Taxation in Andorra: the complete 2025 guide

Taxation in Andorra: the complete 2025 guide

Andorra is today one of the most attractive jurisdictions in Europe in terms of taxation. Nestled in the heart of the Pyrenees between France and Spain, the Principality has built a modern, transparent and extremely competitive tax framework. Whether you are an entrepreneur, investor, liberal professional or affluent retiree, understanding Andorran taxation is the first step towards successful wealth optimisation. This comprehensive guide presents the entire Andorran tax system in force in 2025.

Personal income tax (IRPF)

Andorra applies one of the lowest personal income tax rates in Europe. The scale is progressive but capped at a maximum rate of 10%, which contrasts sharply with French marginal rates that can reach 45% (or even 49% including the exceptional contribution on high incomes).

The Andorran IRPF scale is structured as follows: the first 24,000 euros of annual income are entirely tax-exempt. The band between 24,001 and 40,000 euros is taxed at 5%. Above 40,000 euros, the marginal rate is 10%. In practice, a taxpayer earning 100,000 euros annually would pay approximately 6,800 euros in tax in Andorra, compared with over 30,000 euros in France for a comparable situation.

This tax structure is particularly advantageous for senior executives, company directors, international consultants and liberal professionals whose income falls between 100,000 and 500,000 euros per annum. The tax savings can amount to several tens of thousands of euros each year.

Corporate tax (IS)

Corporate tax in Andorra is set at a flat rate of 10%. This rate applies to all companies, whether they are Limited Companies (SL) or Public Limited Companies (SA). There is no social solidarity contribution or additional surcharge such as those found in France, where the effective corporate tax rate can reach 25% or even 33% for large enterprises.

Furthermore, Andorra offers special regimes for certain activities. Holding companies benefit from a near-total exemption on dividends received from foreign subsidiaries, subject to certain conditions regarding participation thresholds and holding periods. Companies operating in international trade may also benefit from a reduced tax regime with an effective rate that can fall to 2% in certain cases.

Newly created companies benefit from simplified tax guidance. At Aurea Gestoria Group, we coordinate the legal and tax structuring of your company with our local experts to optimise your situation from the outset.

No wealth tax

One of Andorra's major assets is the complete absence of any wealth tax. Where France imposes a Real Estate Wealth Tax (IFI) on net real estate assets exceeding 1.3 million euros, Andorra does not tax the holding of assets in any way, whether movable or immovable.

For high-net-worth individuals, this absence of wealth tax represents a considerable saving. Net real estate assets of 5 million euros would generate approximately 25,000 euros per year in IFI in France. In Andorra, this amount is nil. Over ten years, the cumulative saving easily reaches 250,000 euros, without even accounting for the effects of capitalisation.

No inheritance or gift tax

Andorra levies no inheritance tax and no gift tax whatsoever. This feature is absolutely decisive for intergenerational wealth planning. In France, inheritance tax in direct line can reach 45% on amounts exceeding 1,805,677 euros transmitted per parent. For collateral relatives or unrelated persons, rates can climb to 60%.

In concrete terms, an estate of 10 million euros passed to two children would generate approximately 3.5 million euros in inheritance tax in France. In Andorra, this transfer is carried out without any taxation. This colossal difference explains why many wealthy families choose Andorra as their place of tax residence to organise the transmission of their estate.

The General Indirect Tax (IGI): Andorra's VAT

Andorra applies a general indirect tax (IGI) equivalent to VAT, but at a standard rate of just 4.5%. This is the lowest rate in Europe, well ahead of Luxembourg (17%), Switzerland (8.1%) and France (20%). Reduced rates also exist: 1% for basic foodstuffs and books, 2.5% for transport and certain cultural services, and 0% for health and education services.

This low IGI rate translates into greater day-to-day purchasing power. On a purchase of 50,000 euros (furniture, vehicle, equipment), the saving compared with French VAT at 20% amounts to 7,750 euros. This is a tangible advantage that is immediately felt in daily life.

Capital gains taxation

Capital gains on both property and investments are subject to a favourable tax regime in Andorra. Property capital gains are taxed on a degressive scale based on the length of ownership: 15% if the property is resold within the year following acquisition, then the rate decreases progressively to reach 0% after 12 years of ownership.

Investment capital gains (shares, bonds, investment funds) are incorporated into taxable income and therefore subject to the IRPF scale, with a maximum rate of 10%. By comparison, France applies a flat-rate withholding tax (PFU) of 30% on investment capital gains, or the progressive income tax scale plus social levies of 17.2%.

Dividend taxation

Dividends received by Andorran tax residents benefit from favourable treatment. Dividends paid by an Andorran company to an individual shareholder who is resident are subject to IRPF at a maximum rate of 10%. When an Andorran holding company receives dividends from foreign subsidiaries in which it holds at least 5% of the share capital for more than one year, these dividends may benefit from a 100% exemption under the participation exemption regime.

This mechanism is particularly interesting for entrepreneurs and investors holding stakes in several companies across Europe. Andorra thus becomes an extremely tax-efficient hub for wealth holding.

Crypto-asset taxation

Andorra has adopted a pragmatic and favourable approach to the taxation of cryptocurrencies and digital assets. Gains realised on the disposal of crypto-assets are treated as investment capital gains and incorporated into taxable income at a maximum rate of 10%. No specific tax on crypto-assets has been introduced.

