What is the tax burden in Andorra?


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Andorra stands out for its fiscal competitiveness and its tax system, which is comparable to that of other countries. Its economic stability, underpinned by a sound fiscal policy, makes it an attractive location for investors looking for new opportunities abroad. Much of the available information focuses on what taxes are paid and at what rate, but less attention has been paid to the way in which they are collected. In this article, we discuss the tax burden in Andorra, another important aspect of a country’s taxation.

Table of contents:

  1. The tax burden increased by 2.2 points in 2022
    Collection of personal income tax in Andorra
    Personal income tax in Andorra
    Your tax advisors in Andorra
    Aspects that will add value to your business

The tax burden increased by 2.2 points in 2022

The statistics office has published data on Andorra’s tax burden for the previous year.
The tax burden rose to 26.9%, compared to 24.7% at the end of 2021, an increase of 2.2 points. Total taxes increased by 23.5%, while GDP grew by 13.4%.
Revenue from taxes also increased by 8.4% in 2022, reaching 857.38 million euros. And economic activity, as reflected by the GDP, increased by 11.2% compared to the previous year, totalling 3,187.5 million euros.
Taxes on production and imports increased by 35.5%. Current taxes on income and wealth increased by 22.7%, and social contributions by 12.9%, compared to the previous year.
If you want to know more about taxes in Andorra, we tell you about them in this article.

Indirect taxes represent a greater burden

Indirect taxes continue to account for the largest share of the tax burden at 40.5%, an increase of 3.6 points compared to 2021. On the other hand, direct taxes account for 23.1% of Andorra’s tax burden, slightly less than in 2021. Finally, social contributions account for 36.5%, a decrease of 3.4 points.
These data relate to the tax burden in 2022 and, to complete them, we already have the data for personal income tax.

Collection of personal income tax in Andorra

In addition to the IGI, the value added tax on products (the VAT in Andorra) and corporate income tax, personal income tax (IRPF) stands out as one of the highest revenue-generating taxes. Following the end of the last income tax campaign on 2nd October, the Government has published the first data on the collection of this tax.

Revenues continue the upward trend of 2021

Revenue from personal income tax (IRPF) for the year 2022 reached 52 million euros. It is important to highlight that almost half of this amount resulted from the voluntary tax return campaign that ended on 2nd October. The rest of the revenue was obtained through withholdings made during the tax year. These results follow the same upward trend that could be observed in 2021, when collection reached 51.5 million euros. These figures are much higher than those recorded in 2020, when 37.2 million euros was collected.

The personal income tax return

22,037 tax returns were registered during this campaign. Of these, 11,044 resulted in the collection of approximately 27 million euros. 5,012 returns had a positive balance, allowing approximately 2 million euros to be refunded to taxpayers.. On the other hand, 5,981 returns resulted in a zero balance.
Regarding the method of submission, 18,638 returns were submitted online, while only 3,399 were submitted in person.
The income received came mainly from the withholding tax on earned income, which contributed a total of 14 million euros. Income from real estate capital generated 5 million euros. Finally, the fractional payment related to economic activities contributed 8.25 million euros. In total, tax payments amounted to 24.75 million euros.

Personal income tax in Andorra

The first thing you need to know is that in the Principality, tax is paid on annual income of €24,000 or more. Individuals whose fiscal residence is in Andorra are obliged to pay this tax. The income tax campaign starts in April and ends in October.

It is divided into three parts:

– Income, both earned income and income from economic activities, is exempt from income tax if it is less than €24,000.
– A rate of 5% applies to income between €24,000 and €40,000.
– And from €40,000, a rate of 10% applies.
In this article we will tell you more about income tax in Andorra.

Your tax advisors in Andorra

Our team is committed to helping you make the most of your investments. We offer tax advisory services to help you manage your money wisely from a tax perspective. Our team is dedicated to analysing and investigating business structures to optimise your tax situation, both nationally and internationally. In addition, we take care of all tax and fiscal paperwork and dealings with the Andorran Public Administration, both for individuals and for professional people and companies. One of our fundamental services is the management of tax returns in Andorra.

Aspects that will add value to your business

At Advantia Assessors, we not only fulfil your fiscal obligations, and those of your company in Andorra, but we also help you find significant deductions and savings.
Our services include business start-up studies, especially for new clients, as well as the evaluation and selection of, and application for, any subsidies, reductions or grants that may be available in relation to our clients’ activities. In addition, we constantly monitor business activities to ensure that they are taking advantage of the best tax strategies available under the law.

You can be confident that your investments will be managed in the most tax-efficient way. Please do not hesitate to contact us for more information!