Andorra’s tax system is relatively straightforward, though the details depend on your circumstances.
Something that, in my opinion, makes living in Andorra even more appealing. I like simplicity and clarity, especially when it comes to financial topics.
Of course, tax is rarely a simple topic, but I’ll do my best to offer a high level synopsis of Andorra’s tax system. Bearing in mind that I’m not a professional, this is purely based on my own experience as a long-term resident of the principality.
Personal Income Tax (IRPF)
IRPF generally taxes an Andorran tax resident’s worldwide income, but different categories have different allowances and exemptions. It is not accurate to treat salary, interest, dividends and every capital gain as one identical calculation.
The general rate is 10%. For qualifying general income, the €24,000 personal allowance and the relief on the next band can produce a 5% equivalent rate between €24,000 and €40,000. These are bands, not a 10% charge on your entire salary as soon as it crosses €40,000.
The spouse-related allowance can increase in specified circumstances, including where the spouse has no income. It is not a blanket joint €40,000 exemption for all married couples. Savings income has a separate €3,000 allowance; dividends and gains can have specific exemptions.
Use the official rates and allowances for your income mix. Foreign tax credits and treaty relief are conditional, not an automatic promise that income taxed abroad can be ignored.
Non-Resident Income Tax (IRNR)
Non-resident tax applies to relevant Andorran-source income where the recipient is not an Andorran tax resident. The general rate is 10%, but source rules, exemptions, special rates and treaties can change the result.
Tax residence is not decided solely by whether you spend fewer than 183 days here. Economic interests and other criteria matter. The tax department explains the residence tests.
Corporate Tax (IS)
The general corporate income-tax rate is 10%, with specific adjustments, reliefs and additional rules depending on the income and transaction. A headline rate is not a complete calculation of a company’s liability.
Any startup concession depends on the company meeting the statutory conditions. Use the general 10% rate for an initial comparison and ask for a current calculation before assuming a reduced first-years rate applies.
Since 2015, Andorra has entered into double taxation agreements with several countries including France, Malta, Portugal and Spain. These agreements play an important role in attracting foreign investors to the country.
By preventing the same income from being taxed twice in different countries, the country remains competitive from a global perspective.
Capital Gains Tax
Start with the asset and the taxpayer: a person selling shares, a resident selling an Andorran property and a company making a disposal do not necessarily use the same rules. The old stand-alone property-gains tax was integrated into the income and corporate-tax framework; the 2025 amendments also changed speculative-property surcharges.
CGT on Shares
For a resident individual, the IRPF law provides an exemption for qualifying securities disposals where the relevant holding, including connected-person rules, did not exceed 25% during the preceding 12 months. A separate exemption can apply to larger holdings owned for at least ten years. These conditions should not be simplified to “own less than 25% and all gains are always tax-free”.
Check the instrument, ownership history and any property-rich-company rules in the current IRPF text. Company disposals have their own rules.
CGT on Property
For an ordinary resident-individual disposal, the general IRPF rate is 10%, with a speculative-gain surcharge of 10% where the holding period is below two years, or 5% from two to below five years. That can mean 20% or 15% before considering applicable adjustments; it is not the old annually falling stand-alone tax table.
The current law also includes holding-period adjustments for relevant property gains after more than six years, and exclusion from the taxable base after more than ten years. Main-home reinvestment relief has conditions; it is not a general six-month exemption for every replacement purchase.
Have a proposed transaction checked before signing. Acquisition dates, taxpayer status, calculation rules, withholding and reliefs matter. Sources: 2025 amending law, article 79 and current IRPF, article 27 bis and additional provision nine.
Value Added Tax (IGI)
You will also need to pay value-added tax (VAT) on goods and services. In Andorra, this tax is called ‘IGI‘, and replaces general sales tax on goods.
Unlike much of the Americas, IGI is included in advertised prices, so there are no last minute surprises when making a purchase.
Andorra’s IGI general rate is 4.5%. Other rates are 0%, 1%, 2.5% and 9.5%, with the classification determined by the actual supply; the increased rate applies to specified banking and financial services. Official rate summary.
- Banking and financial services: 9.5%
- Transportation, artistic and cultural services: 2.5%
- Food, drink (non-alcoholic), livestock, agricultural goods and most printed media: 1%
- Most healthcare, medicine, education, stamps and precious metals: 0%
Local Taxes Levied by Parishes
Additionally, individuals and corporations may be subject to communal taxes or fees levied by the town or parish in which they are based. These include:
- ‘Foc i lloc‘ payable by resident individuals between the ages of 18 and 65
- Tax on real estate transfers
- Annual property tax
- Tax on rental income
- Tax on construction
Lastly, there is the filing or location tax of commercial, business and professional activities, which varies according to where the company is registered and the nature of the activity.
It’s worth noting that the communes are autonomous, which means taxes and fees vary within the country.
Property Acquisition Tax
An ordinary taxable property transfer normally carries ITP of 4%, made up of 1% national and 3% communal tax. Some transactions fall under IGI instead, and exemptions have conditions. Official ITP explanation. Ask the notary which regime applies before adding the two together.
Foreign-investment property tax is a separate question. The 2026 changes provide 6% for a first property and 10% for a second where the tax applies, with legal conditions and exemptions. Do not assume that simply having a residence card removes it. Government explanation of the 2026 changes.
Tax Exemptions
Inherited or gifted assets received by an individual are outside IRPF under the relevant rules, but a transfer can have separate consequences for the person giving it, for property taxes, or in another country. It is too broad to say every gift between residents is tax-free.
Scholarships, specified benefits and qualifying prizes have statutory conditions. The €3,000 savings allowance is a separate rule, not an exemption for every type of investment income. See articles 4–5 and 37 of the current IRPF text.
Is Andorra a Tax Haven?
“Tax haven” has no single worldwide definition. Andorra operates income taxes and international information-exchange arrangements, but the applicable list, treaty or anti-avoidance rule depends on the country asking the question. Check your home jurisdiction’s current treatment rather than relying on a promise that Andorra is on no blacklist anywhere.
However, in a colloquial sense, many people still refer to the country that way. If you consider Andorra to be a tax haven, then countries like Singapore are as well.
The lower tax rates, coupled with the potential to reduce them even further, make Andorra an extremely tax-friendly home base. It’s no surprise that many entrepreneurs consider it the best place to live.
Summing Up Andorra’s Tax System
The still relatively unknown principality has some distinct advantages when it comes to tax. If nothing else, it’s extremely easy to estimate what you will owe the taxman in Andorra.
While you are expected to pay tax on a number of things, such as income, capital gains, consumption and so on, in a lot of cases it’s possible to reduce taxes owed.
That being said, it’s up to you to make sure your tax affairs are in order. Andorra might be fair in the amount of tax it levies but, like most other countries, reporting and filing is still your responsibility.