Key Takeaways
- Personal income tax caps at 10%: 0% to €24,000, 5% to €40,000, 10% above.
- Corporate tax is a flat 10% with a 3% minimum effective rate.
- IGI (VAT) is 4.5% — the lowest in Europe.
- No wealth tax, no inheritance tax, no gift tax; Andorran-company dividends are tax-free to residents.
- Residency alone is not tax residency — you need 183+ days or your centre of vital interests in Andorra.
Andorra caps personal income tax at 10% (0% up to €24,000, 5% to €40,000, 10% above), corporate tax at 10%, and charges 4.5% IGI — Europe’s lowest VAT. There is no wealth tax, no inheritance or gift tax, and dividends from Andorran companies are tax-free to residents. It is a genuinely low-tax country, but not a zero-tax one, and residency alone does not make you tax resident.
The headline rates
| Tax | Rate | Notes |
|---|---|---|
| Personal income tax (IRPF) | 0% / 5% / 10% | 0% to €24,000; 5% from €24,000–40,000; 10% above €40,000 |
| Corporate tax (IS) | 10% | 3% minimum effective rate since 2024 (Law 5/2023) |
| IGI (VAT) | 4.5% | Reduced: 1% food/books, 0% health & education, 2.5% transport/culture |
| Dividends from Andorran companies | 0% | Fully exempt for Andorran tax residents |
| Savings income (foreign dividends, interest) | 10% | First €3,000 per year exempt |
| Wealth tax | 0% | Does not exist |
| Inheritance & gift tax | 0% | Does not exist |
Personal income tax, in practice
The 10% figure everyone quotes is a ceiling, not a flat rate. The first €24,000 of income is untaxed, the band from €24,000 to €40,000 is taxed at 5%, and only income above €40,000 is taxed at the full 10%. Someone earning €100,000 pays roughly €6,800 — an effective rate under 7%.
For a business owner, the combination that matters is this: your company pays 10% on its profits, and dividends it distributes to you as an Andorran resident are then tax-free. Total tax on business profit taken as dividends is capped at 10%. That is the core of why entrepreneurs and creators relocate here.
How business profit is really taxed
Corporate tax is a flat 10%, with a 3% minimum effective rate introduced in 2024 to stop aggressive deductions taking the bill to zero. An Andorran company invoicing international clients pays this 10%, files annual accounts, and must have genuine substance — a real office, real activity, a director who lives in Andorra. Shell structures do not work.
Capital gains
On shares and securities
Capital gains on shares are tax-free if you hold less than 25% of the company, or if you hold any stake for more than 10 years. Holdings of 5–10 years get a 50% reduction. Larger, shorter-held stakes are taxed at 10%.
On property
Property gains are folded into the income tax framework. For an individual selling within 2 years of purchase, the gain is taxed at 10% plus a 5% speculative surcharge (15% total). Between 2 and 5 years it is 10%. After 5 years, reduction coefficients shrink the taxable gain progressively toward zero.
IGI: Europe’s lowest consumption tax
IGI (Impost General Indirecte) is Andorra’s VAT, at a standard 4.5% — against 21% in Spain and 20% in France. Food, books and periodicals are at 1%; healthcare and education at 0%; public transport and cultural services at 2.5%. It is the reason day-to-day shopping in Andorra is noticeably cheaper than across either border.
The taxes that do not exist
Andorra has no wealth tax, no inheritance tax and no gift tax. For someone relocating a portfolio or planning succession, this is often worth more than the income-tax rate. There is a municipal property tax levied by each parish (comú), but it is modest — typically a few hundred euros a year.
Is Andorra a tax haven?
Not in the technical sense. Andorra signed up to automatic exchange of financial account information (CRS), has double-taxation treaties with Spain, France, Portugal, Luxembourg and others, removed banking secrecy, and levies real (if low) taxes with filing obligations. It is on no EU blacklist. It is a low-tax jurisdiction with substance requirements — which is exactly why it works for people who actually move there and why it does not work for people who want a flag of convenience.
The catch: residency is not tax residency
Holding an Andorran residence permit does not make you an Andorran tax resident. You are tax resident when you spend more than 183 days a year in Andorra, or your centre of vital interests is there. A passive resident who spends 90 days in Andorra and keeps their home and business abroad will usually still be taxed abroad — and may face an exit tax on leaving. Getting the tax benefit means genuinely moving your life.
Frequently asked questions
What is the income tax rate in Andorra?
A maximum of 10%. Income up to €24,000 is untaxed, €24,000–40,000 is taxed at 5%, and income above €40,000 at 10%.
Does Andorra have capital gains tax?
On shares, gains are exempt if you hold under 25% of the company or hold any stake for more than 10 years; otherwise 10%. On property, rates run from 15% for a sale within 2 years down toward 0% after long ownership.
Is there wealth or inheritance tax in Andorra?
No. Andorra has no wealth tax, no inheritance tax and no gift tax.
How much is VAT in Andorra?
The standard IGI rate is 4.5%, the lowest in Europe, with reduced rates of 0%, 1% and 2.5% for essentials, food, transport and culture.
Is Andorra on any tax blacklist?
No. Andorra exchanges financial information automatically under CRS, has a network of double-taxation treaties, and is not on the EU list of non-cooperative jurisdictions.
Last reviewed: 3 September 2026. General information, not tax advice; rates and thresholds change and this page may become out of date. Confirm your position with a licensed Andorran tax advisor. Speak to our team.
