Andorra Tax on Dividends

How are dividends distributed in Andorra? The allocation of dividends in Andorra varies depending on whether it is to a resident or non-resident. In this article, we fully explain how Andorra’s dividend tax works.

Distribution of dividends tax to Andorra residents

In Andorra, the Personal Income Tax law charges the income obtained by taxpayers as long as it can be classified as taxable income. However, the government has introduced a series of tax exemptions, provided that the requirements in the regulations are met. The most noteworthy full tax exemptions are:

• Dividends and shares in company profits, provided they are paid by entities resident in Andorra.
• Capital gains derived from the transfer of shares, with a shareholding of less than 25% in the capital. This exemption also applies to collective investment schemes.
• Capital gains from the transfer of real estate located outside the Andorran territory, when the taxpayer had at least 10 years of ownership before the transfer.
• Income derived from public debt issued in Andorra.

Distribution of dividends tax to non-residents

The tax on the income of non-tax residents is a direct tax levied on income obtained in Andorra by individuals or legal entities that are not tax residents. They are, therefore, not subject to the tax:

• Income from movable capital (dividends, interest, income from investment funds, etc.).
• Interest and other income obtained from the transfer of own capital to third parties.
• Real estate capital gains made by non-resident taxpayers without a permanent establishment, provided that they are subject to capital gains tax on real estate transfers.