Andorra's Tax Burden Rises to 28.4% of GDP in 2025

Andorra's tax burden rose to 28.4% of GDP in 2025, up 0.9 points from 27.5% in 2024, driven by growth in specific revenue streams rather than hikes in headline rates, Finance Minister Ramon Lladós has said.

The Statistics Department reported final tax receipts alongside an initial GDP figure showing 6.6% economic expansion. Total tax revenue climbed 10%, with Lladós attributing the shift to three main areas: high-income earners, real estate transactions, and corporate payments.

Personal income tax (IRPF) collections increased 20% to €82.3 million, adding €14 million. Taxpayers earning above €200,000—around 3% of filers—account for over half of IRPF revenue. Lladós highlighted how attracting high-net-worth individuals and professionals bolsters public coffers without broadening the tax base.

Real estate taxes delivered substantial gains amid strong market activity: €19.2 million from the foreign investment levy on non-resident property purchases (up 41.2%), €39.3 million in short-term capital gains from sales under two years or non-resident deals (up 56.5%), and €17.7 million in transfer duties (up 52.4%), two-thirds of which went to communes. The minister stressed these measures target non-residents and quick flips, sparing most locals.

Corporate tax revenue surged 31% to €141 million, a €33.6 million rise, thanks to healthy profits and the 3% minimum effective rate on benefits from the previous term. This floor ensures consistent contributions by curbing deduction carryovers that previously erased liabilities in lean years. VAT (IGI) grew 12.5% to €185.7 million on higher economic activity.

Direct taxes now represent 28.7% of the burden (up 2.5 points), indirect taxes 34.5% (down 2 points), and social contributions 36.8% (down 0.6 points). Taxes on production and imports rose 4.1%, income and wealth levies 20.7%, and social security 8.2%.

Lladós described the outcome as a welcome boost from a larger economy and more contributors, equivalent to 28 euros per 100 generated. He assured residents of minimal impact, as levies concentrate on high-value deals, non-residents, and top earners. Andorra's level stays Europe's lowest, below Spain's 37% and France's 45%. While the trend may persist at a slower pace with ongoing real estate dynamism and affluent inflows, he dismissed broad rate increases or past business calls for a 25% cap.

For the 2027 budget—an election year—the focus remains on housing, health, education, and completing key infrastructure.