The Principality is famous for its low taxes, as is the case of VAT or IGI, which is much lower than in the case from Spain. But it is not the only tax to pay. The tax system is complex and it is important to always keep it in order, to avoid possible fines and problems with the financial authority of the country. And the personal income tax in Andorra? How does it work?
Everything you need to know about IRPF in Andorra
IRPF in Andorra means Personal Income Tax and came into force in 2015 in the Principality. Like other tax rates, it is part of the essential gear of the country’s taxation. And who has to pay it? How often? How much is it?
The IRPF in Andorra applies to people who have the tax residence in the Principality. This is a type of taxation that concerns taxable income, regardless of its nature, as well as the source and registration of the taxpayer. Personal income tax in Andorra is withheld from the global income made by each of the country’s tax taxpayers.
This income comes from the different economic and commercial activities and which, before the entry into force of the tax, were subject to the IAE or Tax on the Profits of Companies. Economic Activities.
Who pays IRPF in Andorra?
One of the common questions is who has to pay personal income tax in Andorra. According to applicable legislation, they must pay it:
- All people who live in the Principality for more than 183 days a year.
- All people who have and justify one or more economic activities or who receive economic interests. That is, all residents who obtain economic benefits and take advantage of the Andorran territory.
When it comes to paying personal income tax in Andorra the question also arises as to how much you have to pay. As far as Andorran taxation is concerned, income taxable by personal income tax is determined based on origin and nature. This is how we can find that there is a general base and a savings base.
To general income belong:
- Work income (salary).
- Income fromreal estate, such as the exploitation of rental property, any rights over these properties.
- Income from economic activities.
As for the base of savings, we tell you that changes in the composition of assets are included here, as well as capital gains (interest, income, etc.).
IRPF exemptions in Andorra
One of the great advantages of Andorra, as we already mentioned, is itslow taxation. Personal income tax is no exception and there are also exemptions. acquisitions for free such as donations and inheritances are excluded from personal income tax, since hereditary rights do not exist.
How much and when is IRPF paid in Andorra?
The application of personal income tax varies depending on the income of each taxpayer, but current legislation says that the tax rate throughout the Principality should be a maximum of 10% strong>. This 10% is reduced in cases where people have an income of between 24,000 and 40,000 euros.
Since 2014, the masters of Andorran companies, as well as employers, have actively participated in the country’s tax system. It is they who are asked to make the corresponding withholdings regarding personal income tax, on behalf of the ministry in charge of finances and through the Andorran Social Security Fund, better known as Andorran CASS.
In the case of individuals, they do not have to make any withholding directly, since the employers are in charge of carrying out this process. To do this, it is important to follow a scale, previously established and based on the salary of the workers. This is how theIRPF in Andorrais governed by the following percentages:
- From zero to 27,000 euros: 0%.
- From 27,000 to 30,000 euros: 0.5%.
- From 30,000 to 40,000 euros: 1%.
- From 40,000 to 50,000 euros: 2%.
- From 50,000 to 60,000 euros: 3%
- From 60,000 to 70,000 euros: 4%.
- From 70,000 to 80,000 euros: 4.5%.
- From 80,000 to 90,000 euros: 5%.
- From 90,000 to 100,000 euros: 5.5%.
- From 100,000 to 120,000 euros: 6%.
- From 120,000 to 150,000 euros: 6.5%.
- From 150,000 onwards: 7%.
When the net income is less than 24,000 euros, then the Andorran tax resident does not have to make a declaration to the country’s tax administration.
And when is personal income tax paid? Although it is the employer who is in charge of making the corresponding withholdings, Andorran legislation is very clear when it comes to making the declaration. Taxpayers in the country must submit their tax return between April 1 and September 30. Furthermore, what is declared are the income and income received in the previous fiscal year.
