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Andorra taxes cap personal income at 10% and corporate profit at 10%, with a 4.5% VAT and no wealth, inheritance, or gift tax. Tax residents pay on worldwide income at these low rates; non-residents pay a flat 10% on Andorran-source income only. Recent reforms added a 3% minimum corporate rate and a foreign property tax.

What Taxes Does Andorra Have in 2026?

Andorra runs a low, simple tax system rather than a zero-tax one. The headline rates are a 10% cap on personal income, a 10% corporate rate, and a 4.5% VAT, with no wealth, inheritance, or gift tax. That combination, inside a stable euro-denominated jurisdiction two hours from Barcelona and Toulouse, is the reason internationally mobile investors look at Andorra.

What changed recently is not the rates but the guardrails. Andorra has been steadily normalizing: a 3% minimum effective corporate tax from 2024, a new tax on foreign purchases of Andorran real estate from February 2024, and a tightening of passive residency in February 2026. The core low rates survived all of it. The table sets out the current position before we work through each tax.

Two features do most of the work in that table. The 10% ceiling on both personal and corporate income is unusually low for Europe, and the absence of wealth, inheritance, and gift taxes is rarer still. Everything else is detail layered on top of those two facts.

How Does Personal Income Tax Work in Andorra?

Personal income tax, the IRPF, is charged on a mild progressive scale that tops out at 10%. The first EUR 24,000 of income is tax-free, income from EUR 24,001 to EUR 40,000 is taxed at 5%, and everything above EUR 40,000 is taxed at 10%. There is no higher band; 10% is the ceiling.

Andorran tax residents are taxed on worldwide income at these rates, while non-residents pay the separate IRNR, a flat 10%, only on income earned in Andorra. Savings income, meaning interest and foreign dividends, is pooled and taxed at 10% after an annual exemption on the first EUR 3,000. Because the top rate is so low and the tax-free band so generous, the effective burden on most residents is well below the 10% headline. This is the single biggest pull factor for relocation, and it is why the Andorra residency question and the tax question are really one decision.

How Is Corporate Tax Structured?

Andorran corporate tax, the Impost de Societats, is a flat 10% on profits, among the lowest headline rates in Europe. The important 2026-relevant change is the floor: since January 1, 2024, Law 5/2023 set a 3% minimum effective rate, so deductions and reliefs can no longer take the effective charge below 3%.

Within that frame, targeted reliefs remain. Qualifying intellectual-property income can access a reduced effective rate, and Andorran collective investment vehicles can reach 0%. New companies historically received first-year and small-business reliefs, though these are applied within the minimum-rate rules. The structural advantage for owner-managers is the interaction with dividends: profit is taxed once at the company level at 10%, and distributions to resident shareholders are then exempt, so total tax on extracted business profit is capped at around 10%. Anyone setting up a company should read this alongside our Andorra company registration guide.

How Are Dividends and Savings Income Taxed?

Dividends from Andorran companies are the standout. When an Andorran company distributes profit to an Andorran tax resident, that dividend is exempt from personal income tax, because corporate tax has already been paid. The result is a clean 10% total on business profit with nothing further on extraction.

Other investment income falls under the savings regime. Interest and dividends from foreign companies are pooled and taxed at 10%, after the first EUR 3,000 of total savings income each year is exempted. Where foreign dividends have already suffered withholding tax abroad, Andorra's double taxation treaties or unilateral relief can reduce the Andorran charge, so the same income is not taxed twice. For internationally diversified investors this regime is efficient, though the absence of a treaty with a particular country can raise the effective cost on income from there.

Is There Capital Gains Tax in Andorra?

For most investment assets, effectively little or none. Gains on company shares are exempt where you own 25% or less of the company, and any holding becomes exempt after 10 years; holdings of five to ten years receive a 50% reduction. Larger, shorter-held stakes are taxed at 10%. There is no separate wealth or inheritance tax on top.

Real estate is the exception and is treated separately, which we cover next. The practical takeaway is that Andorra taxes long-term and minority portfolio gains very lightly, which suits buy-and-hold investors, while short-term trading of large stakes and property is where the tax actually bites. The old blanket description of Andorra as having no capital gains tax is an oversimplification; the accurate statement is that most securities gains are exempt while property and large short-term share sales are taxed.

How Is Property Taxed in Andorra?

Property is where Andorra recently added tax rather than removed it. There is no annual property tax, but buying and selling both trigger charges, and a 2024 reform layered a new tax on foreign buyers. The table sets out each event.

The key 2026 change is Law 3/2024, in force February 29, 2024, which added a foreign real-estate investment tax of 3% on a first home, 5% on a second, and up to 10% on portfolios and developments, designed to cool a hot housing market. A 90% rebate applies where the property is dedicated to long-term residential rental for at least 10 years. On the sale side, the old standalone plusvalua tax was derogated and gains folded into the income-tax system: a sale within two years carries 10% plus a 5% speculative surcharge, dropping to 10% after two years and declining toward 0% with long holding. Buyers using property as their residency investment should model these alongside the thresholds in our residency guide.

What Is the VAT (IGI) in Andorra?

Andorra's VAT, the IGI, has a standard rate of 4.5%, the lowest standard VAT in Europe and roughly a quarter of the rates in neighboring Spain and France. Andorra sits in a customs union with the EU but is outside the EU VAT area, so it sets its own rates.

