Andorra VAT Rate
Andorra, as an attractive European business destination, offers robust entrepreneurial conditions. At the core of its fiscal environment, the General Indirect Tax (IGI), equivalent to VAT in many countries like France, plays a key role.
What is the General Indirect Tax (IGI)?
IGI in Andorra, also known as the General Indirect Tax, is a consumption tax. Applied to most goods and services, it represents a percentage of the selling price paid by consumers. Rates vary depending on the products and services, with reductions for certain essential goods and higher rates for others.
To fully understand taxation in Andorra, read our guide that provides answers to all your questions.
Differences between IGI and VAT
Differences between IGI and VATAndorra structures its value-added taxes into several direct taxes, mainly grouped under the general direct tax. These taxes include indirect taxes on goods, commercial activities, financial services, domestic production, public service tax, notary faith, and taxation on electrical and telephone consumption.
Comparison with VAT rates in Europe
While many European countries apply VAT rates of up to 21%, Andorra maintains a fixed rate of 4.5% on value-added. This advantageous taxation positions Andorran businesses with the lowest fiscal burden in Europe.
Functioning of IGI in European transactions
Andorra freely applies its IGI to deliveries of goods and services in Europe. According to the 1990 Customs Union Agreement, a 4.5% customs duty is also applied to imports, with special rates of 1% and 2.5%.
IGI (VAT) Rates in Andorra
In addition to the generic rate of 4.5%, Andorra applies other rates depending on the category of products or services:
- 0% for health services
- 1% for foodstuffs, books
- 2.5% for passenger transport
- 9.5% for banking and financial services
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