Andorra vs Spain Tax: How Much Will You Save?
- Trying to save on taxes but want to remain in proximity to Spain?
- As many foreigners are discovering upon arriving on Spain's digital nomad and non-lucrative visas,taxes here are not low and may even be considerably higher than what they pay...
- But, what if you decide to move north to the small landlocked country in the Pyrenees - the nation of Andorra?
Andorra: A Tax Haven for Spain-Based Digital Nomads and Expats
What is Driving the Exodus to Andorra?
Trying to save on taxes but want to remain in proximity to Spain? Depending on your circumstances, a good compromise may be moving to the tiny, landlocked sovereign country of Andorra, situated between Spain and France in the Pyrenees.
As many foreigners are discovering upon arriving on Spain’s digital nomad and non-lucrative visas,taxes here are not low and may even be considerably higher than what they pay back in their home country.
But, what if you decide to move north to the small landlocked country in the Pyrenees – the nation of Andorra?
Situated right between France and Spain in the middle of the mountains, Andorra is known for its excellent ski resorts, outdoor adventures, duty-free shopping, and, increasingly, its low tax status.
READ ALSO: How will I be taxed on Spain’s digital nomad visa?
The Tax Benefits: A Significant Difference
In fact, if you’re a self-employed person living in Spain earning €60,000 per year and you chose to move to andorra, you’d actually be paying €20,000 less in taxes.
To take advantage of this, around 20,699 Spanish residents have moved to this pint-sized country, almost a third of its total population.
This mainly includes many high-net worth individuals such as online content creators, cyclists, poker players, traders, and crypto investors.
Tax Rate Comparison
| Tax | Spain | andorra |
|---|---|---|
| Income Tax (Max Rate) | 47% | 10% |
| VAT | 21% | 4.5% |
| Tax Burden (GDP) | 38% | 27.5% |
| Wealth Tax | Yes | No |
| Inheritance/Gift Tax | Yes | no |
The income tax rate in Andorra is up to 40 percent lower than in Spain and VAT is at 4.5 percent. The tax burden in Andorra stands at around 27.5 percent of GDP, like that of Switzerland or Ireland.
Andorra also has several other tax advantages over Spain. Personal income tax rate is set at a maximum of 10 percent and exempts those earning less than €24,000 from paying it all. it also does not charge wealth tax, inheritance tax or gift tax.