IGI, the Andorran VAT :
what you actually invoice.

IGI — impost general indirecte — is the Andorran equivalent of VAT. Same logic : the business charges the tax on its sales, deducts the tax it has borne on its purchases, and remits the difference. Same European architecture, too : the Andorran legislator drew on the EU’s harmonised model when drafting Law 11/2012.

Only one thing really differs : the level. Where France levies 20 % and Spain 21 %, Andorra stops at 4.5 %. But for a director invoicing clients in Paris, Barcelona or Berlin from Andorra la Vella, the real question is not the rate : it is knowing when IGI applies, and when it does not apply at all. This guide answers both, with the statute in hand.

Five rates, and only one you will use often

IGI does not carry the thicket of rates of a classic European system. Five levels are enough, and the overwhelming majority of transactions fall under the first.

Who has to charge IGI ?

Every Andorran company carrying on an economic activity is taxable : an SL or an SA charges IGI from its very first taxable transaction, with no threshold and no grace period.

Individuals, on the other hand, benefit from a floor. Article 5.4 of the law is explicit : they do not qualify as entrepreneurs or professionals for the purposes of the tax as long as their supplies of goods and services do not exceed €40,000 per year — €150,000 for farming and livestock activities — unless they expressly opt in. Below that threshold there is no IGI to charge… but no deductible IGI on purchases either.

Invoicing a client abroad : three scenarios

This is where it all plays out, and it is the least well understood point on the market. Everything turns on two questions, in this order : where is the client, and are they acting as a business ?

1. Business client established outside Andorra : no IGI

The general rule in article 43 locates the service at the customer’s place of business where that customer is an entrepreneur or professional acting as such. If that customer has their seat, permanent establishment or residence outside Andorran territory, the service is not deemed supplied in Andorra : it falls outside the scope of the tax. Your invoice goes out without IGI.

One caveat, and it matters : article 44 attaches certain services to the place where they are physically performed, whoever the customer is — work on immovable property, restaurant services, admission to events, transport, short-term hire of a means of transport. A service that physically touches Andorran soil stays Andorran.

2. Private client established outside Andorra : it depends on the service

By default, a service supplied to a non-taxable person is located at the supplier’s place of business : you are in Andorra, so IGI at 4.5 % applies, even if the client lives in Toulouse.

But article 43.2 sets out a list of exceptions covering nearly all modern intangible work. The following are not deemed supplied in Andorra where the recipient is not a professional and resides outside the country :

• transfers of copyright, patents, licences and trademarks ;
• advertising ;
• consultancy, audit, engineering, research bureaux, legal, accounting and tax advice ;
• data processing and the supply of information ;
• translation, proofreading and typesetting ;
• the supply of staff, the hire of tangible movable property ;
• electronically supplied services, telecommunications, broadcasting and television services.

The law adds a common-sense condition : the exclusion falls away if the effective use or enjoyment of the service takes place in Andorran territory. Selling an online course to a French consumer : out of scope. Selling it to an Andorran resident who consumes it on the spot : IGI.

3. Client in Andorra : IGI, no debate

Business or consumer, once the service is located in Andorra the invoice carries the applicable rate — 4.5 % in almost every case.

For goods, the logic is customs-based rather than territorial : article 14 exempts supplies of goods dispatched or transported outside Andorran territory. Merchandise that leaves the country leaves IGI behind.

One practical consequence : your client’s status is not a matter of good faith. Keep on file whatever establishes that they are indeed acting as a business — a verified EU VAT number, a company register extract, a contract. That is the document that justifies the absence of IGI if the Andorran authorities ever ask.

No IGI does not mean no tax

Your invoice goes out without IGI. The question then becomes : who pays the tax on the client’s side ? Andorra belongs neither to the European Union nor to its VAT territory ; from a European standpoint, your sales are transactions with a third country.

Your client is a French company

It applies the reverse charge. It declares French VAT at 20 % on your supply itself and deducts it in the same return : the transaction is neutral for the client where the tax is fully recoverable. This is the mechanism of article 283-2 of the French tax code, the very one already applied to European suppliers. Nothing to collect for you, nothing to disburse for them.

Your client is an EU consumer

This is the case that catches digital businesses out. A supplier established outside the EU selling services to European consumers owes the VAT of each consumer’s country. To avoid registering in twenty-seven states, the EU opens the One Stop Shop, non-Union scheme (non-EU OSS) : a single registration, a quarterly return, one payment. It is a European obligation, not an Andorran one : it appears nowhere in Law 11/2012, which is precisely why it gets overlooked.

You sell goods

Andorra has been bound to the European Union by a customs union since 1991, covering industrial products (chapters 25 to 97). In practice : no customs duties on those products, but a very real fiscal border. On entry into the EU, import VAT remains due and a customs declaration is still required.

For distance sales of imported goods with an intrinsic value below €150, the IOSS scheme allows the customer’s national VAT to be collected at checkout — parcel delivered duty paid, with no unpleasant surprise for the buyer. A seller not established in the EU must appoint an intermediary established in the Union to do so. Something to factor in very early in any e-commerce project from Andorra.

The IGI you pay : deduction, and the reverse-charge trap

IGI borne on your business purchases — commercial rent, equipment, professional fees, supplies — is set off against the IGI you collect. Where the balance is in your favour it forms a credit, which is carried forward and whose refund the law provides for.

That leaves the mechanism almost nobody anticipates. Article 52 designates the Andorran customer as the person liable for the tax where the supplier is not established in Andorra and the service is located there. In plain terms : when you buy a service abroad — an advertising platform, cloud hosting, a software subscription, a French lawyer, a Spanish developer — you are the one who accounts for the IGI on that expense. You declare it, and you deduct it in the same movement.

The operation is cash-neutral. It is not compliance-neutral : a return that ignores those purchases is an incomplete return, and it shows at the first audit. For imported goods, the mechanism is more visible : IGI is assessed at customs when the goods enter the territory.

Filing : a calendar indexed to your size

Frequency depends on the previous year’s turnover. Returns are filed online, within the month following the end of the period.

For a young company that means two appointments a year — a rhythm nothing like the monthly regime of French VAT. It is one of the most tangible reliefs of Andorran accounting, and one of the reasons a small company costs so little to administer here.

IGI is not the hard part of setting up in Andorra : it is the easy part. The difficulty lies elsewhere — in the exact qualification of your services and in the obligations that your clients’ countries place on you. Before you invoice, have your flows mapped : an hour’s work that prevents years of back-tax adjustments. We do it for every company formation file.