Taxation in Andorra: a practical guide to taxes, obligations and real risks

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Understanding Andorran taxation before making decisions

Andorra has an apparently simple tax system (low rates and few taxes compared to other countries), which is one of the country’s main attractions. Nevertheless, its evolution over the years, the introduction of new tax figures, the way these have been implemented, and Andorra’s relationships with foreign institutions have resulted in a complete and mature tax system, comparable to that of other countries in its environment.

This guide aims to bring clarity and explain the Andorran tax landscape, outlining the main impacts depending on the profile involved (resident, non-resident, company, real-estate investor, digital entrepreneur, etc.).

The essential map: how Andorran taxation is structured

To understand Andorra without getting lost, it is useful to divide the system into the following thematic blocks:

• Direct taxation (individuals and companies).
• Indirect taxation (consumption and invoicing).
• International taxation (tax residence, DTCs, transparency and OECD criteria).

In addition, two major investment-related blocks deserve specific attention:

• Real-estate taxation (buying, owning, renting and selling).
• Financial taxation (investment in financial products).

If you are looking for a quick overview of the system and applicable rates, as an entry point you can consult Taxation in Andorra: structure, tax rates and real advantages

Evolution of the Andorran tax framework

Talking about Andorran taxation means talking about evolution. Until 2012, Andorra had an almost complete absence of taxes, which led many countries to consider it a tax haven for years.

If you want to understand how Andorran taxation has evolved, we recommend reading Evolution of the Andorran tax framework

Andorra: is it a tax haven?

No. Andorra has not been considered a tax haven for a long time, although in practice some countries still perceive it as such, either due to the absence of certain DTCs — explained later — or because of its low level of taxation.

If you want to explore this issue further, we recommend Tax haven in Andorra: myth, reality and what current taxation actually says

Direct taxation: when you are taxed on what you earn (individuals and companies)

Direct taxes are those that tax income or profits obtained. Although calculation methods, rates and tax points differ depending on who earns the income (individuals, legal entities or non-residents), the underlying principle of taxation remains the same.

🔹 Individuals: IRPF and capital gains

The key point is not only the maximum rate, but also what is considered taxable income, what is exempt, and how capital gains are treated (sales, investments, crypto-assets, etc.).

To go straight to the core, you can consult: Personal Income Tax (IRPF) in Andorra

Who is subject to IRPF?

To be subject to IRPF, one must qualify as a tax resident. In this respect, it is important to note that there is no “de facto” tax residence without an administrative basis and a defensible personal and economic reality.

To deepen your understanding of tax residence, we recommend Tax residence in Andorra: requirements and real advantages

Administrative resident vs tax resident

It is common to confuse obtaining a residence permit with being a tax resident. The article Administrative residence and tax residence in Andorra: essential differences clearly explains the distinction between the two concepts.

Transfers of residence

When a taxpayer resident in another country decides to transfer their residence, a number of elements must be carefully analysed. In particular, for those relocating from Spain, we recommend Transferring your tax residency to Andorra: the technical elements that truly matter

Likewise, the article Relocating your tax residence from any country (UK, Germany, Belgium, etc.) to Andorra: how to do it properly and without risks
details the specific elements that must be taken into account.

If you are looking for practical information on how to obtain residence in Andorra, the reference article is .

Living in Andorra: the essential guide to obtaining residence and settling safely

🔹 Companies: Corporate Income Tax and corporate tax residence criteria

Corporate Income Tax applies to profits earned by companies. As a general rule, Andorran companies are taxed in Andorra, although several relevant questions often arise:

• Where the company is tax resident (and how this can be substantiated).
• Which structure makes sense (operational, holding, services, asset-holding).
• What compliance obligations and risks exist (accounting, tax and documentation).

For a detailed analysis, we recommend Corporate Income Tax in Andorra: rates, special regimes and tax deductions

Corporate tax residence

As noted above, Andorran companies are generally taxed in Andorra. However, exceptions may apply. To understand them, you can consult Place of effective management: the key to determining a company’s tax residence

Types of Andorran companies

Andorran law provides for two main corporate forms: SA and SL. To understand their real differences, consult SA or SL company in Andorra: real differences and how to choose the right structure

Special regimes

Not all Andorran companies are the same. In addition to standard operating companies, there are asset-holding companies and holdings. To explore these regimes in more detail Holding companies in Andorra: taxation and main advantages

🔹 Non-residents: when you are taxed in Andorra without being a tax resident (IRNR)

It is not necessary to be a tax resident to be taxed in Andorra. If you are not a tax resident but generate certain types of income in the country, you may be subject to the Non-Resident Income Tax (IRNR).

