

These rates don't necessarily reflect the final tax burden: the tax base, allowable expenses, family situation, foreign withholding tax, tax credits and treaties can all affect the outcome.

The 10% rate is the main reference point for personal income tax and corporate tax. It shouldn't be confused, however, with the statutory rate, the base it's applied to, the amount actually paid, social security contributions, and any tax already withheld in another country.

For an individual, the 10% rate applies after the reductions provided for under personal income tax rules. For a company, it applies to taxable profit, not turnover. Foreign income may also have been subject to withholding tax or tax in its country of origin — a tax treaty or a tax credit can then reduce or correct the double taxation, without necessarily eliminating it entirely. CASS social security contributions are, separately, a matter of social protection and are not included within the personal or corporate income tax rates.

An individual is generally considered an Andorran tax resident when they spend more than 183 days in Andorra during the calendar year, or when the main centre of their economic activities or interests is located, directly or indirectly, in the Principality. Occasional absences can be counted towards the 183-day calculation, unless the taxpayer can show tax residency in another state.

An Andorran residence card alone isn't enough to settle the tax question: a distinction must be drawn between the residence permit, which allows someone to live legally in the Principality under the status obtained, and tax residency, which determines the country in which the person is taxed on all or part of their income. Where someone retains significant ties to another country, particular attention should be paid to genuinely available housing, where the family lives, the number of days spent in each place, where the activity is carried out, the management of any companies, and the centre of economic interests — see our residency in Andorra guide.

Andorran personal income tax is based on the worldwide income principle: a resident must take into account income earned in Andorra as well as income from other countries. The law distinguishes two main tax bases, and the distinction matters because the personal allowance and tax credit don't apply to both in the same way.

The general base includes, among other things, salaries and professional remuneration, income from economic activities, director's remuneration, and rental income from real estate.

The savings base includes, among other things, interest, dividends that don't qualify for an exemption, certain financial products, and capital gains and losses.

The personal income tax rate is set at 10%. Personal income tax isn't therefore structured as a classic progressive scale with three separate rates of 0%, 5% and 10%: the progressivity mainly comes from the reductions and tax credit provided for by law.

The general base can be reduced by a personal allowance of €24,000, increased to €30,000 in the case of recognised disability, and which can reach up to €40,000 in certain situations — particularly where a dependent spouse or partner has no income included in the general base. It's therefore more accurate to say that the general base benefits from a €24,000 personal allowance, rather than stating that all income below that amount is automatically taxed at 0% — the difference matters as soon as someone receives several categories of income.

Income from employment, economic activities and real estate can then benefit from a tax credit equal to 50% of the tax calculated on the general base remaining after the personal allowance, capped at €800. This gives an effective rate of 5% on the relevant bracket, which generally falls between €24,000 and €40,000 — it doesn't apply where someone receives only savings income.

Simplified example — a net general base of €35,000, with no other particular reduction: base after the €24,000 personal allowance = €11,000; tax at 10% = €1,100; 50% tax credit = − €550; indicative personal income tax = €550, i.e. an effective burden of 5% on the bracket above the personal allowance. The actual result may differ depending on deductible expenses, income, investments, withholdings, tax credits and family circumstances — an estimate can be refined with our tax simulator.

Income from movable capital and capital gains are included in the savings base, which benefits from a separate tax-free allowance of €3,000 per year — not a separate allowance per account, bank or investment. The positive balance is in principle subject to the 10% rate, subject to specific exemptions.

Taxable interest is generally included in this base; a 10% withholding may be applied by the Andorran payer, with the possibility, under certain conditions, of applying the tax-free allowance to a specified account. Foreign dividends, on the other hand, don't automatically benefit from the exemption reserved for Andorran distributions: they're generally included in the savings base, and where the country of origin has already withheld tax, a double-taxation relief mechanism may apply — the deduction is equal to the lower of the tax actually paid abroad and the Andorran tax corresponding to that income.

Yes, for a resident individual, where the dividends are paid by an entity that is an Andorran tax resident subject to corporate tax, or by an Andorran collective investment scheme subject to that tax — this exemption avoids a second personal-level tax on the same profit after it has already been taxed at company level.

