The “Llei 5/2014 del 24 d´abril , de l´impost sobre la renda de les persones fisiques”  is the  Andorran Tax Law (IRPF)  on personal income or on capital gains. ( Butlletí Oficial del Principat d´Andorra dd. 21.5.2014 )

The income is divided into two classes , general income ( renda general ) and income from savings ( renda de l´estalvi).  ( art. 4.3 of the law )

The tax rate at the moment is 10% on both general income and income from savings.

Both incomes are taxed differently . The allowances for general income are more generous than the ones for savings income. For example the exempt income for general income is 24.000 €. The exempt income for savings income is 3.000 €.

general income  or  ” la renda general ” is :

– income from employment ( les rendes de treball : e.g. salaries, pensions etc.)

– income from business activities ( les rendes procedents de la realizació d´activitats econòmiques : e.g.  trade , professions )

– income from real estate ( les rendes del capital immobiliari : e.g. rentals )

( art.4.3.a of the law )

savings income or “ la renda de l´estalvi ” is :

– income from capital ( les rendes del capital mobiliari )

This is income from interests, dividends and other income from “capital mobiliari”.

– capital gains and losses  ( els guanys i les pèrdues de capital : capital transfers  )

( art.4.3.b of the law)

Are not subject to the law :

capital gains that are subject to special law on capital gains on transfer of real estate in Andorra . ( l´impost sobre les plusvàlues en les transmissions patrimonials immobiliàries)

capital gains and losses on the sale of real estate abroad are subject to the IRPF law if the property has been owned for less than ten years.  ( art. 5m IRPF)

In those cases where capital gains on real estate abroad are taxable, the acquisition price is adjusted by an index (Art.26.2)