Everything you need to know about the General Indirect Tax in Andorra

Have you heard about the General Indirect Tax (IGI) in Andorra and wonder what it is and how it works? At WIT, we offer you a detailed guide to understand this important tax and how it affects your business.

What is the General Indirect Tax in Andorra?

The General Indirect Tax (IGI) is the Andorran equivalent of the VAT in other countries. This tax is levied on the consumption of goods and services within the Principality of Andorra.

How does the IGI work?

IGI is a tax that is added to the price of goods and services. Businesses are responsible for collecting this tax from their customers and subsequently paying it to the government.

What does the IGI levy?

IGI is levied on a wide range of goods and services, from everyday items to professional services. It is a versatile tax that affects almost all commercial transactions in Andorra.

The IGI tax rates are as follows:

  • General rate (4.5%): This is the most common rate in Andorra. It applies to most goods and services that are not covered by the special categories mentioned in the following sections. Comparatively, this rate is significantly lower than the VAT applied in Spain (21%) or the TVA in France (20%), reflecting a less burdensome tax policy in Andorra.
  • Super-reduced rate (0%): applied in public health care, education, primary housing, and investment gold.
  • Reduced rate (1%): se aplica en alimentos para el consumo humano y para animales, agua, animales vivos, semillas, plantas, libros, diarios y revistas.
  • Special rate (2.5%): applies to transport of persons, private cultural services, and objects of art and antiques.
  • Increased rate (9.5%): only applies to financial and banking services.

Andorra’s tax structure, with its relatively low general tax rate, is a key aspect of its tax attractiveness, especially when compared to neighbouring countries such as Spain and France.

Periodicity of IGI According to Revenue Figure

La periodicidad de declaración y pago del IGI en Andorra varía según la cifra de ingresos de tu actividad. For companies with high income, the declaration can be monthly, while for smaller businesses, it could be quarterly or annually.

Special Regimes of the IGI Law

It is crucial to bear in mind that the IGI law provides that regímenes especialesadapted to different types of business activities and circumstances, thus offering taxation that is more in line with the reality of each business.

Refund of IGI

With the tax reform passed in 2023, the possibility to apply for a refund of the IGI quota on a regular basis is established. This represents a significant opportunity to improve companies’ liquidity and cash flow.

Small Business Exemption

In addition, it is important to know that there is the possibility of not being considered a business or professional for tax purposes if the annual turnover does not exceed 40,000 euros. This can represent a great tax relief for small entrepreneurs and freelancers, simplifying their tax management.

In Andorra, residents who are final consumers have a notable advantage when making purchases in other countries, especially in the European Union. When they buy products in foreign countries, they have the option to claim tax free or VAT refund (Value Added Tax) when taking these products back to Andorra by paying the corresponding IGI (Value Added Tax) at customs.

The General Indirect Tax is an essential part of Andorra’s tax system. Knowing how it works, what it taxes, and how these new provisions can be applied is crucial for any business.At WIT, we help you to navigate the complexities of IGI so you can focus on what really matters: growing your business.

Do you need more information about IGI or assistance with your tax obligations in Andorra? Contact WIT, your trusted advisor, and let us help you simplify your taxation.

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