This is particularly relevant in three common scenarios:

• Non-resident property owners who own real estate in Andorra (personal use or rental).
• Investors receiving income from Andorran sources (depending on the type of income and the applicable DTC).
• Foreign professionals or companies operating partially in Andorra or with an economic presence there (the real threshold is determining when sufficient activity exists for Andorra to tax it).

What does IRNR tax?

IRNR taxes Andorran-source income obtained by non-resident individuals or entities.

👉 Practical advice: the critical issue is not only “how much you pay”, but whether the income is considered Andorran-source and whether a DTC limits or reallocates taxing rights between Andorra and your country of residence.

To understand this properly, you can consult Non-Resident Income Tax (IRNR) in Andorra

IRNR cannot be understood without addressing DTCs (double taxation conventions), which are covered in the international taxation section.

Real estate owned by non-residents

Most financial income obtained by non-residents is exempt. In practice, therefore, the most common IRNR exposure is real estate-related:

• Owning a property (and its local obligations).
• Renting it out (rental income).
• Selling it (capital gains).

To understand how real-estate taxation works in detail, we recommend Real-estate taxation in Andorra: complete guide to buying, renting and selling with criteria

IRNR or IRPF?

In Andorra, the issue is not so much that a non-resident becomes a tax resident, but that a person considered tax resident in Andorra may also be considered tax resident in another country.

Once again, what matters is tax residence and how firmly it is established in a given jurisdiction.
To go deeper into this concept, we recommend Tax residence in Andorra: requirements and real advantages

This situation, known as a residence conflict, is analysed in the international taxation section.

Indirect taxation: IGI and invoicing obligations

In Andorra, IGI (equivalent to VAT) is one of the most visible and impactful taxes, as it affects day-to-day operations: invoices, filings, deductions, refunds and accounting criteria.

Some of the most common questions regarding this tax include:

• When IGI must be charged and when it must not.
• Which rate applies and how to justify it.
• How to invoice correctly (series, corrective invoices, retention).
• How to properly record obligations (tax point and consistent accounting).

If you want to understand how IGI works, we recommend VAT in Andorra: how the General Indirect Tax (IGI) works

nvoicing obligations

In Andorra, as in other countries, certain formal invoicing requirements must be met.
If you want to understand them in detail, you can consult Invoicing obligations in Andorra: what the Regulation requires and how to comply

Accounting records

Accounting obligations affect both Corporate Income Tax and IGI.
For a comprehensive overview, you can consult Tax and accounting obligations in Andorra: what companies and self-employed professionals must comply with

If you have specific doubts regarding the accrual principle and its recording, you can consult The accrual principle in Andorra: the key to solid and fiscally secure accounting

International taxation: DTCs, OECD, transparency and the reality of “changing residence”

International taxation governs, from a tax perspective, economic relations between countries. This block cannot be understood without placing Andorra in its international context.

In practice, in Andorra the international dimension is not an “extra”: in many cases it is the core of the analysis. The country’s current reality, especially in tax matters, cannot be understood without the involvement of international organisations and the agreements Andorra has signed with foreign countries.

🔹 DTCs: what really determines where you are taxed

Double Taxation Conventions (DTCs) are the mechanism that prevents income from being taxed twice and, more importantly, determine which country has the right to tax each category of income.

To understand the global framework, the logic of these conventions and their practical application, you can consult Double Tax Treaties: the key to understanding where international income is truly taxed

If you want to see the full list of countries with which Andorra has signed a DTC, you can consult Double taxation conventions (DTCs) in Andorra

🔹 Residence conflicts

Determining where a person is considered tax resident is just as important as the existence of a DTC. Tax residence is closely linked to residence conflicts.

To deepen your understanding of tax residence, you can consult again Tax residence in Andorra: requirements and real advantages

When a person is considered tax resident in two countries at the same time, a residence conflict arises, with several potential consequences.
Firstly, DTCs may not apply. Secondly, the overall tax treatment of the situation may be completely different.

