Evolution of Andorra’s tax framework

Reading time: 6 minutes

🏁 Introduction

Over the last two decades, Andorra’s tax framework has undergone a profound transformation. From a closed and lightly regulated economy, the Principality has evolved into a modern, transparent and cooperative jurisdiction aligned with international standards.
This gradual and strategic process has turned Andorra into a fully compliant, competitive and reliable destination, capable of attracting investment and talent with full legal certainty.

🏦 1. From traditional banking to economic openness

For many years, Andorra’s economy relied mainly on the financial sector and tourism. The absence of direct taxes and strong banking secrecy were distinctive features of the country.
However, the global context — especially after the 2008 financial crisis and OECD reforms — encouraged Andorra to open its economy and tax system towards transparency and competitiveness.

🌱⚖️ 2. Birth of the modern tax system

The most significant transformation came with the introduction of direct taxation:

• Corporate Income Tax (Law 95/2010).
• Personal Income Tax (Law 5/2014).
• General Indirect Tax (IGI), introduced in 2013, replacing the former sales tax.

These reforms provided Andorra with a tax structure comparable to that of its European neighbours, maintaining low rates — capped at 10% — and a clear focus on attracting legitimate investment.

➤ To better understand how the Andorran tax system is structured and which taxes apply to residents and companies, you can read Taxation in Andorra: advantages and obligations, where we explain in detail the tax rates, the double-taxation treaties, and the key principles of Andorra’s fiscal framework.

🌍 3. International agreements and transparency

Andorra has signed tax information exchange agreements and double taxation treaties with numerous countries, including Spain, France, Portugal, Luxembourg, the UAE, the United Kingdom, South Korea and Lithuania.
It also adopted the OECD’s Common Reporting Standard (CRS) and joined the Global Forum on Transparency and Exchange of Information for Tax Purposes.
The result is a legal environment where transparency and international cooperation coexist with low, stable and predictable taxation.

➤ To understand in detail how international agreements prevent double taxation on the same income, you can read Double taxation treaties (CDI) in Andorra, where we explain which countries have signed them, their benefits for residents and businesses, and how they are applied in practice.

🧱 4. Consolidation of an attractive and legitimate model

Today, Andorra is no longer seen as a tax haven but as a competitive, internationally recognised country.
Its model combines low taxation with high standards of compliance and institutional stability.
For international entrepreneurs and professionals, this means developing projects in a secure, transparent and efficient jurisdiction.

Conclusion

The evolution of Andorra’s tax system reflects an intelligent transition: from secrecy to modernity, from opacity to cooperation.

The country has adapted without losing competitiveness, offering a balanced environment between legal security, fair taxation and quality of life.

Andorra demonstrates that openness and excellence can coexist with economic efficiency.