Andorra’s personal income tax revenue rises from €36 million to €91 million in just five years

Andorra’s personal income tax (IRPF) revenue has risen from €36.1 million for the 2020 tax year to €91 million for 2025. Comparing the figures announced at the close of the respective filing periods shows an increase of almost €55 million, or 152%, in five years.

Figures presented on Thursday by Carles Ferreira, Director General of Taxation and Borders, put personal income tax revenue for 2025 at €91 million, with more than 29,700 returns submitted during the filing period, which closed on 30 September.

The total is approximately 2.5 times the €36.1 million announced for 2020 and extends the growth recorded in recent years. By the 2023 tax year, revenue was already approaching €60 million.

According to Ferreira’s figures revenue increased by €18 million from the €73 million collected for 2024, a rise of nearly 25%.

Almost 12,000 more tax returns than in 2020

The rise in revenue has been accompanied by an increase in the number of returns. By the standard filing deadline for the 2020 tax year, 17,853 returns had been submitted, compared with more than 29,700 in the latest filing period. That represents approximately 11,850 additional returns, an increase of 66%.

Both figures illustrate the expansion of personal income tax collection over these five years, although the rise in revenue does not mean that each taxpayer is paying proportionately more. The total depends on factors including declared income, the number of people filing returns and changes to the types of income covered by the tax.

Ferreira attributed the latest annual increase to economic growth and higher employment and savings income. He said the rise had been fairly broad-based, with a similar trend also evident in corporate income tax revenue.

Property capital gains explain part of the increase

One change must be taken into account when comparing the figures: the €91 million collected for 2025 includes around €6 million from capital gains on property transactions, which were previously covered by a separate tax that has since been abolished.

This means that part of the increase reflects the inclusion of this revenue in personal income tax. The entire rise cannot be attributed to growth in income already subject to the tax.

Excluding that €6 million would bring revenue for the latest tax year to approximately €85 million, still well over twice the €36.1 million reported for 2020. This calculation helps illustrate the impact of property capital gains, although it does not account for other economic and regulatory differences between the two tax years.

Revenue grows despite expanded tax allowances

The director general highlighted that revenue had increased despite expanded tax relief for families and housing.

For this filing period, the allowance for each dependent relative in the ascending or descending line rose from €750 to €1,000, while the mortgage-related allowance increased from €1,000 to €5,000.

Of the €91 million collected for the tax year, more than €38 million was paid during the filing period, between April and September. The remainder consists of personal income tax payments made outside that period.

Online filing remained the most widely used method, with 85% of returns submitted electronically. Submissions were also less concentrated in the final month: September accounted for 55% of returns, compared with 64% the previous year.

Regarding a possible revision of the €24,000 tax-free threshold, Ferreira said it was not the department’s role to assess whether it should be changed. He also noted that almost half of employment income falls outside the scope of the tax.

A €500 million bond issue

The rise in tax revenue coincides with a new government financing operation. On Wednesday, Finance Minister Ramon Lladós highlighted the strong reception for a €500 million sustainability bond issue with a three-year maturity and a 3.87% coupon.

Demand reached €1.292 billion, equivalent to 2.58 times the amount offered, with 57 investors from 16 countries participating. The transaction, carried out ahead of the previous issue’s maturity, priced at a spread of 32 basis points over benchmark rates, compared with 115 basis points in 2021.

Lladós said the outcome reflected international investors’ confidence in Andorra’s economy and institutional stability. Andorra’s risk premium is now close to France’s.