To explore this topic in depth, you can consult Tax residence conflicts: when two countries consider you resident at the same time

🔹 Customs agreement between Andorra and the European Union

All goods entering or leaving Andorra necessarily pass through the European Union. For this reason, it is essential for Andorra to have a cooperation framework with the EU governing all economic transactions, direct or indirect, between both territories.

This agreement has a direct impact on commercial transactions and on the taxation of any international operation, especially those involving goods.

To understand how this agreement works, you can consult Customs agreement between Andorra and the European Union: origin and foundations of an essential relationship

🔹 Association Agreement: why it matters for taxation

Although it does not regulate taxes in the strict sense, the Association Agreement influences rules, equivalences, financial operations and the overall regulatory framework.

Explicitly, the Association Agreement does not regulate direct taxes in Andorra, but it does affect commercial relations between countries and, in particular, the customs agreement mentioned above.

To analyse it properly, you can consult The Association Agreement between Andorra and the European Union: objectives, scope and implications

🔹 Monetary Agreement

The Monetary Agreement, signed between Andorra and the European Union, allows Andorra to legally use the euro and issue its own coins.

Although its impact is primarily financial, it directly affects international relations and, by extension, taxation and the exchange of information addressed below.

To understand how it works, consult The Monetary Agreement between Andorra and the European Union: origin, meaning and impact on the Andorran financial system

🔹 Exchange of financial information (CRS and FATCA)

Even indirectly, talking about taxation also means addressing the exchange of information with other countries. For example, even if a company is Andorran, information about its financial operations may be shared with third countries.

In this area, two complementary models stand out:

• CRS, promoted by the OECD.
• FATCA, of US origin.

To understand how they work and what information is exchanged, you can consult:

• Common Reporting Standard (CRS): the global standard for tax transparency and its impact in Andorra
• FATCA: the US model that transformed international tax transparency

🔹 OECD and Andorra

Although Andorra is not a member of the OECD, decisions taken by this organisation significantly affect many countries, including Andorra.

These decisions may have multiple implications: for DTCs, for information exchange, and also for direct and indirect taxation.

To understand the OECD’s role, you can consult The OECD: what it is, how it works and why it shapes international taxation

🔹 Andorra’s evolution: from a discretionary model to a recognised jurisdiction

Andorra’s modern narrative is based on transparency, cooperation and alignment with international standards, which have rapidly become part of the country’s reality.

To understand this evolution and Andorra’s current position, you can consult Andorra’s international evolution: from tradition to the global landscape

Real-estate taxation: the block that generates the most surprises

If there is one area where Andorra cannot be simplified, it is real estate. The real cost of an operation depends on multiple factors, including:

• Taxes on acquisition (including transfer taxes and authorisations).
• Recurring taxes (property ownership and rental income).
• Taxation on sale (capital gains and surcharges).
• Foreign investment regime and, in some cases, specific taxes.

For a full analysis of this block, we recommend Real-estate taxation in Andorra: complete guide to buying, renting and selling with criteria

🔹 Buying and selling property in Andorra

If you want to understand all the taxes affecting the purchase of a property, we recommend Taxes when buying property in Andorra: taxation, real costs and how to optimise a purchase

A particularly relevant tax at the time of purchase is ITPI, the Real-Estate Transfer Tax.
For a detailed explanation, you can consult Real-estate transfer tax (ITPI) in Andorra: structure of the tax, current rates and impact on a transaction

🔹 Renting property in Andorra

Renting property is also subject to specific taxation in Andorra.
If you want to understand how it works, you can consult Rental tax in Andorra: which rates apply in each parish

If, instead, you are interested in operating a tourist rental, we recommend Tourist rentals in Andorra: how to operate an HUT legally and when it can actually be profitable

🔹 Selling property

When selling a property, taxes are also triggered.
To understand them in detail, you can consult Taxation of real-estate capital gains in Andorra

🔹 Ownership / holding of property

As in many other countries, owning property in Andorra is also subject to certain taxes.
Although these are very low and often perceived as almost insignificant, they do exist.

To understand them, you can consult Property ownership tax in Andorra: what it is and how it is calculated in each parish

🔹 Other relevant elements

In real-estate investment, the risk is not only fiscal. In many cases, the real issue is contractual, related to authorisations, or to traceability (who buys, how they buy and through which structure).

