Andorra Tax Residency in 2026: 10% Flat Tax and Passive Residency

Andorra has evolved from a tax-free microstate to a low-tax, well-regulated European jurisdiction that offers entrepreneurs and investors a maximum 10% personal income tax rate, no inheritance tax, no wealth tax, and a growing financial services sector. Its position between France and Spain, combined with a 90-day minimum annual presence requirement, makes it one of the most practical low-tax residency options in Europe.

Andorra's Tax Framework

Personal Income Tax (IRPF)

Andorra introduced personal income tax in 2015 as part of its alignment with international standards:

• 0% on the first EUR 24,000
• 5% on income between EUR 24,001 and EUR 40,000
• 10% on income above EUR 40,000

The 10% maximum rate applies to all categories of income: employment, self-employment, investment, and rental income. There are no social surcharges or solidarity contributions that increase the effective rate.

Capital Gains

Capital gains are taxed as personal income (maximum 10%). However, significant exemptions apply:

• Gains on assets held for more than 10 years: fully exempt
• Gains on assets held 5-10 years: 50% exempt (effective rate 5%)
• Gains on assets held less than 5 years: fully taxable at 10%
• Gains on the sale of a principal residence: exempt if reinvested in another Andorran principal residence within 2 years

Corporate Tax (IS)

Andorra's corporate tax rate is a flat 10%. Key features:

• Participation exemption on dividends from subsidiaries in which the company holds at least 5%
• No withholding tax on dividends paid to non-resident shareholders (subject to conditions)
• Tax credits for international double taxation
• Special regime for international trading companies (effective rate as low as 2%)

Other Taxes

• No inheritance tax (abolished, replaced by a modest transfer tax of 0-1%)
• No wealth tax
• No gift tax between close relatives
• IGI (VAT equivalent): 4.5% standard rate (one of the lowest in Europe)
• Real estate transfer tax: 4% on property purchases

Residency Options

Active Residency (Residencia Activa)

For individuals who will carry on professional or business activities in Andorra:

Requirements:

• Create or participate in an Andorran company (holding at least 34% of shares, or being an administrator)
• Reside in Andorra for at least 183 days per year
• Deposit EUR 50,000 with the AFA (Autoritat Financera Andorrana) as a refundable guarantee
• Obtain a criminal record certificate
• Pass a basic Catalan language test (or commit to learning)

Benefits:

• Full Andorran tax residency
• Access to Andorran social security and healthcare
• Right to work in Andorra
• Residence cards for dependants

Passive Residency (Residencia Passiva)

For individuals who do not wish to carry on economic activity in Andorra:

Requirements:

• Invest a minimum of EUR 600,000 in Andorran assets:
  • At least EUR 400,000 in qualifying Andorran investments (real estate, Andorran government bonds, Andorran company shares, or deposits with Andorran financial entities)
  • Plus EUR 50,000 deposit with the AFA (non-interest-bearing, refundable)
  • Plus EUR 150,000 additional deposit or investment
• Reside in Andorra for at least 90 days per year
• Private health insurance coverage
• Criminal record certificate

Categories of passive residency:

• Category A: Individuals with independent means (no economic activity)
• Category B: International sportspersons and artists
• Category C: Individuals with international professional activities performed primarily outside Andorra
• Category D: Individuals making a significant investment (EUR 600,000+)

Residency for Professionals (Compte Propi)

Self-employed professionals who operate businesses from Andorra:

• Must incorporate an Andorran company or register as an autonomous worker
• Minimum 183 days of presence per year
• EUR 50,000 AFA deposit

The 90-Day Presence Requirement

Andorra's passive residency requires only 90 days of physical presence per year -- one of the lowest thresholds in Europe. This makes it compatible with:

• Business travel schedules requiring significant time outside Andorra
• Seasonal residency patterns (spending winters in warmer climates)
• Maintaining business operations in other jurisdictions

The 90-day requirement is monitored through passport stamps, airline records, and banking activity. Andorra does not maintain automated border controls with France or Spain, so the burden of proof lies with the resident to demonstrate presence.

Banking in Andorra

Andorra has five licensed banks:

• Andbank (the largest)
• MoraBanc
• Credit Andorra
• Vall Banc
• Banca Privada d'Andorra (BPA) (restructured as Vall Banc following AML issues)

The banking sector manages approximately EUR 50 billion in assets. Services include:

• Multi-currency private banking
• Portfolio management and advisory
• Mortgage lending for Andorran property
• International wire transfers
• Debit and credit cards

Andorra participates in CRS and exchanges financial information with over 100 jurisdictions.

Double Tax Agreements

Andorra has signed DTAs with:

• France, Spain, Portugal, Luxembourg, Liechtenstein, Malta, Cyprus, UAE, South Korea, and others
• The DTA network is expanding and now covers approximately 15 jurisdictions

For individuals with income from treaty countries, the DTAs reduce withholding rates and provide tie-breaker rules for dual residency situations.

Practical Considerations

Healthcare

Andorra's healthcare system (CASS) provides high-quality care. Residents affiliated with CASS pay 75% of medical costs, with the remaining 25% covered by CASS. For serious procedures, patients are typically referred to hospitals in Barcelona or Toulouse.

Education

Andorra offers three public school systems: Catalan, French, and Spanish. The Agora International School provides English-medium education.

Connectivity

• Barcelona: 2.5 hours by car (Barcelona-El Prat Airport)
• Toulouse: 3 hours by car (Toulouse-Blagnac Airport)
• Andorra-La Seu d'Urgell Airport: Small airport handling limited commercial flights

Cost of Living

Significantly lower than Monaco, Switzerland, or Luxembourg:

• Property: EUR 3,000-6,000 per square metre (compared to EUR 40,000+ in Monaco)
• Dining: Restaurant meals from EUR 15-30
• Groceries: 15-20% cheaper than France or Spain
• The 4.5% IGI (VAT) keeps consumer prices low

Language

Catalan is the official language. Spanish, French, and Portuguese are widely spoken. English proficiency is growing but not universal.

Andorra vs Comparable Jurisdictions

Feature	Andorra	Monaco	Malta	Cyprus	UAE
Max income tax	10%	0%	15% (GRP)	0% (non-dom)	0%
CGT (10+ years)	0%	0%	0%	0%	0%
Min presence (days)	90	~180	90	~60	90
Min investment	EUR 600K	EUR 500K+	EUR 275K+	None	~USD 5K
EU member	No	No	Yes	Yes	No
Schengen	No (visa-free entry)	No (French zone)	Yes	Yes	No
Cost of living	Low-Medium	Very High	Medium	Low-Medium	High

Key Takeaways

• Andorra's maximum 10% personal income tax rate, with 0% on the first EUR 24,000, makes it the lowest standard-rate jurisdiction in Europe.
• Capital gains on assets held for more than 10 years are fully exempt, creating powerful long-term investment planning opportunities.
• Passive residency requires a EUR 600,000 investment in Andorran assets and only 90 days of annual presence.
• No inheritance tax, no wealth tax, and a 4.5% VAT keep overall tax and cost burdens extremely low.
• The expanding DTA network (now approximately 15 treaties) is improving Andorra's integration with the international tax framework.
• Andorra is best suited to entrepreneurs and investors who value European proximity, mountain lifestyle, and a low tax rate without the extreme costs of Monaco or Switzerland.