Andorra vs Spain Taxes 2026: Save €40,000+/Year (Complete Comparison)

If you’re considering moving to Andorra from Spain — whether you’re a business owner, freelancer, or employee — the tax gap between the two countries is likely the most compelling factor in your decision. And in 2026, that gap is wider than ever.

This guide breaks down every major tax category: income tax, corporate tax, VAT, social security, dividends, and wealth tax. With real figures, practical examples, and the latest legislative changes, including the Omnibus 2 Law passed in January 2026.

Personal Income Tax (IRPF)

The most striking difference between the two countries lies in personal income tax. Spain applies a progressive system with rates reaching up to 47%, while Andorra caps at 10% with a generous exemption.

Andorra

Andorra’s personal income tax has just three brackets:

Annual income bracket	Tax rate
Up to €24,000	0% (exempt)
€24,001 to €40,000	5%
Above €40,000	10%

The most notable feature is the full exemption on the first €24,000. This means an Andorran resident earning €24,000 or less pays absolutely zero income tax.

Spain

Spain’s IRPF combines a state bracket with a regional bracket that varies by autonomous community. The state brackets for 2025/2026 are:

Annual income bracket	State rate
Up to €12,450	19%
€12,451 to €20,200	24%
€20,201 to €35,200	30%
€35,201 to €60,000	37%
€60,001 to €300,000	45%
Above €300,000	47%

The regional component pushes the maximum combined marginal rate to 48-54% depending on the autonomous community. Madrid keeps the lowest rates, while Catalonia, Valencia, and the foral communities (Basque Country, Navarra) charge higher rates.

Practical example: €100,000 salary

In Andorra: The first €24,000 is exempt. On the next €16,000 (from €24,001 to €40,000) you pay 5% = €800. On the remaining €60,000 (from €40,001 to €100,000) you pay 10% = €6,000. Total income tax: €6,800 (effective rate of 6.8%).

In Spain (Madrid): Applying Madrid’s combined state and regional brackets, the total income tax is approximately €26,000-€28,000 (effective rate around 26-28%). In Catalonia, the effective rate rises to 29-31%.

The difference is around €20,000 per year in income tax alone. On a €200,000 salary, the gap exceeds €55,000 annually.

Corporate Tax

Andorra

Andorra’s corporate tax is governed by Law 95/2010:

Concept	Rate
General rate	10%
Reduced rate (profits ≤ €50,000)	5%
Dividends paid to residents	0%
Holding companies (qualifying)	0%

Dividends distributed by an Andorran company to its resident shareholders incur no additional tax. This eliminates the double taxation that exists in Spain and means the total effective tax rate on distributed business profits is just 10% (or 5% for profits up to €50,000).

Spain

Concept	Rate
General rate	25%
SMEs (turnover < €10M)	24% (2025), dropping to 20% by 2028
Micro-enterprises (turnover < €1M)	21% on first €50k, 22% on rest (2025)
Newly created companies	15% (first 2 profitable years)

Additionally, dividends distributed to individual shareholders in Spain are taxed as savings income:

Dividend bracket	Rate
Up to €6,000	19%
€6,001 to €50,000	21%
€50,001 to €200,000	23%
€200,001 to €300,000	27%
Above €300,000	30%

Practical example: company with €150,000 profit

In Andorra: Corporate tax = €150,000 × 10% = €15,000. Net profit = €135,000. If distributed as dividends to a resident shareholder: €0 additional tax. Total tax burden: €15,000 (10%).

In Spain: Corporate tax = €150,000 × 25% = €37,500. Net profit = €112,500. If distributed as dividends: approximately €23,175 in savings income tax (19-23% depending on bracket). Total tax burden: ~€60,675 (40.5%).

The difference is dramatic: a business owner in Spain pays more than four times what they would in Andorra on the same profit.

Social Security (CASS vs Spanish Social Security)

Andorra (CASS)

The Caixa Andorrana de Seguretat Social (CASS) is Andorra’s social security system:

Concept	Rate/Amount
Employees: total rate	22% of gross salary
— Employer portion	15.5%
— Employee portion	6.5%
Self-employed and company directors	Fixed €563.42/month (22%)

CASS covers 75% of outpatient care and 90% of hospitalization costs. It operates as a co-payment system with excellent healthcare coverage.

