Andorra Investment Income Guide: Dividends 0%, Interest 10%, Royalties 5% 2026
Andorra applies very favourable withholding tax rates on investment income: dividends at 0% for both residents and non-residents, interest at 10%, and royalties at 5%. Double Taxation Treaties may reduce these rates further. Here is how investment income is taxed in 2026.
The taxation of investment income in Andorra is notably investor-friendly. The 0% dividend withholding tax for both residents and non-residents makes Andorra a competitive jurisdiction for holding companies. The interest and royalty rates are also low by European standards. The Departament de Tributs i Fronteres administers withholding tax obligations — the payer is responsible for withholding and remitting the tax. Cross-border tax guide →
Real-world example: An Andorran company pays €200,000 in dividends to a French shareholder. WHT at 0% = €0, net payment = €200,000. If the same company pays €50,000 in royalties to a German licensor: WHT at 5% = €2,500, net = €47,500 (potentially reduced under DTT). Interest of €30,000 paid to a Spanish lender: WHT at 10% = €3,000. Compare to Spain where dividends to non-residents incur 19% WHT, and royalties incur 24% WHT. Corporate tax overview →
Withholding Tax Rates on Investment Income
- Dividends — residents: 0% WHT — dividends paid to Andorran resident individuals and companies are exempt
- Dividends — non-residents: 0% WHT — no withholding on dividends paid to non-residents (participation exemption)
- Interest — residents: 0% WHT — interest paid to Andorran residents is exempt
- Interest — non-residents: 10% WHT — may be reduced under DTT
- Royalties — residents: 5% WHT
- Royalties — non-residents: 5% WHT — may be reduced under DTT
The 0% dividend WHT on non-residents is rare internationally and positions Andorra as a leading jurisdiction for holding companies alongside Luxembourg, Malta, and Cyprus.
Double Taxation Treaty Network
Andorra has approximately 10 Double Taxation Treaties. Treaties generally provide for reduced withholding tax rates:
- Dividends: 0% in most treaties (reflecting domestic 0% rate)
- Interest: Treaty rates typically range from 0% to 5% (compared to 10% domestic)
- Royalties: Treaty rates typically range from 0% to 5% (compared to 5% domestic)
Treaty benefits require the recipient to be the beneficial owner and provide a Certificate of Tax Residency. Treaty partners include Spain, France, Portugal, Luxembourg, UAE, Malta, Cyprus, San Marino, Hungary, and the Netherlands.
Taxation of Other Investment Income
- Bank interest: Interest on savings accounts earned by residents is not subject to withholding tax. Non-residents may be subject to 10% WHT
- Government bonds: Interest on Andorran government securities may have specific tax treatment
- Capital gains on investments: 0% CGT on shares and securities for both residents and non-residents
- Participation exemption: Dividends and capital gains from qualifying shareholdings are exempt from CIT
Compliance and Reporting
Andorran companies paying dividends, interest, or royalties to non-residents must withhold the appropriate tax and remit it to the Departament de Tributs i Fronteres within the prescribed timeframe. The payer must also file an annual withholding tax return. Recipients seeking treaty relief must provide a Certificate of Tax Residency, a declaration of beneficial ownership, and other required documentation. Failure to withhold correctly results in the payer being liable for the unpaid tax plus penalties.
Are dividends from Andorran companies really 0% for non-residents?
Yes. Andorra does not levy any withholding tax on dividends paid to non-residents. This applies regardless of the shareholder's country of residence and without any minimum holding period or shareholding threshold. This is a key advantage for international investors.
What is the procedure for claiming treaty relief?
The non-resident recipient must submit a Treaty Relief Application to the Andorran payer, along with a Certificate of Tax Residency. The payer then applies the reduced rate at source. If tax has been over-withheld, the non-resident can file a refund claim with the tax authority.