One of the advantages of living in the Principality is related to taxes. The low taxation of the country makes many people decide to establish their residence there. And what is the VAT in Andorra? We explain everything you need to know about this tax and how works in the Principality.
What is IGI or VAT in Andorra?
The Andorran tax system offers great advantages to residents of the Principality. Taxation in Andorra is structured in such a way that residents can obtain great benefits and represents a great advantage over other countries. You will be surprised to know that VAT in Andorra is one of the lowest in the world.
It is also important to note that VAT in Andorra is not called that. It is called IGI and means General Indirect Tax. The IGI or VAT in Andorra, came into force on January 1, 2013. The IGI became the tax to be applied to deliveries of goods, imports and the provision of services within the national territory. In this case, professionals and businessmen are in charge of transferring the tax to the end user.
Types of VAT in Andorra
VAT in Andorra is classified into five different types. This is how we find the general IGI which is the most common and amounts to only 4.5%. It makes a big difference when compared to the general Spanish VAT, which is 21% or the French TVA, which is 20%.
But thisis not the only type of VAT in Andorra. You can also find the increased 9.5% and that applies to financial and banking services. In addition to the general and the increased, we find the super-reduced, the reduced and the special. It is important to know in which case each of these applies, since there are different assumptions in this regard.
IGI superreducido
This tax is 0% and is applicable in cases of hospital or public health care. It is also the rate that applies to assistance provision services, reimbursable medications (from the CASS) and ambulance transportation.
This type of tax also includes services related to education, daycare, teaching (they can be private classes at school and even the university). All services related to sports, physical education and culture are included in this type, as long as they are provided by public organizations or by non-profit entities.
Finally, the super-reduced IGI is applicable to home transfers, as long as it concerns the purchase of a first residence. That’s why if you want to invest and buy a house in Andorra, as far as IGI is concerned, it is very profitable.
Reduced or 1% rate
The 1% reduced IGI applies in the following cases:
- About food for human consumption and for animals. Alcohol is not included in this section.
- The IGI of 1% is applied to water for human consumption, as well as for animal irrigation.
- VAT in Andorra at 1% is also applicable to live animals, seeds and plants.
- When it comes to books, newspapers and magazines for advertising purposes.
IGI of special type or 2.5%
VAT in Andorra of special rate amounts to 2.5% of the value of the goods and/or services included in this section. Firstly, the transport of people is covered by this type of taxation (except if it is done by cable transport). But it is also a tax rate that applies to different cultural services, but they do not depend on the public administration, parapublic or non-profit entities.
The VAT of 2.5% can benefit from:
- The services of libraries, archives and documentation centers.
- Visits to museums, art galleries, art galleries, monuments and historical places, as well as fairs.
- The organization of exhibitions and demonstrations that have a cultural, educational or social nature.
- Musical, theatrical, audiovisual, choreographic performances and film projections.
- The 2.5% VAT also applies to visits to botanical gardens, natural parks, protected areas and zoos.
- Finally, the 2.5 IGI must also be applied to objects that are considered art, collectibles or antiques.
How to pay VAT in Andorra?
The IGI is a tax that, as in Spain, must be paid by the final consumer, that is, the person who purchases the product or service. On the other hand, we find that the IGI must be declared (when appropriate), in different deadlines:
- Semesterly. Companies or self-employed workers who have an annual invoice with an amount of less than 250,000 euros must declare it.
- Quarterly. It applies to companies that have a turnover between 250,000 and 3,600,000 euros per year.
- Monthly. When it comes to companies that have a turnover of more than 3,600,000 euros per year.
Regardless of the deadline that corresponds to you, keep in mind that you must always have the list of invoices issued, as well as another of invoices received strong>. It is important that these documents allow you to consult the tax base and the applicable rate. Therefore it is important that you distinguish between:
- VAT refunded.
- Supported, in operations carried out within the Andorran territory.
- IGI supported on imports, for products and/or services contracted outside Andorra.
