Andorra,
in April 2011,
introduced a 10% tax for non-residents on
local-sourced income. The extension of the
income tax regime to resident individuals
is forthcoming but subject to political
stability. There are no gift, inheritance
or capital transfer taxes.
Until
2007, there was no capital gains tax, but
one was then introduced (on a sliding scale)
in an attempt to slow property inflation.
The nominal rate is 15%, but it is reduced
by 1% for each year of ownership of the
property being sold.
Employees pay national insurance contributions,
and there are municipal taxes on property.
There are customs duties on some imported
goods (Andorra applies the common external
tariff of the EU), and a number of sales
taxes on various classes of goods and services,
typically at single digit rates although
higher on alcohol, tobacco and cars.
In
June, 2004, Andorra was obliged to accept
the EU's Savings Tax Directive, and as from
July, 2005, is imposing a withholding tax
of 15% (20% from July 1, 2008, 35% from
2011) on returns on savings paid to citizens
of Member States of the EU, of which 75%
is remitted onwards to the States concerned.
Andorra Residence and Liability for Taxation
Andorran residents as such do not have liability
to Government taxation, other than to municipal
property taxes (see below).
Permanent residence means a stay of more than
183 days in the year. Non-Andorran nationals
can become resident only by having a work
permit (which will ensure issue of a residence
permit) or by obtaining a Passive
Residence Permit.
Employees
of an Andorran enterprise (which means all
employees since there is no provision for
foreign companies to operate other than through
an Andorran entity) must pay social security
contributions (see below). The self-employed
(only possible with more than 10 years' residence)
also pay social security contributions.
Other
Andorran taxes or duties are related to events,
rather than residence status.
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There is a health and social security system
in Andorra known as the CASS (Caixa Andorrana
de Seguretat Social) which applies to all
employees of Andorran individuals or companies.
The rates of contribution are 13% of salary
by the employer, and between 5% and 9% by
the employee. In practice, the employer often
pays the lot. Self-employed individuals pay
18% of earnings.
'Employers',
ie individuals who own companies or who register
as traders and employ others, cannot join
the CASS. See Forms
of Company.
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A resident of Andorra registers with the parish
(Comu) where he rents or owns the property
in which he lives. This entails liability
to taxes and property rates imposed by the
parish. Percentages charged vary according
to the parish.
There
are a number of headings under which charges
are imposed:
- 'Foc
i Lloc' (meaning hearth and home) and
'Serveis' (services) rates are general
rates payable by heads of household, may
vary according to the size of the household,
and may be more for absentee owners; on
average, they amount to EUR150 per year;
- Property
ownership tax is levied on each property
owned (flat, house or chalet) and averages
around EUR100 per property;
- Rental
tax is levied by some parishes on rental
income received at around 3%;
- Property
acquisition tax is payable when property
is bought (not inherited) and varies quite
widely: often it is 1% or 2% of acquisition
cost, but is sometimes levied per square
metre.
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