Simplified example — an Andorran company makes a taxable profit of €100,000: corporate tax at 10% = €10,000, profit available after tax = €90,000. Distributed to a resident individual, this dividend may be exempt from personal income tax where the statutory conditions are met — without taking into account, in this example, the director's remuneration, social security contributions, mandatory reserves, or the rules applicable to a holding company.

Salary compensates work actually carried out and falls within the general personal income tax base, along with social security contributions. Director's remuneration must be provided for, documented and consistent with the work actually performed. A dividend compensates the holding of capital: it's not deductible for the company and can only be distributed out of distributable profits. The choice between these three types of payment shouldn't aim solely at the lowest tax bill, but should also take into account the level of work actually done, social security cover, the company's cash position, and future investment needs — genuine professional remuneration should never be artificially replaced by dividends unconnected to the actual activity carried out.

The general corporate tax rate is 10%, applied to the tax base determined from the accounting result after statutory adjustments — never on turnover. Any expense must be linked to the activity, properly justified, recorded, and compliant with deductibility rules: a director's personal expenses don't become deductible simply because the company pays them. Services, loans, rent and royalties between related companies must be priced at arm's length and documented.

An SL or SLU and an SA or SAU are both subject to the same general 10% rate: the choice of legal form is therefore based on capital, the number of investors, and governance, not on a different tax rate. Certain transactions may benefit from special regimes, but never automatically — see our holding company in Andorra guide for intragroup shareholdings and dividends.

IGI, or Impost General Indirecte, is Andorra's tax on consumption. It applies, among other things, to the supply of goods, services provided by businesses or professionals, and imports.

An Andorran company invoicing a foreign client doesn't automatically apply 4.5% IGI: it's necessary to determine whether the client is a business or an individual, their country of establishment, where the service is deemed to take place, and whether an exemption or reverse charge applies — the tax treatment needs to be worked out activity by activity. Rentals used exclusively as a home benefit from a 0% rate, compared with generally 4.5% for commercial premises.

Non-resident income tax applies to certain individuals or companies that don't reside in Andorra but receive Andorran-source income. The general rate is 10% on the gross amount paid in many situations, with specific rates including 5% for certain royalties, 1.5% for reinsurance, and a 20% reduction of the gross base for certain rental income.

Dividends, interest and certain other Andorran-source investment income are currently exempt from non-resident income tax — the recipient's country of residence may nonetheless tax them. Remuneration paid to a non-resident director by an Andorran company is generally treated as Andorran-source income and may be taxed at 10% on the gross amount. A tax treaty may change the taxing right or the applicable rate.

Gains on shares — gains from selling shares, shareholdings, or certain investment funds may qualify for an exemption, in particular where the taxpayer, related parties, and certain family members together held no more than 25% of the capital, equity, profits or voting rights during the twelve months before the sale. Above that threshold, the gain may still be exempt if the shares were held for at least ten years. This rule doesn't apply uniformly to all financial assets: shares, investment funds, bonds, structured products and digital assets are treated differently.

Real estate gains — since the direct tax reform, gains on real estate are included within the direct taxes applicable to the seller (personal income tax, corporate tax or non-resident income tax). For an individual, the gain corresponds to the difference between the transfer value and the acquisition value increased by documented expenses, with coefficients that progressively reduce the taxable gain according to how long the property was held:

A special surcharge may apply when an Andorran property is sold before five years of ownership: 10% of the gain if held under two years, 5% between two and five years. A gain made by a resident on a property located abroad may be exempt from Andorran personal income tax after ten years of ownership, but the country where the property is located generally retains a taxing right.

The general ITP (property transfer tax) rate is 4%, split between 1% for the Government and 3% for the relevant Comú, subject to exemptions or IGI treatment depending on the nature of the transaction.

Since 16 February 2026, the foreign real estate investment tax is set at 6% for the first category of acquisition set out under the regulations, and 10% for acquisitions falling within the higher category — these rates replaced the previous 3% and 5% rates. Before any acquisition, it's therefore necessary to check the buyer's residency status, their status as a foreign investor, the number and type of properties involved, and any exemptions or reductions available.

For a resident individual, rental income is included in the general personal income tax base, subject to allowable expenses and any municipal taxes. Where property is held through a company, taxation and accounting obligations differ — see our asset-holding company in Andorra page.

