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Andorra Unveils Individual Income Tax Bill

25 June 2013   (0 Comments)
Posted by: Author: Ulrika Lomas
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Author: Ulrika Lomas

Andorra's Prime Minister Antoni Marti Petit has unveiled details of the Government's bill providing for the introduction of a tax on individual income in Andorra (IRPF).

Based on the key principles of equity, the inclusion of all types of income, and simplicity, the draft legislation accords "particular sensitivity" to family businesses in Andorra, deemed to be a vital motor of the Andorran economy.

The Government aims to ensure that all citizens in Andorra contribute according to their economic means, and to guarantee that the IRPF tax system provides for low rates of taxation and for a broad tax base.

The bill therefore provides for an annual tax-free allowance of EUR24,000 (USD31,494). Annual income of between EUR24,000 and EUR40,000 will be taxed at a rate of 5 percent, while income in excess of EUR40,000 a year will be subject to a 10 percent rate of tax. In the interests of fairness, tax exemptions and deductions will be accorded to families, where one member works while the other provides childcare, for incapacity, as well as for the acquisition of a primary residence.

To guarantee that the future tax system has a wide base, the IRPF levy will include income from capital, as well as income from labor. A tax exemption of EUR3,000 will be granted for interest income, to protect small savers, however.

Determined to ensure that the tax model is simple, a withholding tax system is to be applied. Consequently, the majority of citizens will not be required to submit a tax return. The Andorran Health and Social Security Administration (CASS) will be tasked with collecting the IRPF withholding tax from income from work. This will ensure that the burden is not increased on either employees or businesses in Andorra, especially small- and medium-sized enterprises.

Defending the legislation, the Andorran Prime Minister insisted that the IRPF tax is necessary, given that other taxes that have already been introduced in Andorra, notably corporation tax (IS), the tax on economic activities (IAE), the levy on non-resident income (IRNR), and the general indirect tax (IGI). It would therefore be extremely "unfair and irresponsible" not to subject personal income to taxation, he argued, emphasizing that the new tax model will also demonstrate Andorra's firm commitment to transparency.

Prime Minister Marti Petit firmly ruled out the idea of introducing an inheritance, gift or wealth tax in Andorra.


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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