Corporate Tax in Andorra 2026
Is it true that companies in Andorra only pay 10% of their profits? This is one of the most frequent questions. The direct answer is yes: the general Corporate Tax (IS) rate is 10%. However, the tax reality has many more nuances.
Deductions, adjustments, and, above all, the minimum payment of 3% introduced by the 2023 reform come into play between gross profit and the final installment. In this updated guide, we explain everything you need to know before making financial decisions in the Principality.
1. What is Corporate Tax and what are the current types?
This direct tax levies profits obtained by tax-resident legal entities in Andorra (such as SL, SLU, SA, SAU societies) and by permanent establishments of foreign companies. It is noteworthy that the self-employed do not pay this tax, but rather they do it through IRPF (personal income tax).
| TAX REGIME | RATE | CONDITIONS & DETAILS |
|---|---|---|
| General Rate | 10% | It is the nominal rate applicable by default to all Andorran societies and one of the most competitive in Europe. |
| Reduced Rate | 2% | For international trade, international exploitation of intangibles, and ETVE. It is mandatory to obtain prior authorization and demonstrate real economic substance. |
| Minimum Installment | 3% | Since Law 5/2023, no profitable company can have an effective rate lower than 3%, regardless of deductions. |
2. Main Deductions in the Principality
Despite recent restrictions, regulations continue to offer very attractive tax incentives to foster corporate growth. Do not forget that the sum of all these bonuses can never lower your installment below the 3% floor.
| TYPE OF DEDUCTION | KEY REQUIREMENTS |
|---|---|
| Job Creation | Applicable for each new indefinite contract. Requires maintaining the staff. |
| Investments (Fixed Assets) | It is calculated on the amount invested in new assets exclusively destined for economic activity. |
| International Double Taxation | Avoids paying twice for the same income if a Treaty (CDI) exists with the state of origin. |
| R+D+i and Patronage | Subject to the project’s qualification and the submission of detailed technical documentation. |
3. Formal Obligations: Deadlines and Economic Substance
To correctly liquidate the tax, it is vital to know the calendar: the payment on account is made during the month of September (50% of the previous year’s installment), and the annual declaration must be submitted before July 31st of the following exercise by telematic means.
Beyond deadlines, economic substance is now the main focal point of inspections (especially if you apply the 2% rate). You need to demonstrate real means: a physical office, contracted staff, operational bank accounts, and that management decisions are actually made from Andorran territory.
4. Fiscal Comparison: Andorra vs Spain vs Portugal
Andorra’s attractiveness becomes very evident when we compare it with surrounding countries. In a theoretical case with €200,000 of gross profit, the differences in the nominal installment are very significant:
| COUNTRY | NOMINAL RATE | INSTALLMENT (On €200,000) |
|---|---|---|
| 🇦🇩 ANDORRA | 10% | €20,000 |
| 🇪🇸 SPAIN | 25% | €50,000 |
| 🇵🇹 PORTUGAL | 19% (+ municipal surcharge) | Aprox. €41,000 |
Do you want to optimize your company’s taxation?
Do not commit common mistakes like forgetting tax’s adjustments or applying incorrect deductions. At Triple A, we are experts in Andorran taxation and are ready to help you.
