Executive Summary
Andorra’s General Council has unanimously enacted the Law on Temporary Fuel Price Reductions, legislatively enshrining a phased hydrocarbon tax cut retroactive to October 1, 2026. The measure reduces petrol taxes by 20 cents per litre (13 cents in December) and diesel by 15 cents (8 cents in December) through year-end, implemented via a refund mechanism binding importers to full consumer pass-through under penalty of fines up to €50,000.
Important Updates
Parliament Enacts Temporary Hydrocarbon Tax Cuts for Q4 2026
On October 22, 2026, Andorra’s General Council approved the ‘Law on Temporary Fuel Price Reductions’ (Llei de reducció temporal del preu dels carburants), published in the BOPA on October 23. The law formalizes a government decree-law fast-tracked on October 21, making the discounts retroactive to October 1 and effective through December 31, 2026. The three-tier structure cuts the hydrocarbon tax (impost sobre hidrocarburs) by 20 cents per litre for 95/98 octane petrol and 15 cents for diesel in October–November, stepping down to 13 cents (petrol) and 8 cents (diesel) in December. The reductions operate as a partial refund to the 15 licensed fuel importers, contingent on passing the full savings to pump prices within 48 hours. The Ministry of Finance will publish weekly average price comparisons with Spain; if Andorran prices exceed Spanish averages by more than 5 cents, the refund may be increased.
Compliance obligations are stringent: importers must file monthly hydrocarbon tax declarations reflecting reduced rates starting with the October period (due November 20), and apply for refunds via the e-Impostos portal from November 1 (processed within 10 business days). A sworn declaration of consumer pass-through is required. The Tax Department will audit at least 20% of the ~120 service stations monthly, with penalties of €10,000–€50,000 per station per violation and potential license revocation. A procedural circular (Circular 12/2026) detailing the refund mechanism and audit procedures is due by November 5.
The measure carries an estimated €4.2 million fiscal cost for the quarter, absorbed within the 2026 contingency reserve. It aims to protect household purchasing power, support the tourism sector (over 80% of GDP), and maintain Andorra’s cross-border fuel price advantage versus Spain and France. The law includes a sunset clause reverting rates to standard levels on January 1, 2027, unless extended. The government must submit quarterly execution reports to the General Council, with the first due by January 15–31, 2027.
Sources: Alto Business | Alto Politics
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.