Andorran Trade Union Proposes Raising Income Tax Exemption Threshold to €30,600 to Protect Wages from Inflation
The USdA calls for tax thresholds to be adjusted in 2027 and automatically linked to inflation each year
The Unió Sindical d'Andorra (USdA) has submitted a proposal to amend the country's personal income tax (IRPF) system to prevent workers from paying higher taxes simply because their salaries increase to compensate for inflation.
The trade union is calling for an adjustment to personal income tax exemption thresholds and the maximum tax credit, arguing that these amounts have not been systematically revised to reflect rising living costs since the tax was introduced.
The proposal would introduce an initial adjustment for the 2027 tax year, based on the cumulative inflation recorded in Andorra between 2016 and 2025.
Tax-Free Income Threshold Would Rise from €24,000 to €30,599
The main change proposed by the USdA would increase the first income threshold from €24,000 per year to €30,599.41.
This adjustment would expand the amount of income covered by the tax exemption and help prevent salary increases intended to offset inflation from automatically resulting in higher taxation.
The union also proposes raising two additional income thresholds and the maximum available tax credit.
The proposed changes are as follows:
| Category | Current amount | Proposed for 2027 |
|---|---|---|
| First threshold | €24,000 | €30,599.41 |
| Second threshold | €30,000 | €38,249.26 |
| Third threshold | €40,000 | €50,999.01 |
| Maximum tax credit | €800 | €1,019.98 |
According to the USdA, these adjustments would restore the real value of tax thresholds that have gradually eroded as the cost of living has increased.
Automatic Inflation Adjustments from 2028
Beyond the initial revision, the union's proposal includes a mechanism to ensure that tax thresholds and the maximum tax credit are automatically adjusted every year from 2028, in line with Andorra's official annual Consumer Price Index (CPI).
Under this system, the tax-free thresholds and maximum tax credit would increase whenever consumer prices rise, without requiring new legislative amendments each year.
However, if inflation were negative, the thresholds would remain unchanged rather than being reduced.
The USdA argues that this approach would prevent further erosion of tax allowances and provide greater long-term stability for taxpayers.
Union Warns Inflation Could Increase Workers' Tax Burden
The trade union warns that leaving income tax thresholds unchanged can result in workers paying more tax even when their real purchasing power has not improved.
This happens when salaries increase in nominal terms to compensate for higher prices, while tax thresholds remain fixed.
"It is unacceptable for a worker to have to pay more taxes simply because they have received a salary increase that, in reality, only serves to maintain their purchasing power," the USdA said in its statement.
The organisation argues that this situation can effectively turn inflation into an indirect source of additional tax revenue for the Government, particularly from employment income.
For this reason, the union insists that taxation should reflect taxpayers' real economic capacity, rather than merely the nominal value of their earnings.
USdA Urges Political Leaders to Adopt the Reform
The Unió Sindical d'Andorra maintains that its proposal is not intended to introduce an indiscriminate tax cut, but rather to correct the effects of inflation on taxpayers.
The organisation argues that updating income tax thresholds is necessary to ensure that wage increases designed to compensate for rising living costs are not partially absorbed by higher taxation.
The union is therefore calling on political leaders to examine and incorporate the proposed tax amendment for 2027, while establishing a permanent system of annual adjustments linked to the Consumer Price Index.