Income tax in Andorra (IRPF): rates and calculation

How does income tax work in Andorra?

Personal income tax (IRPF) applies to the worldwide income of people who are tax resident in Andorra, whatever the country of the payer. Created by Llei 5/2014, it has applied since 1 January 2015.

Income is split into two bases, taxed separately at the same statutory rate of 10%:

The residence criteria (more than 183 days in the year, or centre of interests in Andorra) are detailed in our guide to tax residency in Andorra.

Non-residents and cross-border workers: IRNR

Anyone who is not a tax resident is subject to a different tax, non-resident income tax (IRNR, Llei 94/2010), on their Andorran-source income only: 10% as a general rule, 5% on royalties. The official IRPF guide places in this category cross-border workers, who come every day from France or Spain to work for an Andorran business, and temporary workers employed for less than six months. If they pay full contributions to the CASS, they can opt for a regime that gives them access to the employee deductions, the personal allowance, pro-rated for less than a year of work, and the IRPF tax credit (Article 36 bis of Llei 94/2010). A non-resident’s other taxes are covered in our overview of taxes in Andorra; the situation of cross-border workers, permits included, in our guide to working in Andorra and living in France.

Tax bands: 0%, 5% and 10% (effective scale)

The law provides for only one rate, 10%. The progressive scale that is often quoted results from two mechanisms, which apply only to the general tax base:

• a tax-free personal allowance of €24,000, raised to €30,000 in the case of a recognised disability and to €40,000 if your spouse or stable partner, living with you, has no general-base income;
• a tax credit (the bonificació) equal to 50% of the tax calculated on the part of the general tax base that exceeds €24,000, capped at €800. The cap is reached at a tax base of €40,000.

Indicative calculation derived from Articles 35, 43 and 46 of Llei 5/2014: 10% of the tax base above €24,000, minus the tax credit.

Tax on a salary: from gross pay to the taxable base

For an employee, the net general tax base is obtained by deducting from gross salary:

• the employee’s contribution to the CASS, i.e. 6.5% of salary;
• a flat-rate expenses allowance of 3% of gross salary, capped at €2,500 a year. This allowance does not apply to retirement pensions.

Rental income is calculated after deducting expenses: depreciation of the building, service charges, property tax. The parish tax on rents is not deducted from the tax base, but it is then credited against the tax. Pensions count as earned income; only CASS pensions of people who were contributing before 2015, with at least 15 years of contributions, benefit from a reduction of 1% per year of contributions, up to 30%.

Deductions: main residence, education, pension plan

Next come reductions, which are in addition to the personal allowance:

Articles 35 to 39 of Llei 5/2014; the official IRPF guide specifies the supporting documents required.

How much tax in Andorra? Examples from €30,000 to €150,000

The tax ranges from €300 a year for a net base of €30,000 to €10,575 for a gross salary of €150,000, for a single person with no dependants who receives only earned income. These examples follow our calculator’s method.

Indicative calculation: 10% of the tax base above €24,000, minus the tax credit (50% of that tax, capped at €800). For a gross salary, the base deducts 6.5% CASS and a 3% flat-rate allowance capped at €2,500 (cap reached above a salary of about €83,333); as a share of gross salary, the tax represents 3.7% at €60,000, 5.9% at €100,000 and 7.1% at €150,000.

For a different amount, or with savings income, use our Andorran income tax calculator; our comparison tool also lets you compare with French tax on the same taxable income.

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Savings income: 10% above €3,000

The savings tax base brings together income from movable capital and capital gains. It benefits from an allowance of €3,000 a year, and is then taxed at 10%, with no personal allowance, no tax credit and no 5% band.

• Dividends paid by Andorran companies subject to corporate income tax are exempt.
• Foreign dividends and interest are taxed at 10% above the allowance; interest on Andorran public debt is exempt.
• Banks withhold tax on interest. You can ask them not to (form 345) as long as your income stays below the allowance; above it, you must give up this exemption and settle the difference in your tax return, or face a 10% surcharge.
• Many capital gains on securities are exempt, depending on the size of the holding or how long it has been held.

The details are in our guide to the taxation of dividends and savings income.

Income received in France or abroad: the foreign tax credit

An Andorran resident declares their worldwide income. When foreign income has already been taxed in its country of origin, a deduction avoids double taxation:

• it is equal to the lower of two amounts: the tax actually paid abroad, or the Andorran tax corresponding to that income;
• it is calculated by grouping income by country;
• if your Andorran tax for the year is not enough to absorb it, the balance can be credited over the following three years; the part of the foreign tax that exceeds the corresponding Andorran tax is not deductible;
• if it reduces the Andorran tax on foreign income to zero, that income does not have to be declared in detail: you only need to state its nature and country of origin on schedule 300-F.

For French-source income, the tax treaty first determines which country may tax it: private pensions are in principle taxable only in Andorra, civil service pensions only in France, and rents from a property located in France in France. See our guide to the double taxation treaty.

Tax returns in Andorra: when and how to file?

1. 1

   During the year: withholding and payments on account

   The employer withholds tax from salaries and pays it over to the tax authority. Banks do the same on savings income, and self-employed people make payments on account on their business income.

2. 2

   From 1 April: the proposed adjustment

   If your only income is from salaries, the Departament de Tributs i de Fronteres, the tax authority, recalculates your tax and sends you a proposed adjustment (form 300.3/300.4). Accepting it counts as filing a return.

3. 3

   Until 30 September: the tax return

   In other cases, file form 300 online, on the Govern’s Seu electrònica with a digital certificate, or in person at the counter. This is compulsory in particular if you have a self-employed activity, a capital gain or income from which no tax was withheld.

4. 4

   Payment or refund

   The balance is paid when you file; a deferral or payment in instalments can be requested within three months of the opening of the filing period. Any overpayment is refunded by bank transfer within a maximum of three months.

Common misconceptions about Andorran income tax