ANDORRA Law and Practice Contributed by: Oriol Giró, Laia Bertran, Yaumara Toledo and José Luis Andrés, Emindset Law Firm
circumstances. Overtime must be paid with at least a premium or, with the employee’s consent, compen - sated by equivalent paid rest. 4.4 Termination of Employment Contracts Andorra is not an employment-at-will jurisdiction. Indefinite contracts may be terminated without cause subject to statutory notice and compensation, while fixed-term contracts normally end on the agreed date or upon completion of the relevant work. Employers may also dismiss employees for objective or disci - plinary reasons, provided the legal grounds and pro - cedural requirements under Law 31/2018 are met. Unjustified, defective or discriminatory dismissals may trigger increased compensation or nullity. Collective redundancies arise when dismissals exceed the statutory workforce thresholds within 90 days. Employers must consult employee representatives, justify the measures and notify the Labour Ministry. An agreement is not mandatory; however, in its absence, prior administrative authorisation is required. Affected employees are entitled to the notice and compensa - Employers must inform employees of their role, duties and working conditions, which should be clearly stat - ed in the written employment contract. They must also comply with ongoing obligations concerning remu - neration, working time, health and safety, equality and any material changes affecting the employment relationship. Employee representation is not mandatory in every company. However, companies with more than 30 employees must establish a works council elected by the workforce. Management must inform and consult that body on relevant employment, organisational and collective measures. tion applicable to objective dismissal. 4.5 Employee Representations
Employers must withhold and remit any applicable personal income tax. Social security contributions to the Caixa Andorrana de Seguretat Social (CASS) amount to 22% of gross salary: 6.5% is borne by the employee and withheld from salary, while 15.5% is paid by the employer. These contributions cover the general healthcare and retirement benefits. No separate payroll tax generally applies. 5.2 Taxes Applicable to Businesses Companies incorporated in Andorra are generally sub - ject to corporate income tax on worldwide profits at a standard rate of 10%, subject to available exemp - tions, deductions and special regimes. Businesses supplying goods or services are also sub - ject to the general indirect tax (IGI), normally at 4.5%, with reduced and increased rates for certain transac - tions. Dividends distributed by Andorran companies are generally not subject to withholding tax, while pay - ments to non-residents, including certain interest and service income, may attract non-resident income tax at up to 10%, subject to domestic exemptions and tax treaties. Real estate transfers may trigger transfer tax, gen - erally between 3% and 4%, and foreign real estate investment may also be subject to a specific tax (cur - rently 6%). As of June 2026, Andorra has not implemented the OECD Pillar Two GloBE rules or a domestic top-up tax, and no Andorran regime appears on the OECD Central Record as qualifying for safe-harbour status. 5.3 Available Tax Credits/Incentives Andorra already offers a competitive tax framework, with maximum rates of 10% for corporate and per - sonal income tax and a general IGI rate of 4.5%. Corporate incentives include deductions for creating permanent employment and for qualifying new invest - ments made in Andorra.
5. Tax Law 5.1 Taxes Applicable to Employees/ Employers
Employment income is taxed at a maximum rate of 10%, subject to statutory allowances and reductions.
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