Andorra is popular for having one of the lowest income tax rates in Europe. And in this blog, we will discuss the tax procedures of the Andorran Public Administration. According to the reports, nobody pays more than 10% of the income as tax in Andorra and only the national government levies income tax in Andorra. Besides, the increasing number of double-tax treaties signals that Andorra is further getting integrated with the world business investment environment.
Personal income tax is another major concern to count on when you have the plan to form a company, find a job, or live in Andorra. The international finance specialists in Andorracan assist you in this regard. One of the main benefits of living in Andorra is that it has a comparatively straightforward taxation system and a relatively low rate for taxation.
What income is taxable in Andorra?
A standard mix of income is considered to be taxable in Andorra. It includes salaries and wages, professional fees, rents from properties and other rights, insurance payments, and other types of compensations regarding movable properties. Besides, there are handfuls of deductions in personal and business taxes in Andorra, which decrease the taxable incomes in Andorra. These are dependant family members, allowances for accommodation/rent, pension fund, and child support contributions.
Income tax on savings and investments:
Bond interest, dividends, savings account interest, and other types of financial incomes are taxable in Andorra. According to the top financial advice Andorra, the initial €3,000 is tax-exempt and therefore all incomes in this category are 10% taxable. The Andorran banks automatically remit the tax that someone owes on their savings account interest. Employers are also accountable for deducting a part of salary or wages and remitting that to the Andorran government against the tax of that year as the interim payment.
Overview of the personal income tax system in Andorra:
In short, it can be said that the income tax story of Andorra is:
- Nobody pays more than 10% of their total income in taxes in Andorra
- The total taxable income is less than this. All credit goes to certain deductions and a bracket system
- There are some special rules available for non-residents and married couples, which are easy to understand.