The evolution of Andorra’s activities and economic structure has meant that the tax system has had to develop in parallel. The most significant change has been the shift from a tax system based almost entirely on indirect fees to the implementation of direct taxes.
The advantage? This direct taxation is homologous with other countries around the world.
Which entities collect tax in Andorra?
In Andorra, taxes are collected through the comús (local councils) and the government.
The comús are responsible for fulfilling the collection of taxes related to:
- Foc i lloc (fire and location)
- Rental income
- The establishment of commercial, business and professional activities
- Charges related to construction
Meanwhile, the Andorran Government is responsible for collecting the following taxes:
- Personal income tax (IRPF)
- Income tax for non-fiscal residents
- Corporation tax
- General Indirect Tax (IGI)
- Tax on capital gains from property transfers
- Tax on vehicle ownership
- Trademark Office fees
- Fees for registering as the owner of economic activities
- Court fees
- Fees for bingo play
These are the taxes that currently (2020) comprise the fiscal framework of Andorra and make it homologous with the other countries of the European Union and OECD.
Less tax burden; comparable conditions
Despite this, the taxes levied in Andorra are considerably lower than those in neighbouring countries, making our principality a highly attractive option for investment.
These tax advantages are especially interesting for technology, health and welfare, education, sport and tourism companies as well as those involved in international trade. The characteristics of these types of businesses make Andorra a fiscally desirable country that enables them to benefit from a lower tax burden on the closing of their annual accounts.