If you are buying with an international profile, the “international” block of this guide is mandatory reading.
In addition, if you want to understand the risks involved in purchasing property in Andorra, we recommend Buying property in Andorra: real risks and how to protect your investment

Taxation of financial income and investment products

In many cases, the taxation of financial income is not analysed as a separate block. While it is true that each type of taxpayer is taxed differently, it is important to highlight that in Andorra the taxation of financial products is particularly low.

Although it depends on each specific case, investing through a company is generally more burdensome than investing as an individual, as financial income is often exempt or almost exempt when earned personally.

If you want a detailed explanation of how these income streams are taxed, the article How financial income is taxed in Andorra will provide all the necessary answers.

🔹 Crypto-assets and digital products

Unlike traditional financial income, crypto-assets are subject to a differentiated treatment in Andorra. In general terms, they are taxed under the ordinary tax regime.

If you want to understand how they are taxed, you can consult Taxation of digital assets and crypto-assets in Andorra

Accounting and tax obligations: the foundation that supports the entire system

In Andorra, a competitive tax system is not incompatible with strict compliance with formal obligations. Doing things properly and in a defensible way is not only a legal obligation, but also a strong recommendation, both from a local and an international perspective.

In practice, the most common mistakes in Andorra are not about “paying too little”, but rather:

• Keeping accounting records that do not follow accounting principles.
• Invoicing without properly applying or justifying tax rates.
• Not understanding which documentation must be retained and how it must be evidenced.
• Structuring companies without coherence between economic reality and documentation.
• Carrying out related-party transactions without properly documenting or distinguishing them.

To understand in detail the tax and accounting obligations of Andorran taxpayers, you can consult Tax and accounting obligations in Andorra: what companies and self-employed professionals must comply with

🔹 Accounting obligations and the General Accounting Plan (PGC)

In Andorra, accounting is governed by the General Accounting Plan (PGC).
To understand how it works, you can consult Accounting in Andorra: origin and structure of the General Accounting Plan (PGC)

Given that the PGC is the basis for tax calculations, understanding it thoroughly is essential.

🔹 Differences between accounting and taxation

It is important to bear in mind that, for the purpose of calculating economic income or business profits, the starting point is the accounting result.
However, for tax purposes, adjustments must be made to that base.

🔹 Related-party transactions

Related-party transactions are commercial relationships between individuals or legal entities that have a family or shareholding connection.

In a country like Andorra, these transactions are particularly relevant, as international operations between related parties are very common.

When they occur, specific legal, documentary and tax obligations apply.
To explore this topic in depth, we recommend Related-party transactions: concept, scope and how to record them correctly

Everything that should be taken into account

This guide, although comprehensive, is intended to address in a general way the most relevant elements of Andorran taxation.
There are multiple possible scenarios depending on each person’s objectives. By way of illustration:

• If you relocate as an individual: IRPF, tax residence, the existence of DTCs and the taxation of financial income will be relevant. Real-estate taxation may also apply if you invest in property.
• If you relocate with a company: Corporate Income Tax, place of effective management, tax and accounting obligations, DTCs, related-party transactions and, in some cases, information exchange will be key factors.
• If you purchase property: real-estate taxation will apply, and you will need to consider whether foreign investment authorisation is required.
• If you hold financial assets: taxation of financial income, the existence and application of DTCs, and information exchange mechanisms (CRS / FATCA) will be relevant.
• If you operate internationally: particular care must be taken with residence conflicts, DTCs, related-party transactions where applicable, and the availability of robust documentary evidence.

👉 Practical advice: the real value of Andorra is not simply “paying less”, but being able to do so in a rigorous, stable, recognised and defensible way.
If a structure is not properly built, the risk is usually not in Andorra, but in the country of origin or in the countries where you operate. This is why the role of a specialised advisor is essential, helping you identify and reduce risks and focus on what truly matters.

How can Elysium help you?

Every case is different, and every individual or company has unique needs and circumstances.

If you are considering investing or relocating to Andorra and have not found all the answers in our articles, you can contact us through the contact form. We will help you structure things correctly from the outset, avoiding unnecessary risks, reducing costs and saving time.

If, instead, you prefer to book a confidential advisory meeting, you can Reserve your meeting in the footer, just below this article.

We are at your disposal to support you in your projects.Last review: December 2025