By comparison, France applies the PFU of 30% on crypto-asset disposal gains (or the progressive scale with social levies). For investors who have made significant gains in the crypto market, the difference in taxation between France and Andorra is considerable. A gain of 500,000 euros on crypto-assets would generate approximately 150,000 euros in tax in France, compared with approximately 47,200 euros in Andorra.

International tax treaties

Andorra has considerably expanded its network of tax treaties over the past decade, strengthening its international credibility and providing enhanced legal certainty for residents.

The treaty with France, which entered into force in 2015, is particularly important for French expatriates. It provides mechanisms for the elimination of double taxation, clearly defines the criteria for tax residence and governs the taxation of different categories of income (salaries, dividends, interest, royalties, capital gains). It also includes an information exchange clause in accordance with OECD standards.

The treaty with Spain, also in force, is essential for Andorran residents with activities or assets in Spain. It covers the same aspects as the Franco-Andorran treaty and enables effective tax planning for cross-border flows.

Andorra has also signed tax treaties with Portugal, as well as with numerous other countries (Luxembourg, Liechtenstein, United Arab Emirates, among others). This growing treaty network reinforces the Principality's attractiveness as a place of residence for international profiles.

Tax comparison: Andorra vs France

To illustrate the differences concretely, let us take the example of an entrepreneur generating 300,000 euros in annual profits through their company, paying themselves 150,000 euros in remuneration and 100,000 euros in dividends.

In France, corporate tax on the 300,000 euros of profits would amount to approximately 72,500 euros. Income tax on the 150,000 euros of remuneration would reach approximately 45,000 euros (including social levies). The 100,000 euros in dividends would be subject to the PFU of 30%, i.e. 30,000 euros. The overall tax burden thus approaches 147,500 euros.

In Andorra, corporate tax on 300,000 euros of profits amounts to 30,000 euros. IRPF on 150,000 euros of remuneration is approximately 12,800 euros. Dividends of 100,000 euros are taxed at a maximum of 10%, i.e. approximately 7,600 euros. The overall tax burden is approximately 50,400 euros.

The annual saving therefore amounts to approximately 97,100 euros, representing a reduction of nearly 66% in the total tax burden. Over a ten-year period, this represents cumulative savings of nearly one million euros.

Social security contributions (CASS)

The Andorran social security system (CASS - Caixa Andorrana de Seguretat Social) is also more advantageous than the French system. Employer contributions amount to 15.5% of gross salary and employee contributions to 6.5%, giving a total of 22%. In France, total social security contributions (employer and employee) regularly exceed 60% of gross salary.

For self-employed workers in Andorra, contributions are calculated on a flat-rate basis, making them particularly predictable and moderate. The CASS system provides quality healthcare coverage with 75% reimbursement of medical expenses (supplemented by private insurance to reach 100%).

Filing obligations

Tax compliance in Andorra is relatively straightforward. The annual IRPF return must be filed by 30 September of the following year. The corporate tax return is due within six months of the end of the financial year. IGI returns are filed quarterly for businesses.

However, it is essential to scrupulously observe filing obligations, both in Andorra and in the country of origin. Exit taxes and obligations to declare foreign accounts must be anticipated and managed rigorously. Aurea Gestoria Group coordinates French and Andorran tax advisers for its clients to ensure a seamless fiscal transition in full compliance with the regulations of both countries.

Conditions for benefiting from Andorran taxation

To take full advantage of the Andorran tax framework, it is necessary to obtain tax residence in the Principality. This requires meeting the following criteria: physically residing in Andorra for more than 183 days per year (for active residence) or at least 90 days per year (for passive residence), having accommodation in Andorra (owned or rented), and not being considered tax resident in another country.

Andorran tax residence is obtained alongside administrative residence. It is crucial to plan the transition carefully to avoid any situation of dual tax residence. Bilateral treaties provide tie-breaker rules in the event of conflict, but advance planning is always preferable.

Outlook for the tax framework

Andorra continues its process of international integration whilst preserving its tax competitiveness. Negotiations for an association agreement with the European Union are ongoing and could influence certain aspects of the tax framework in the medium term. Nevertheless, the Andorran government has clearly expressed its intention to maintain an attractive tax environment.

The Principality also continues to develop its network of tax treaties and to comply with international transparency standards (automatic exchange of information, register of beneficial owners). This compliance reinforces Andorra's credibility and secures the tax residence choices of its inhabitants.

Conclusion

Andorran taxation offers an exceptionally favourable framework for individuals and businesses alike. With income tax capped at 10%, corporate tax at 10%, no wealth tax or inheritance tax, IGI at 4.5% and advantageous taxation on capital gains and dividends, Andorra positions itself as one of the most attractive destinations in Europe for lawful tax optimisation.

However, settling in Andorra cannot be improvised. Cross-border tax planning, management of exit taxes, compliance with filing obligations in both countries and wealth structuring all require expert guidance. Aurea Gestoria Group places at your disposal its network of Andorran and French tax specialists to orchestrate your transition with complete peace of mind.

The information provided is for guidance purposes only. Contact Aurea for personalised support.