Andorra VAT Guide: IGI 4.5% Standard, 1% Super-Reduced, 9.5% Banking 2026
Andorra applies the Impost General Indirecte (IGI) at a standard rate of 4.5%, one of the lowest in Europe. A super-reduced rate of 1% applies to books, food staples, and medicine. Financial and insurance services are taxed at 9.5%. Here is how IGI works in 2026.
The IGI is governed by the Andorran tax code and administered by the Ministeri de Finances — Departament de Tributs i Fronteres. Andorra's IGI rates are significantly lower than neighbouring countries: Spain's VAT (21% standard, 10% reduced), France (20% standard, 10% reduced) and Portugal (23% standard, 13% reduced). The IGI is a destination-based consumption tax similar to EU VAT. Businesses with annual taxable turnover exceeding certain thresholds must register for IGI. Corporate tax overview →
Real-world example: A restaurant in Andorra la Vella charges €100 for a meal. IGI at 4.5% = €4.50, total invoice €104.50. A pharmacy sells €200 of prescription medicine at 1% IGI = €2. A bank charges €500 in service fees at 9.5% IGI = €47.50. Compare to Spain where the same meal would incur 10% VAT = €10, and the bank fees would be exempt from VAT. Cross-border IGI rules →
IGI Rates in Andorra
- 4.5% (standard rate): Most goods and services including retail, restaurants, professional services, electronics, clothing, and consumer goods
- 1% (super-reduced): Books, newspapers, food staples, medicine, medical equipment, and certain basic necessities
- 9.5% (increased rate): Banking, financial services, and insurance services
- 0% (zero rate): Exports of goods, international transport, and certain cross-border services
- Exempt: Education, healthcare, residential real estate rentals, and postal services
The 4.5% standard rate is the lowest in Europe alongside Jersey and Guernsey, making Andorra a low-cost jurisdiction for goods and services. The 9.5% rate on financial services ensures the banking sector contributes its share.
IGI Registration
- Mandatory registration: Annual taxable turnover exceeds applicable thresholds (varies by activity)
- Voluntary registration: Businesses below the threshold may opt to register
- Non-resident registration: Foreign businesses supplying taxable goods or services in Andorra must register
Registration is done through the Departament de Tributs i Fronteres. IGI numbers follow a standard format. Failure to register when required can result in penalties and back-tax assessments.
IGI Compliance and Filing
- Filing frequency: Monthly or quarterly depending on turnover
- Filing deadline: By the prescribed date following the tax period
- Electronic filing: All IGI returns must be filed electronically
- Records: Businesses must maintain IGI invoices, receipts, and accounting records for the statutory period
Late filing incurs penalties. Late payment incurs interest at the statutory rate. The Departament de Tributs i Fronteres conducts regular audits.
IGI Invoicing Requirements
- Tax invoices must include seller/buyer details, IGI number, date, description, amount, IGI rate, and IGI amount
- Invoices must be issued in euros (EUR)
- E-invoicing is increasingly being adopted for B2B transactions
Can non-resident businesses reclaim Andorran IGI?
Yes. Non-resident businesses not registered for IGI in Andorra may reclaim IGI incurred on business expenses through a refund procedure. Reciprocal arrangements apply for businesses from countries with mutual agreements.
Are digital services subject to IGI?
Yes. Digital services provided by non-resident companies to Andorran consumers are subject to 4.5% IGI. Non-resident digital service providers may need to register for IGI in Andorra under the simplified registration regime.
What is the penalty for late IGI filing?
Late filing penalties depend on the delay and company size. Interest on late payment accrues at the statutory rate. Repeated violations may result in increased penalties and business registration suspension.