Page 68 - Economic report 2020

contrasting with the situation in the period 2017-2021, when it represented 68% on average,
compared with 32% short-term debt. In this context, the International Monetary Fund (IMF) has
supported the fiscal discipline process which has enabled Andorra to reduce public debt and meet
the fiscal targets set for 2022.

1.1. Revenue

In 2022, non-financial revenue settled by the Government saw an increase of 31.4%, which
is added to the 4% in 2021, after the decline of 9.9% it suffered in 2020 due to the impact
of Covid-19. So, non-financial revenue reached €544.5 million, a figure that exceeds the pre-
pandemic (2019) figure by 23.1% and represents a historic high. The increase extended to all the
major entries, with the sole exception of current transfers, which practically disappeared in 2022.

Revenue from direct taxes
GOVERNMENT NON-FINANCIAL REVENUE
Thousands of euros Chart 8.5 hit a historic high.

More specifically, revenue from direct taxes
increased 28.7%, to €150.8 million, a figure
that represents a new historic record. So, this
chapter’s percentage of total non-financial
income rose to 27.7% – having been practically
zero only twelve years ago – to represent
32.2% of total direct and indirect taxes. In
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any case, it is still lower than the 40% limit set
by the Law on Public Finance Sustainability
passed in 2014.

Direct tax Indirect tax
Other taxes and revenue Investment income By forms of tax, the rise in revenue from direct
taxes can be explained by the very positive
Note: : In 2022, revenue associated with putting euros into circulation trend in both personal income tax (IRPF),
among the country’s banks (3,852 thousands of euros) are recognised
in the chapter of investment income, whereas until 2021 they were rising 47%, and corporate tax (IS), by 32%.
included in the chapter of financial liabilities. In 2021, this revenue
relating to euro circulation rose to 3,739 thousands of euros. So, if we In contrast, the revenue from non-residents’
were to follow the same criteria as in 2022, the investment income income tax (IRNR) fell 44%. Note that the
chapter for 2021 would be 27,858.48 thousands of euros (instead
of 24,119.48). variations regarding the increase in IRPF
Andorran economy: general developments | VIII. Public sector
Source: Ministry of Finance. (income tax) and IS (corporate tax) are related
to the recovery in economic activity, which
increased both business profits and the wage
There was notably strong growth bill – thanks to the improvement in activity and
in revenue from IRPF and IS taxes also wage rises due to rising inflation and the
due to the economic recovery. difficulties finding staff in some sectors.

Among the direct taxes, the contribution from
capital gains tax on property was also positive (+28%). This is a tax that is directly related to
property transactions carried out within the country (on the increase in value of real property
that appears in transfers). This data highlights the fact that activity in the property sector was still
high in 2022. Finally, note that this year was the first in which the new tax on empty housing was
charged, but the revenue obtained was very modest (little more than €5,000).

Regarding indirect taxes, revenue obtained in 2022 also saw a very positive dynamic, with an increase
of 34.5% to €317.7 million, representing an increase of 10.7% over the 2019 pre-pandemic figure