At WIT Andorra, we understand that the world of taxes can be complex and sometimes overwhelming. That’s why we want to offer you a clear and concise guide on the Personal Income Tax (IRPF) in Andorra, designed to help you understand your tax obligations and how we can assist you in this process.
What is the IRPF?
The IRPF is a tax that applies to the income earned by individuals who are tax residents in Andorra. This tax applies to all income, regardless of where it is generated or the country of the payer. In other words, it taxes the worldwide income earned by the taxpayer.
Who is considered a tax resident in Andorra?
An individual is considered a tax resident if they meet any of the following conditions:
- Reside in Andorra for more than 183 days during the calendar year.
- Have the main center of their activities or economic interests in Andorra, either directly or indirectly.
Cross-border workers who commute daily to Andorra from Spain or France are not considered tax residents. The income earned by these workers is subject to the non-resident income tax, although they may opt for a special regime under the general IRPF rules.
Obligation to declare the IRPF
At WIT Andorra, we help you determine if you are required to declare the IRPF. You must file the declaration if:
- You earn income from economic activities.
- Your income from real estate capital and/or employment is equal to or greater than 24,000 euros.
- Your non-withheld income from movable capital exceeds 3,000 euros.
- You earn capital gains and losses.
Types of income subject to IRPF
The IRPF in Andorra taxes different types of income classified according to their origin:
- Employment income: Wages and salaries derived from an employment relationship.
- Real estate capital income: Income from renting properties.
- Income from economic activities: Income from business or professional activities.
- Income from movable capital: Dividends, interest, and returns from life or disability insurance.
- Capital gains and losses: Income derived from changes in the composition of assets, excluding inheritances and donations.
Tax rate and fiscal benefits
The general IRPF rate is 10%, but a 5% rate applies to income between 24,000 and 40,000 euros, with a maximum deduction of 800 euros. Additionally, there are deductions to prevent double taxation and for new investments and job creation in economic activities.
Settlement period
The IRPF declaration must be submitted between April 1st and September 30th of the year following the fiscal year. At WIT Andorra, we help you meet these deadlines and optimize your tax situation.
Withholdings
Payers of employment and movable capital income must apply the corresponding withholding and remit it to the Ministry of Finance.
Employment income: The Department of Taxes and Borders determines the withholding percentage, taking into account applicable reductions and deductions.
Movable capital income: A fixed withholding rate of 10% is applied, with the possibility of requesting a reduction if the income is below 3,000 euros.
How can we help you at WIT Andorra?
t WIT Andorra, we are experts in Andorran taxation and are committed to offering you a personalized service to maximize your tax benefits. Our team of professionals will guide you through every step of the process, ensuring that you comply with all regulations and take full advantage of the available deductions and benefits.
Don’t let the complexity of the IRPF overwhelm you. Contact us today and discover how we can simplify your tax obligations and help you optimize your finances.
