How does VAT work in Andorra?
What is the IGI (Andorran VAT)?
Contrary to what happens in Spain, in Andorra we do not apply VAT or Value Added Tax.
But, in Andorran territory, we apply the IGI or General Indirect Tax.
This tax is levied on the sale of goods or the provision of services that are carried out by professionals and entrepreneurs in the Principality.
Now, when people consider that VAT or IGI has many more advantages than the one applied in Spain... how right are they?
How many VAT/IGI rates are there in Andorra?
Roughly speaking, in Andorra the tax advantages are much greater than Spain.
And as with the well-known Corporation Tax, VAT is not far behind.
It is considered one of the lowest in Europe.
To give you an idea, the general rate that applies to the supply of goods or with the provision of services is 4.5%.
In Spain, as you well know, it is 21%.
But that is not the only thing, because in Andorra, in addition, there are other products or services that have an even lower tax burden.
Do you want to stay and meet them? Because they are:
- Reduced rate (1%)
- Super reduced rate (0%)
- special rate (2,5%)
- Increased tax rate.
Let's see each one of them.
Reduced Rate (1%)
There are some products that are subject to reduced VAT here in Andorra.
While, in Spain, this reduced VAT is 10%, in the Principality it is only 1%.
These types of products are food, water, books or magazines, among others.
Unbelievable, don't you think?
Super Reduce Rate (0%)
If the reduced VAT has seemed brilliant, wait to know the super-reduced rate.
In this case, it applies to some products and services such as medicines, the rental of real estate, the acquisition of first homes or services in the education sector.
In Spain, this type of tax is 4% while here it is 0%... or what is the same: no VAT is applied.
Special Rate (2,5%)
In addition to those just mentioned, there are also a number of products and services to which a special rate of taxation is applied.
This consists of 2.5% and is used for the services of museums, libraries or art galleries and transport of people among others.
Increased Tax Rate
There is an exception to the above rates and applies to banking and financial services.
These are taxed at 9.5% and are considered the services with the highest tax burden in the country. A fact of the most curious if you think about it.
Now that you know all the types of VAT or IGI, we think it is important that you also know the deadlines that exist to declare in Andorra.
What are the IGI declaration deadlines?
The deadlines that exist when declaring the IGI in Andorra are:
- Semi-annual for companies or freelancers with an annual turnover of less than € 250,000.
- Quarterly for companies whose turnover is between 250,000 and 3,600,000 euros per year.
- Monthly for companies whose turnover exceeds 3,600,000 euros per year.
Of course, keep in mind that regardless of the term that applies to you, you must have a list of invoices issued and another of invoices received.
In them you must consult the taxable base of each invoice and the applicable rate.
To do this, you have to make a distinction between:
- Comercial VAT.
- Input VAT on internal transactions (within Andorran territory)
- INPUT VAT on imports (products or services contracted outside Andorra)
What models should I present?
VAT taxation in Andorra is carried out as follows.
When you pay taxes under the general regime, you must complete form 900.
Whereas, if you are going to do it by simplified regime, you will do it through the 910 model.
In addition, another tax for which you must pay in Andorra is the IRNR or Non-Resident Income Tax.
This is settled quarterly through models 700, 710, 700A, 710A, 700B or 710B.
How is it invoiced from Andorra to Spain?
Finally, and before closing this article, we would like to explain how the export of goods and services from Andorra to Spain is invoiced.
In the end, if your intention is to come here, you may be interested in finding out.
Export of goods
In this type of export, the invoice does not have to include any tax burden.
It will be when declaring the export at customs when the tax rate to be applied in the country of destination is applied. It can be Spain, France or... any.
Provision of services
While, with the entry into force of the Double Taxation Agreement, in the provision of services it is also not necessary to apply the IGI.
En este caso, se tributa únicamente en Andorra sin efectuar retenciones de ningún tipo.
Do you need help moving your company to Andorra?
From PSF we take care of helping you make your move to Andorra as simple and pleasant as possible.
We take care of everything: from your company to your family so that you can make this change as comfortable as possible and an incredible experience.
Just send us a message and we will contact you to tell you how we can help you start your new life in the Pyrenees.