Taxes in Andorra: what will change from January 1, 2023

The Council of Ministers of Andorra has approved a new effective corporate tax rate for companies registered in the country. It will be 3%.

Will say why Andorra increases income tax and what other changes are planned in the country’s tax system.

Author •Vladlena Baranova

Head of Legal & AML Compliance Department, CAMS, IMCM

Residence permit in Andorra for investment: how to get to become a tax resident

Taxes in Andorra: what will change from January 1, 2023

The Andorran tax system is one of the most attractive in the world, so investors receive a residence permit for investment.

There is no tax on capital gains, dividends and inheritance in the country. Everyone who is registered in Andorra or has resident status is subject to income tax — Impost de societats, or IS.

The nominal corporate tax rate is 10%, but the effective corporate tax rate can be reduced to 0% through offsets and deductions. Under a significant tax rate, a high tax supply is required, which ensures that the payment is received from the profit or income for the period of use.

From January 1, 2023, companies will pay an “objective tax” on profits, the minimum rate of which will be 3%. The maximum rate will remain the same — 10%.

3 to 10%

Will make the corporate tax in Andorra from January 1, 2023

The new corporate tax rate is part of the Andorran tax reform, which should increase tax revenues, maintain the competitiveness of the state’s financial system and bring it closer to international standards.

blok — Andorra is famous for its ski resorts, thermal springs and picturesque lakes. About 10 million tourists come to Andorra every year for vacation, so the demand for residential property rental is high

What else will change in the tax system of Andorra

Andorra plans to change the country’s tax system gradually. The changes, which come into effect on January 1, 2023, are the first step. The bill includes 86 articles and amendments to nine existing laws.

The tax on rental income in Andorra will be reduced by 2%, provided that the income does not exceed €900 per person per month.

The tax rate depends on the status of the taxpayer: non-residents of Andorra pay 10% of the rental income, residents pay on a progressive scale from 0.4 to 4%.

There will be new tax information exchange agreements with Hong Kong, Macau, Maldives, Morocco, Ecuador, Peru and Samoa. When they will come into force is still unknown.

How to become a tax resident of Andorra

A foreigner who lives in the country for more than 183 days can become a tax resident of Andorra. Legally, this can be done if you obtain a residence permit or permanent residence in the country. One of the ways to get a residence permit is to participate in the state program of residence permit for investment.

To obtain a residence permit in Andorra, investors can:

buy property;
open an interest-free deposit;
buy securities;
invest in local business.

€350,000 — investment in the economy of Andorra
+ €50,000 — insurance deposit at the Central Bank of Andorra

If the investor receives a residence permit together with his family, then for each relative he pays an additional €10,000 to the amount of the security deposit. At the same time, the amount of the main investment is reduced.

The Andorran residence permit for investment does not give the right to work and start a business — all income must come from abroad. To maintain the status of a residence permit, it is mandatory to spend at least 90 days a year in the country.

Residence permit holders can visit France and Spain without visas, get visas to the Schengen zone, the USA, Canada and other countries in an accelerated manner.

Immigrant Invest helps to obtain a residence permit in Andorra for investment. If you want to buy or rent real estate to obtain resident status, seek advice from investment program experts.