How vat / sales tax works in Andorra
Andorran IGI defaults to 4.5% on goods and services, among Europe's lowest, with 1% on healthcare and education, 2.5% on food and culture, and 9.5% on banking and financial services.
Traders register past EUR 40,000 of turnover, charge output tax, deduct input tax, and file quarterly returns with annual reconciliation.
Exports zero-rate, exempt sectors follow EU-style logic without credits, and cross-border B2B flows use reverse-charge mechanics.
Tax rates at a glance
- Standard VAT
- 4.5%
- Reduced VAT
- 1% / 2.5%
- Increased rate
- 9.5%
- Exports
- 0%
- Registration line
- EUR 40,000
- Filing rhythm
- Quarterly
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
E-commerce sellersFreelancersExpatsFoundersCross-border traders
Watch out for
- Banking and finance at 9.5% inverts normal reduced-rate logic, so financial-sector pricing needs Andorra-specific mapping.
- Non-EU status changes border mechanics with Spain and France, where import VAT and duty apply on arrival.
- The EUR 40,000 line catches testing-phase sellers fast, with backdated duties to the crossing point.
- Exempt supplies block input recovery without a reduced band to blame, repricing mixed health and education work.
Frequently asked questions
What is the VAT rate in Andorra?
Andorra applies 4.5% general IGI in 2026, with 1% and 2.5% reduced bands and 9.5% on banking and finance.
When must an Andorran business register for IGI?
Past EUR 40,000 of turnover, with quarterly filing standard. Voluntary registration suits input-heavy starters.
Does Andorra follow EU VAT rules?
No. Andorra is outside the EU VAT area with its own IGI system, so cross-border flows face import mechanics on both sides.