Several reduced rates apply by category: 0% on healthcare, education, and certain social services, 1% on food, books, and magazines, and 2.5% on public transport and cultural services. An increased 9.5% rate applies to banking and financial services. For residents and businesses, the low IGI is a meaningful part of Andorra's cost advantage, feeding directly into lower prices on goods and services and helping explain why the cost of living undercuts its larger neighbors despite Alpine geography.

How Are Residents and Non-Residents Taxed Differently?

The line between resident and non-resident is the most important distinction in the whole system. Andorran tax residents are taxed on worldwide income under the IRPF, capped at 10%. Non-residents pay the IRNR, a flat 10%, only on Andorran-source income such as local salaries, rents, or business income.

You become a tax resident by spending more than 183 days a year in Andorra, or by having your center of economic interest or your immediate family there. This is why holding an Andorran residence permit is not the same as being an Andorran tax resident. A passive resident who spends only 90 days in Andorra and the rest of the year in Spain or France usually remains a tax resident of that other country under its own rules. Capturing Andorra's low rates requires genuinely shifting tax residency, not merely holding a card, and it needs analysis in both countries before you rely on it.

Does Andorra Have Tax Treaties and Information Exchange?

Yes to both, and this is central to Andorra's modern reputation. Andorra has around 21 double taxation treaties as of 2026, including with Spain, France, Portugal, Luxembourg, Liechtenstein, Malta, Cyprus, the UAE, the Netherlands, and the United Kingdom, with more under negotiation. These treaties allocate taxing rights and prevent double taxation on cross-border income.

On transparency, Andorra exchanges financial account information automatically under the OECD Common Reporting Standard, active since 2018, and is not on the EU or OECD lists of non-cooperative jurisdictions. It reports by tax residence, not nationality. This matters for two reasons: it means Andorra is a credible, whitelisted base rather than a flagged one, and it means anyone expecting secrecy will be disappointed. The low rates are real; the opacity is gone. How banking fits this picture is covered in our Andorra banks guide.

What Are the Common Mistakes to Avoid?

Most Andorran tax errors come from treating the headline rate as automatic or from relying on pre-reform guides. These are the ones we see most.

• Assuming a residence permit equals tax residency. You must actually meet the 183-day or center-of-interest test.
• Relying on a 90-day passive stay for tax relief. That usually leaves you tax resident elsewhere.
• Believing Andorra has no capital gains tax at all. Property and large short-term share gains are taxed.
• Overlooking the 3% minimum corporate rate introduced in 2024.
• Ignoring the foreign real-estate investment tax of 3% to 10% on property purchases since 2024.
• Expecting banking secrecy. Andorra reports under the CRS to more than 100 jurisdictions.
• For US citizens, assuming relocation ends US tax filing. It does not.

Sergey Voinich, Founder and Managing Partner at Â鶹ԭ´´, notes: "People fixate on the 10% headline and forget it only applies once you are genuinely an Andorran tax resident. The rate is real and excellent, but the value is in structuring the move correctly, not in the number itself. The clients who get it wrong are the ones who counted the tax saving before they had actually shifted their residency."

Frequently Asked Questions

What Is the Income Tax Rate in Andorra?

Andorra's personal income tax (IRPF) is capped at 10%. The first EUR 24,000 is taxed at 0%, income from EUR 24,001 to EUR 40,000 at 5%, and income above EUR 40,000 at 10%. Non-residents pay a flat 10% (IRNR) on Andorran-source income only. Residents are taxed on worldwide income at these low rates.

Does Andorra Have Wealth or Inheritance Tax?

No. Andorra levies no wealth tax, no inheritance tax, and no gift tax. Combined with the broad exemption for most long-held and minority securities gains, this means estates and portfolios can pass without Andorran taxation. This absence of capital and estate taxes is a primary reason high-net-worth individuals consider Andorran residency.

What Is the Corporate Tax Rate in Andorra?

Corporate tax (Impost de Societats) is a flat 10%, among Europe's lowest. Since January 1, 2024, Law 5/2023 set a 3% minimum effective rate, so reliefs cannot reduce the effective charge below 3%. Dividends distributed to Andorran resident shareholders are then exempt, capping total tax on business profit at about 10%.

Is There VAT in Andorra?

Yes. Andorra's VAT, the IGI, has a standard rate of 4.5%, the lowest in Europe. Reduced rates apply: 0% on healthcare and education, 1% on food and books, 2.5% on transport and cultural services, and 9.5% on banking. Andorra is in a customs union with the EU but outside the EU VAT area, so it sets its own rates.

When Do You Become a Tax Resident of Andorra?

You become an Andorran tax resident by spending more than 183 days a year in the country, or by having your center of economic interest or immediate family there. A residence permit alone does not create tax residency. A passive resident spending only 90 days a year usually remains a tax resident of their other country under its rules.

Is Andorra a Tax Haven?

Andorra is a low-tax jurisdiction, not a secrecy haven. It exchanges account information automatically under the CRS since 2018, has around 21 double taxation treaties, and is not on the EU or OECD blacklists. It offers low rates within a transparent, cooperative framework, which is the opposite of the opacity that defines a classic tax haven.

How Â鶹ԭ´´ Helps

Â鶹ԭ´´ advisors help clients understand how Andorra's tax regime interacts with residency and structure, so the decision rests on facts rather than the headline rate. We map which residency route actually delivers Andorran tax residency, how presence requirements affect it, and how company formation and banking fit around it. We are a global mobility advisory, not a tax firm, so where detailed tax computations or filings are needed we work alongside qualified local tax professionals, keeping our role on the residency and structuring side where it belongs.