Key Tax Rates at a Glance
| Tax Type | Rate | Tier | Notes | Source |
|---|---|---|---|---|
| Income Tax — top rate | 10.0% | Low Tax | Top marginal rate | OECD 2026 |
| Income Tax — lowest rate | 5.0% | Entry rate | OECD 2026 | |
| Corporate Tax | 10.0% | Low Tax | Standard rate | OECD 2026 |
| VAT | 4.5% | Low Tax | Standard rate | OECD 2026 |
| Capital Gains Tax | 0.0% | Zero | Standard rate | OECD 2026 |
| Social Security (employee) | 7.5% | Employee contribution | OECD 2026 | |
| Territorial Taxation | Yes | Territorial system | OECD 2026 | |
| Digital Nomad Visa | Yes | Check official government sources | Official |
Andorra Special Tax Regime
| Criterion | Detail |
|---|---|
| Who qualifies | Qualifying expats, investors and skilled workers. |
| Tax rate under regime | Reduced rate under Andorra Special Tax Regime. |
| Duration | Varies — consult official government sources. |
| Application process | Apply through Andorra Tax Authority. |
| Key restriction | Must not have been tax resident in prior years. |
Income Tax Brackets
Income Tax Brackets
| Annual Income (EUR) | Tax Rate | Marginal Calculation |
|---|---|---|
| €0–€24,000 | 0% | No tax on first €24k |
| €24,001–€40,000 | 5% | 5% on income between €24k and €40k |
| €40,001+ | 10% | 10% on income above €40k |
Andorra's progressive bands make it attractive for moderate earners (0% on first €24k is equivalent to €2,000/month tax-free), while high earners pay a simple 10% flat marginal rate. Personal deductions and pension contributions reduce taxable income. Self-employed professionals benefit from deduction of business expenses before applying brackets.
Corporate Tax
Corporate Tax
Andorra taxes corporate profits at a flat 10% rate. The key advantage is deferral — companies can retain earnings without immediate dividend withholding, allowing compounding growth. When profits are distributed as dividends, shareholders in Andorra pay personal income tax on the dividends at the 10% rate (or lower if below €40k bracket). This structure is efficient for reinvestment-focused businesses.
VAT & Consumption Taxes
VAT & Consumption Taxes
Andorra's standard VAT rate of 4.5% is the lowest in Europe, making it attractive for shopping and retail. Reduced rates include 0% on certain goods and 9.5% on tobacco and luxury items. As a member of the EU customs union, Andorra aligns VAT treatment with EU standards but maintains its lower rate through special agreement.
Capital Gains & Investment Income
Capital Gains & Investment Income
Andorra imposes no capital gains tax on personal investment gains — a significant advantage for traders and portfolio investors. Dividends from foreign companies and interest income are taxed as personal income at the bracket rates (0–10%). Foreign-source dividends and interest are not separately taxed if income falls below €40,000 (remain at 0–5%).
Digital Nomad & Expat Visas
Andorra offers a dedicated digital nomad or remote-work visa. Check official government sources Holders typically benefit from the Andorra Special Tax Regime.
Tax Scenarios — Effective Rates
Estimated all-in tax burden after income tax and employee social security. Assumes standard deductions; does not account for special regimes or itemised relief.
Tax Burden Calculator
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Key Insight
Andorra operates a territorial tax system — foreign-sourced income is generally not taxed for residents. A digital nomad visa is available, attracting remote workers seeking a lower-tax base.
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Frequently Asked Questions
Comparisons
Social Security & Benefits
Social Security
Mandatory social security (CASS — Caixa Andorrana de Seguretat Social) combines pension and health contributions at approximately 6.5% for employees. Self-employed rates are higher (~24%). Contributions are deductible from income tax. Andorra's public healthcare system is available to residents, and international agreements with EU/OECD countries facilitate portable benefits.