Andorra Corporate Tax Guide: CIT 10%, Minimum 1.5% 2026

Andorra's Corporate Income Tax (CIT) rate is 10%, one of the lowest in Europe. A minimum corporate tax of 1.5% applies on a calculated basis. There is a separate 10% flat rate on passive income. No reduced rates exist for small businesses. Here is how Andorran corporate tax works in 2026.

Corporate Income Tax in Andorra (Impost sobre Societats — IS) is governed by the consolidated tax code and administered by the Ministeri de Finances — Departament de Tributs i Fronteres. The standard CIT rate of 10% is significantly lower than neighboring countries: Spain (25%), France (25%), and Portugal (21%). The minimum tax of 1.5% ensures a baseline contribution. The tax year is the calendar year. Companies must file annual CIT returns by March 31 of the following year. Filing and compliance guide →

Real-world example: An Andorran consulting company with annual turnover of €500,000 and taxable profit of €150,000 pays CIT at 10% = €15,000. The minimum tax applies at 1.5% of a calculated tax base, so if the regular CIT is lower than the minimum, the minimum prevails. Compare this to Spain where the same profit would incur 25% CIT = €37,500, or France at 25% = €37,500. IT sector overview →

Corporate Tax Rate Structure

10% standard CIT: Applies to all resident companies on taxable profits
1.5% minimum tax: Calculated on a specific tax base — ensures a minimum tax contribution regardless of profitability
10% passive income: Certain passive income (interest, royalties, certain financial income) taxed at a flat 10%
No reduced rates: Unlike some neighbouring countries, Andorra does not offer reduced CIT rates for small businesses or startups

The minimum corporate tax applies to all companies and is calculated on a base determined by the tax code, which may differ from accounting profit. This prevents zero-tax scenarios even for companies reporting losses.

Taxable Income and Deductions

Corporate taxable income is calculated as accounting profit adjusted for tax purposes. Key rules include:

Depreciation: Standard rates apply — buildings 3-5%, machinery 10-20%, vehicles 20%, computers 25%
Interest deductibility: Thin capitalization rules limit interest deductions
Loss carryforward: Tax losses can be carried forward for up to 10 years
Dividend exemption: Dividends received from Andorran resident companies are generally exempt from CIT
Capital gains: Treated as ordinary income and taxed at standard CIT rate

Transfer pricing rules apply for transactions with related parties following OECD guidelines. Andorra has a formal tax ruling system. Cross-border taxation →

Withholding Taxes on Outbound Payments

Andorra imposes withholding tax on certain payments to non-residents:

Dividends: 0% WHT for both residents and non-residents (participation exemption)
Interest: 10% WHT (may be reduced under DTT)
Royalties: 5% WHT (may be reduced under DTT)

The 0% dividend withholding tax for non-residents is an important advantage for international holding structures. Investment income guide →

Tax Incentives and Exemptions

Andorra offers limited tax incentives for businesses:

Participation exemption: Dividends and capital gains from qualifying shareholdings are exempt from CIT
R&D incentives: Enhanced deductions for research and development expenditures
International holding regime: Favorable treatment for holding companies
Digital nomad visa: Attracts international tech talent and remote workers

Andorra's low 10% CIT is itself a significant incentive compared to neighbouring countries. IT and digital sector →

Who needs to register for CIT in Andorra?

All legal entities (companies, partnerships, branches of foreign entities) must register for CIT with the Departament de Tributs i Fronteres. Registration is required before starting business operations. Non-resident companies with a permanent establishment in Andorra are also subject to CIT on Andorran-source income.

What is the filing deadline for corporate tax?

Annual CIT returns must be filed by March 31 of the following year. Tax is paid in advance installments during the year based on the previous year's liability, with a final settlement upon filing. Late filing penalties apply.

Are there any regional taxes in Andorra?

No. Andorra has a unitary tax system with no regional or municipal corporate taxes. The 10% CIT is the only corporate-level tax. There is no trade tax or local surcharge on corporate profits.