Spain

Concept	Rate/Amount
Employees: total rate	~36-38% of gross salary
— Employer portion	~29.9-30%+
— Employee portion	~6.35-6.45%
Self-employed (flat rate first year)	€80/month
Self-employed (standard)	€230-€530/month depending on income

The employer’s contribution in Spain is significantly higher than in Andorra, making hiring more expensive. For a gross salary of €3,000/month, the total cost to the company is about €3,900 in Spain versus €3,465 in Andorra.

For freelancers, Spain offers a flat rate of €80/month for the first year, but contributions increase substantially after that. In Andorra, the fixed monthly payment of €563.42 is predictable and doesn’t vary with income.

VAT: IGI vs IVA

Concept	Andorra (IGI)	Spain (IVA)
General rate	4.5%	21%
Reduced rate	1%	10%
Super-reduced rate	—	4%
Increased rate (financial services)	9.5%	—

The VAT difference is massive: 4.5% versus 21%. For consumers, this means significant savings on every purchase. For businesses, it means lower administrative burden and less impact on final pricing.

A product costing €100 + VAT in Spain would be €121 for the consumer. The same product in Andorra would cost €104.50. That 15.8% difference is especially noticeable on large purchases like electronics, furniture, or home renovations.

Wealth Tax and Inheritance Tax

Concept	Andorra	Spain
Wealth tax	Does not exist	0.2%-3.5% (varies by region)
Inheritance and gift tax	Does not exist	7.65%-34% (varies by region)

Spain levies a Wealth Tax on net assets above certain thresholds (generally €700,000, with an additional €300,000 exemption for the primary residence). Some regions like Madrid effectively eliminate it through a 100% bonus, but others like Catalonia and Valencia apply it in full. For a detailed analysis of how this policy has played out across Europe, see our guide on Spain’s wealth tax and the countries that already abandoned it.

Andorra has no wealth tax and no inheritance or gift tax whatsoever. This is especially relevant for long-term wealth planning and family business transfers.

2026 Updates: Andorra’s Omnibus 2 Law

In January 2026, Andorra passed Law 2/2026, known as the Omnibus 2 Law, introducing relevant changes:

Passive residency: The minimum investment for passive residency rises from €600,000 to €1,000,000 in Andorran assets. This mainly affects investors who don’t plan to work in Andorra.

Active residency unchanged: For those establishing a business activity (company, freelance, professional), active residency requirements remain essentially the same. This is the most common route for Spanish entrepreneurs.

Tax rates unchanged: Income tax, corporate tax, and VAT rates have not been modified. Andorra maintains its competitive tax structure.

Full Comparison Summary

Concept	Andorra	Spain
Maximum income tax	10%	47% (up to 54% by region)
Income tax exemption	First €24,000	~€5,550 (personal allowance)
Corporate tax	10% (5% if profit ≤ €50k)	25% (general)
Dividends (resident individual)	0%	19-30%
VAT	4.5%	21%
Social security (total)	22%	~36-38%
Wealth tax	0%	0.2%-3.5%
Inheritance tax	0%	7.65%-34%

At What Income Does It Make Sense to Move?

The tax savings become meaningful starting at around €60,000-€80,000 in annual income. Below that threshold, the income tax difference may not offset relocation costs (housing, AFA deposit if applicable, adjustment).

For a business owner with a company generating €150,000 or more in profit, annual savings can exceed €40,000, covering establishment costs in under a year. If you’re evaluating whether to use Spain’s Beckham Law as a stepping stone, the long-term maths still favour Andorra. And with Spain’s 100+ tax increases since 2018, the gap is only widening.

Use our free calculator to see exactly how much you would save with your specific situation, comparing your profile across Andorra, Spain, France, the UK, and Portugal. British entrepreneurs should also note that the Andorra-UK double taxation treaty, which entered into force in 2026, eliminates the risk of being taxed twice on cross-border income.

Important Note

This guide provides estimates based on official tax rates for 2025/2026. Actual tax obligations vary depending on individual circumstances, residency regime, applicable double taxation treaties, and other factors not covered here. Always consult a qualified tax advisor before making any relocation or investment decision.

Sources: Government of Andorra, Spanish Tax Agency (Agencia Tributaria), Andorran IRPF Law 5/2014, Andorran Corporate Tax Law 95/2010, Spanish Corporate Tax Law 27/2014, Omnibus 2 Law 2/2026, CASS, PWC Tax Summaries.