The Non-Resident Income Tax (NRIT / IRNR) in Andorra

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Understanding the NRIT: an overview

The Non-Resident Income Tax (NRIT) applies to income generated in Andorra by individuals or entities that are not tax residents in the country. Its structure is similar to other non-resident tax systems, especially the Spanish NRIT, with which it shares multiple concepts and technical criteria.

The reform introduced by Law 5/2023 marked a turning point: the former Real-Estate Capital Gains Tax (Law 21/2006) was repealed and integrated into the direct tax system (PIT, CIT and NRIT).
This brought coherence, simplification and enhanced oversight, particularly in real-estate transactions.

➤ For deeper context, see the article Evolution of Andorra’s tax framework.

➤ For a broader fiscal overview, the article Taxation in Andorra: structure, rates and real advantages may help.

Who is subject to NRIT?

NRIT applies to all individuals or entities that, without being tax residents, obtain income from an Andorran source:

• non-resident individuals earning income in Andorra,
• non-resident companies generating revenue in the Principality.

In short, any person or entity earning Andorran-source income without being a tax resident.

What counts as Andorran-source income?

According to the Law, income is considered Andorran-source when it derives from:

• economic activities carried out physically in Andorra,
• real-estate assets located in the country,
• payments made by Andorran residents when the service is used in Andorra,
• except when a service is contracted and used entirely abroad.

➤ For a clearer understanding of how tax residence interacts with source rules, see Tax residency in Andorra: requirements and real advantages.

Permanent establishment or not? The key distinction

The Law distinguishes two situations:

🔻Without a permanent establishment (PE)

The most common scenario, including:

• occasional service provision,
• employment income for work carried out in the country,
• directors’ fees,
• rental income from Andorran properties,
• capital gains on real-estate disposals.

These incomes are subject to fixed rates, generally with withholding obligations.

🔺With a permanent establishment (PE)

A PE exists when the activity displays continuity or uses human or material means in Andorra. In such cases:

• taxation follows the rules of a resident company,
• an annual return is required,
• the rate applied is 10%.

To explore how taxation applies in these cases, you may consult Corporate income tax in Andorra: rates, special regimes and tax deductions.

In practice, most real-life cases do not involve a PE.

Incomes subject to NRIT

Key taxable categories include:

🔹 Economic and professional activities

Any business or professional activity carried out in Andorra is taxed at 10%.

🔹 Employment income

Salaries, professional fees, private pensions and directors’ remunerations are taxable when the work is physically carried out in Andorra.

🔹 Rental and real-estate income

Rent from Andorran property is taxed at 10%.
However, Article 25.2 provides a 20% automatic reduction, bringing the effective rate down to 8%.

🔹 Real-estate transfers (major change in 2023)

Capital gains arising from property disposals are taxed as follows:

• 10% (general rate),
• 15% if sold within the first 2 years of ownership.

➤ For more detail, see How real-estate capital gains are taxed in Andorra.

➤ For broader market insight, see The Andorran real-estate market.

Incomes NOT subject to NRIT

☑️ Investment income (financial income)

Includes:

• bank interest,
• dividends,
• investment-fund income,
• savings-insurance products,
• any financial income defined in Article 13 of the Law.

👉 No non-resident —individual or company— pays NRIT on Andorran financial income. This is a decisive advantage for international investors.

You can find further details in the article How financial income is taxed in Andorra.

☑️ Other exempt or non-taxable income

Articles 8 and 15 also exempt:

• certain public benefits,
• research grants and scholarships,
• labour-law indemnities,
• disability or severe-invalidity benefits.

Determining the taxable base

The taxable base depends on the income type:

• business/services → gross amount,
• employment income → amount received,
• rental income → 20% reduced base,
• real-estate gains → sale price – acquisition cost – certified improvements.

Applicable tax rates

Andorra’s tax model is defined by its simplicity and consistency:

• 10% (general rate),
• 8% effective rate on rental income (after reduction),
• 15% effective rate on gains from properties held less than 2 years,
• 0% for exempt income.

The country has no excessive withholding system nor fragmented regimes: it is a stable and predictable framework.

Returns, withholding and the NRT

🔹 When the payer applies withholding

If withholding is correctly applied, the non-resident is not required to file a tax return.
A voluntary return is still possible.

🔹 When there is no withholding

The non-resident must file quarterly tax returns.

🔹 For real-estate transactions

A mandatory withholding applies as a payment guarantee.

Identification number:
If the non-resident must file a return, the Ministry automatically issues an NRT.

Deadlines:

• quarterly filings → April, July, October and January,
• property transfers → within 30 days,
• permanent establishments → annual return (as per CIT).

🔹Consequences of not filing or not withholding

Non-compliance may result in:

• late-payment interest,
• penalties,
• joint liability of the withholding agent,
• fiscal blocks in future real-estate transactions.

Common NRIT scenarios

Frequent cases include:

• a non-resident renting out property in Andorra,
• a company director living abroad,
• a professional providing occasional services in the country,
• disposal of Andorran property by a non-resident,
• occasional Andorran-source income.

Double-tax treaties (DTTs)

DTTs can significantly reduce or eliminate withholding tax.
Andorra maintains treaties with several European and Asian jurisdictions, reinforcing legal certainty for cross-border activities.

➤ For conceptual insight, see Double-tax treaties: the key determining where international income is taxed.
➤ For the complete list of treaties, see Double-tax treaties (DTTs) in Andorra.

Conclusion

NRIT may seem straightforward, but correct application requires precision and technical judgement: determining income source, assessing the existence of a PE, applying reductions and understanding how domestic law interacts with DTTs.

The 2023 reform enhanced coherence —especially in real-estate taxation— but also increased formal obligations and oversight.
In this context, proper classification and documentation of income are essential to avoid unnecessary risks.

Andorra offers a clear, stable and predictable tax system, but applying it properly requires professional insight. Solid analysis often makes the difference between a safe operation and a future problem.

📞 Need to analyse a specific situation?

If you believe we can help or would like us to review your case with clear professional judgement, you can contact us here.

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Last updated: january 2026