Andorra Corporate Tax: Essential Guide

Published on October 4, 2025 and written by Cyril Jarnias

Andorra, a small country nestled between France and Spain, has in recent years become a sought-after destination for entrepreneurs and investors seeking favorable tax conditions. With its spectacular mountain landscapes and exceptional quality of life, the Principality offers much more than just tax appeal. Let’s explore together the assets that make Andorra a true business paradise in 2025.

A Highly Competitive Corporate Tax System

Andorra stands out with particularly attractive taxation for businesses, featuring some of the lowest tax rates in Europe. Here are the main taxes and duties applicable to Andorran companies:

Corporate Tax (IS): The standard rate is set at 10%, one of the lowest on the European continent. This rate applies to profits earned by companies, whether owned by residents or non-residents.

Value Added Tax (IGI): Andorra’s equivalent to VAT, called IGI (Impost General Indirecte), is only 4.5%. This is the lowest rate in Europe, offering a significant competitive advantage to companies operating from Andorra.

Withholding Tax on Dividends: Andorra does not apply any withholding tax on dividends paid to shareholders, whether they are residents or non-residents. This measure encourages foreign investment and profit repatriation.

Capital Gains Tax: Capital gains realized by companies are taxed at the standard corporate tax rate of 10%. However, exemptions exist for certain types of assets held long-term.

Social Security Contributions: Employer social security contributions are capped at 14.5% of gross salary, a relatively low rate compared to other European countries. This measure helps reduce labor costs for employers.

Registering with the Andorran Tax Authorities: A Simplified Process

Registering a company with the Andorran tax administration is a relatively simple and quick procedure. Here are the main steps to follow:

1. Obtaining a Tax Registry Number (NRT): This is the first step to be completed with the Department of Taxes and Borders. This number is essential for all tax transactions.

2. Registration with the Commercial Registry: This step is mandatory for all commercial companies. It allows obtaining the company’s registration number.

3. Activity Declaration: The company must declare its main activity and any secondary activities to the tax administration.

4. Choosing the Tax Regime: Depending on the nature and volume of the activity, the company can opt for different tax regimes (simplified regime, standard regime, etc.).

5. VAT (IGI) Registration: Any company with a turnover exceeding €40,000 must register for the IGI regime.

Did You Know? Andorra has established a one-stop shop to facilitate administrative procedures for businesses. This service allows completing most formalities in one place, significantly reducing delays and the complexity of the registration process.

Tax Obligations: Rigor and Transparency Ensured

Although benefiting from advantageous taxation, Andorran companies are subject to strict reporting obligations. This rigor aims to ensure transparency and compliance with international standards. Here are the main obligations to respect:

Annual Corporate Tax Return: To be filed within 6 months following the end of the fiscal year. Companies must attach their complete financial statements to this return.

Provisional Payments: Companies must make quarterly corporate tax advance payments, calculated based on the previous year’s results.

VAT (IGI) Returns: To be filed monthly or quarterly depending on the company’s turnover.

Annual Declaration of Transactions with Third Parties: This declaration summarizes all transactions exceeding €3,500 conducted with suppliers and clients.

Maintaining Compliant Accounting: Companies must keep accounting records according to Andorran standards, with the possibility of using IFRS standards for large companies.

Appointment of an Auditor: Mandatory for companies exceeding certain thresholds in turnover, total assets, or number of employees.

Tax Treaties: Andorra Opens Up to the World

Long considered an opaque tax haven, Andorra has in recent years pursued an active policy of signing Double Taxation Avoidance Agreements (DTA) and tax information exchange agreements. This approach aims to facilitate economic exchanges while ensuring fair taxation. Here are the main agreements in force in 2025:

Double Taxation Avoidance Agreements: – France – Spain – Portugal – Luxembourg – United Arab Emirates – Liechtenstein – Malta

Tax Information Exchange Agreements: Andorra has signed agreements with more than 20 countries, including the United States, the United Kingdom, Germany, and the Netherlands.

These agreements allow Andorran companies to avoid double taxation on their international income and facilitate their expansion abroad. They also offer increased legal security for foreign investors looking to establish themselves in Andorra.

Important Point: Andorra has committed to implementing OECD standards on tax transparency, including the automatic exchange of financial information. This approach strengthens the country’s credibility on the international stage.

Andorra vs Other Offshore Jurisdictions: A Strategic Choice

Facing competition from other tax-attractive destinations, Andorra stands out with several unique advantages. Here is a comparison with some popular offshore jurisdictions:

| Criterion | Andorra | Gibraltar | Malta | Cayman Islands | |———|———|———–|——-|————–| | Corporate Tax Rate | 10% | 12.5% | 35% (with refund) | 0% | | VAT/IGI | 4.5% | No VAT | 18% | No VAT | | Political Stability | Very High | Medium (Brexit) | High | Medium | | EU Access | Association Agreement | Via UK | EU Member | No | | Quality of Life | Excellent | Good | Good | Medium | | International Reputation | Improving | Medium | Good | Controversial |

Andorra’s Distinctive Advantages: – Attractive taxation while remaining within a European framework – Exceptional quality of life (nature, safety, infrastructure) – Unwavering political and economic stability – Facilitated access to French and Spanish markets – A regulatory framework constantly modernizing

Conclusion: Andorra, Much More Than Just a Tax Haven

In 2025, Andorra positions itself as a prime destination for entrepreneurs and investors seeking advantageous taxation within a stable and modern European framework. Beyond tax benefits alone, the Principality offers a business-friendly environment, exceptional quality of life, and privileged access to French and Spanish markets.

Increased transparency and alignment with international standards strengthen Andorra’s credibility, making it a serious and sustainable alternative to traditional tax havens. However, the complexity of international taxation and the specificities of Andorran law require expert guidance to fully leverage the opportunities offered by this small Pyrenean state.