Andorra's current national tax system doesn't include a general annual wealth tax comparable to the global wealth taxes found in some other countries. This doesn't mean wealth escapes taxation altogether: tax on income generated by assets, property taxes, ITP, the foreign real estate investment tax, capital gains tax, and foreign taxes on assets located outside Andorra may all still apply.

Assets and rights received through inheritance, bequest, gift or other gratuitous transfer fall outside the scope of personal income tax for the Andorran recipient — which doesn't mean a transfer has no tax consequences at all. In particular, the donor's or deceased's country of residence, the recipient's country of residence, where the assets are located, any capital gain for the donor, and applicable rules abroad all need to be considered. A gift of shares, a property, or a business asset should therefore be reviewed before it takes place, not afterwards.

Andorra has signed tax treaties with several states, including France, Spain, Luxembourg, the United Arab Emirates, Malta, Cyprus, Portugal, the Netherlands, and several other European and international states. A treaty determines which country can tax a given item of income, the maximum withholding rate applicable, the method for relieving double taxation, and the criteria used in the event of dual residency — it takes precedence over ordinary domestic tax rules within its scope, and accessing certain benefits requires providing a tax residency certificate.

Switzerland doesn't currently appear on the official list of general double taxation treaties in force published by the Andorran Government; information exchange between the two countries nonetheless exists under other frameworks.

Yes. Andorra has applied the OECD's Common Reporting Standard on the automatic exchange of financial account information since 2017, allowing certain information to be shared reciprocally between the tax authorities of participating jurisdictions. The protocol signed with the European Union in October 2025, which came into force in 2026, updates the agreement to reflect current international standards and extends its scope to certain digital assets, electronic money and emerging financial products.

Andorra should therefore not be presented as a jurisdiction built on a lack of transparency. A sustainable set-up relies on genuine tax residency, correctly declared income, a documented origin of funds, proper bookkeeping, and consistency between contracts, invoices and the activity actually carried out.

General rates alone aren't enough to decide on a move: your country of departure may continue to tax certain income, property, pensions, companies or capital gains. Our comparisons set out the main differences depending on where you're coming from.

Each comparison should start from your actual situation: country of residence, family, businesses, clients, assets and income.

No, setting up an Andorran company doesn't automatically shift its director's tax residency or the taxation of all their activities to the Principality. It's necessary to check where the director actually lives, where decisions are made, where the services are carried out, where employees are based, and whether the company has a permanent establishment abroad — a company managed entirely from another country may retain tax obligations there. The full process is set out in our company formation in Andorra guide.

A holding company can help centralise shareholdings and reinvest certain dividends or sale proceeds within a group, but it isn't an automatically tax-exempt solution: the percentage held, the holding period, each subsidiary's taxation, the applicable treaty, any withholding tax abroad, and whether the general or special regime is used all need to be analysed.

For an individual, a personal income tax return is generally required where the resident receives income from economic activities, at least €24,000 of gross income from employment or real estate, more than €3,000 of investment income that hasn't been subject to withholding, or taxable capital gains or losses. The general filing period runs from 1 April to 30 September of the year following the income concerned.

For a company, obligations include, among other things, keeping proper accounts, retaining supporting documents, filing annual accounts, tax returns, an IGI return where applicable, social security obligations, and keeping legal information up to date — even a company with little activity shouldn't be left unmonitored. Our accounting and management in Andorra service supports companies from the point of registration onward.

• treating the residence card as sufficient proof on its own — where you actually live, days of presence, family, and economic interests remain the deciding factors;
• applying the 0%, 5%, 10% formula to all income, when the €24,000 allowance applies to the general base and savings income is treated differently;
• treating all dividends as exempt, when foreign income needs to be looked at separately;
• calculating corporate tax based on turnover rather than taxable profit;
• ignoring the source country of the income — a property, a pension or a foreign activity may remain taxable in its country of origin;
• relying on a tax treaty without a residency certificate;
• setting up a company with no real activity, while management and operations are carried out from abroad;
• overlooking the 2026 property taxes when making a purchase;
• assuming a gift is automatically exempt everywhere, without checking the rules of the donor's country.