21 Apr 2019 PERSONAL INCOME TAX CAMPAIGN
2019 PERSONAL INCOME TAX CAMPAIGN
The 2019 personal income tax campaign (2019 PIT return) has begun on April. In this regard, we would like to remind you that tax residents in Andorra have a deadline of September 30th, 2020 to sign and present the corresponding tax return for the year 2019 before the Andorran Tax Authorities.
The declaration to be filed before the Andorran Tax Authorities corresponds to form 300.
What is personal income tax?
The PIT records the earnings obtained by individuals who are considered tax residents in the Andorran territory. In accordance with article 8 of Law 5/2014 on Personal Income Tax (PIT Law), any person with the following rights shall be deemed liable to do so:
- If he or she lives in Andorra more than 183 days during the calendar year.
- If the main core of economic activities or economic interests is in Andorra, either directly or indirectly.
Which earnings must be declared for the personal income tax?
The taxpayer is subject to the PIT by personal obligation, and therefore, all earnings obtained worldwide must be declared. The earnings that are subject to a declaration are classified as follows:
- Labour income (considered arising from an employment relationship).
- Income from property capital (rents).
- Income from economic activities (business or professional activities and administrators).
- Income from movable capital (interest, dividends and income from insurance).
- Capital gains and losses (asset transfers, inheritances and donations are not included).
In this respect, taxpayers must present the tax return when they obtain employment income, rentals or business activities income above 24,000 euros during the positive period. This is known as the personal minimum.
Reductions, dedcutions and exemptions applicable
The PIT Law foresees several tax reductions applicable in the calculation:
- Personal minimum of 24,000 euros (previously mentioned).
- Exemption of 3,000 euros for obtaining passive income and capital gains and losses.
- Family minimum (consisting of 750 euros per parent and dependent descendant, multiplied by 1.5 in case of disability).
- Main residence (maximum 1,000 euros per year).
- Contributions to pension plans (with a maximum amount of 5,000 euros or 30% of the sum of the income from work and incomes from economic activities).
- Compensatory pension or annuities for food (corresponding to the amount recognized in the applicable civil legislation, judicial resolution or regulatory agreement).
Applicable tax rate
Application of a fixed tax rate of 10%. However, a 5% rate will be applied to income comprised between 24,000 and 40,000 euros and it will be applied in the taxation quota through a maximum bonus of 800 euros for certain income.
Taxpayers who earn income from economic activities are required to make a partial payment on the current tax period. This is a payment on account of the income tax return for 2020 (which will be filed in 2021). The deadline to make the payment on account is September of 2020.
Taxpayers have the option of authorizing the Andorran Government to liquidate the payment instalment.
With regard to the amount of the instalment payment, due to the new measures adopted in the Omnibus Law, which are aimed at alleviating the negative consequences of the crisis caused by the COVID-19, in 2020 will exceptionally apply 20% on the settlement fee of the 2019 declaration. The applicable percentage will decrease from 50% to 20%.
Extemporaneous submission of the tax return
It should be remembered that the extemporaneous submission of the 2019 PIT return will be subject to the following surcharges:
- 2% of the amount deposited after the deadline if less than two months have elapsed.
- 5% of the amount deposited after the deadline if between two and twelve months have elapsed.
- 10% of the amount deposited after the deadline if more than 12 months have elapsed.
Contact us to help you with your PIT return
In this sense, the ANCEI tax team is at the disposal of all taxpayers to help and advise them on the elaboration and presentation of their IPRF declaration before the Andorran Tax Authorities.
Likewise, the ANCEI tax team undertakes to apply special conditions for those who provide the necessary information for the elaboration of the PIT return before July 15th, 2020.
For more information, please contact us directly at the following email address: firstname.lastname@example.org.
ANCEI’s PIT team