The Government of Andorra has presented ‘Declarapp’, a new application designed to facilitate the declaration of IGI (General Indirect Tax) on purchases made outside Andorran territory (whether or not they have benefited from tax-free status), as well on purchases made in online shops and collected by the Spanish Post Office and the Post Office. This change reflects the recent legislative changes in the field of taxation. The new tool represents another advance in the digitalisation of public administration in Andorra. It also simplifies fiscal procedures, offering a practical and efficient manner of managing one’s fiscal obligations from any location.
Table of contents:
- ‘Declarapp’: a new app for IGI declarations
Changes to Andorra’s direct tax law
New measures for businesses
How does ‘Declarapp’ work?
The economic impact of the change in legislation
What is the rate of IGI in Andorra?
We help you with your taxes in Andorra!
‘Declarapp’: a new app for IGI declarations
This digital tool will significantly simplify the tax declaration process for purchases made outside Andorran territory. It is used both for purchases made in physical establishments and for those made via online platforms, delivered by postal services, and covering tax-free and non-tax-free transactions.
Its implementation streamlines fiscal procedures by obviating the need to travel, reducing paperwork and saving taxpayers’ time. It also results in fair competition in the local retail sector.
Changes to Andorra’s direct tax law
The app is being launched at a time when certain obligations are coming into force as a result of the change in tax regulations. In particular, this concerns law 05/2023 regarding the reform of direct taxes and the modification of other tax and Customs regulations. From 1st January, 2024, import duty (IGI) must be declared on all purchases made online outside Andorra and arriving by post, as well as those exceeding €300 per person (and which the buyer brings into the country by their own means). The new regulations, approved in February 2023, eliminate the exemptions from payment of IGI on imports worth less than €22 and on individual shipments worth less than €220. The exemption from import duties and taxes on imports worth less than €22 is also eliminated. Consequently, from 1st January, 2024, users will be required to present a barcode at border crossing points or at post offices (Correos in Spain or La Poste in France), in order to collect their parcels.
New measures for businesses
The Tax and Border Department has introduced new strategies for businesses and professional people. These strategies will streamline processes that use the postal services. This includes the introduction of a simplified procedure for importing by parcel post and the launch of a declaration-printing assistant, which will enable businesses to fulfil their Customs obligations more efficiently. The purpose of these initiatives is to simplify compliance by the country’s businesses with their fiscal obligations.
How does ‘Declarapp’ work?
In order to make the declarations, it is necessary to have a digital certificate, provide a census number and provide an e-mail address where the barcode certifying payment of the IGI declaration can be received. This code must be presented at the border control points, in the case of tax-free operations, and to the postal services for the collection of the parcel. For this purpose, the application enables the user to enter the parcel identifier, thereby validating the payment to Customs and authorising the postal operators to send the parcel to the user’s home address. This eliminates the need for the user to visit the post office in person to collect the parcel.
The app is available at both ‘App Store’ and ‘Google Play Store’ and is free of charge.
Anyone who is unable to use the application or who encounters difficulties in doing so may still declare this tax in person at the central Customs office. Further information can be found on the customs website.
The economic impact of the change in legislation
The Department of Borders and Taxation has predicted a significant increase in the number of imports presented by the end of 2024, due to the legal changes that have been implemented. It is estimated that there will be approximately 66,200 declarations by the end of the year, compared to only 2,492 in 2023. Specifically, this increase will derive from the postal services, where the declarations could reach 64,080, and where last year only 693 operations were declared.
What is the rate of IGI in Andorra?
While the value added tax (VAT) in Spain is 21%, and the average for European countries is 20%, in Andorra the tax on income from goods and services (IGI) is only 4.5%. This is considered one of the lowest in Europe, as is the case with other taxes. For further information, please refer to our article on the tax comparison in Andorra.
The IGI is divided into 4 tranches:
• The general rate is 4.5%.
• The special rate is 2.5% and applies to the transport of people and to marketing, educational, cultural and social services not offered by public administrations or non-profit organisations, and to the sale of art.
• The reduced rate is 1% and applies to food, drinking water, books, newspapers and magazines, among others.
• The super-reduced rate is 0% and applies to healthcare products and services, education and training, housing rental and public cultural services, among others.
• Finally, the increased IGI of 9.5% is only applicable to banking and financial services.
How do companies declare IGI in Andorra?
The periods during which businesses and traders in Andorra are required to declare the Indirect General Tax depend on their annual turnover.
• Those with an annual turnover of less than 250,000 euros are obliged to declare the total of the previous six months twice a year, in July and January.
• Those with a turnover of less than 3,600,000 euros are required to declare the previous quarter’s income in April, October and January.
• Those with an annual turnover of 3,600,000 euros or more are required to pay, every month, the IGI corresponding to the previous month.
We help you with your taxes in Andorra!
Proper tax management and reporting is fundamental to the success of any business. The professional staff at Advantia Assessors are devoted to ensuring that both individuals and legal entities optimise their tax obligations, making the most of business structures and investments by means of efficient strategies both locally and globally. We assist our clients with all their tax dealings with the public administration. If you would like tax advice, please do not hesitate to contact us.