Gift tax in Andorra

In Andorra, gift tax, or tax on free wealth transfers (ITPG), is an important topic for foreign residents and investors. Our Gestoria offers you a detailed understanding of the circumstances, the different cases, and the corresponding articles of law. We will also answer concrete questions to help you navigate this taxation.

What is a Donation?

A gift is an act by which one person (the donor) transfers ownership of an asset to another person (the donee) without financial consideration. In Andorra, gifts can include real estate, sums of money, shares, and other types of property.

Taxation of Gifts in Andorra

The ITPG applies when property is transferred from one person to another without consideration. The rules and tax rates vary according to several criteria, including the relationship between the donor and the donee.

Tax Rates by Relationship

• Between parents in the direct line (parents-children): The rate is 0%.
• Between 2nd degree collateral relatives (brothers/sisters): The rate is 10%.
• Between unrelated persons: The rate is 25%.

Value of Donated Property

The value of donated property is a key factor in the tax calculation:

• Buildings: The value taken into account is the higher of the purchase price and the cadastral value.
• Movable property (money, shares, works of art): The market value on the day of the gift is used.

Deductions

Andorran tax residents benefit from allowances on the total value of donated assets:

• Spouse, ascendant or direct descendant: Allowance of €40,000.
• Other cases: Allowance of €20,000.

Corresponding Sections of the Act

The articles of Andorran law relating to gifts are mainly found in the “Codi de Família” (Family Code) and the “Codi de Successions i Donacions” (Inheritance and Donation Code). Here are some key articles:

• Article 13 of the Family Code: Conditions for gifts between parents and children.
• Article 27 of the Inheritance and Gifts Code: Types of property that can be donated and terms of donation.
• Article 42 of the Inheritance and Gifts Code: Gifts between spouses, exempt from tax under certain conditions.

Formalities to Follow

For the gift to be valid, several formalities must be respected:

• Notarial deed: The donation must be formalized by a notarial deed. The notary registers the gift and ensures that all legal requirements are met.
• Official registration: The donation must be registered with the relevant authorities.
• Required documentation: Proof of ownership, identification of parties involved, etc.

Concrete questions

1. Is it possible to make a gift to a person who is not a resident of Andorra?

Yes, it is possible to make a gift to a non-resident person. However, it is recommended that you consult with a tax advisor to understand the tax implications in the donee’s country of residence.

2. Are donations in Andorra subject to notary fees?

Yes, donations are subject to notary fees, which vary depending on the value of the donated property and the complexity of the notarial deed.

3. What are the tax implications for a gift of real estate in Andorra?

Gifts of real estate between direct relatives and between spouses are exempt from tax. However, notary fees and registration fees may apply. It is crucial to ensure that all legal formalities are followed to avoid future complications.

In conclusion

Gift tax in Andorra offers significant advantages, including the exemption for gifts between direct relatives and spouses. However, it is essential to comply with the legal formalities and consult with tax and legal experts to ensure that everything is in order. With a clear understanding of the articles of the law and the different circumstances of donation, you can plan your donations efficiently and in full compliance with Andorran legislation.

For those looking for professional support in this area, Clickand, our gestoria based in Andorra, specialises in this type of case. Our team of experts can help you navigate the complexities of gifting and optimize your tax situation. To make an appointment and get personal advice, you can book an appointment by email.

By following these recommendations and being accompanied by professionals like Clickand, you can manage your donations with complete peace of mind and in compliance with the legislation in force.