Andorra sits in the Pyrenees between France and Spain and offers one of Europe’s most attractive low-tax regimes: a personal income tax capped at 10%, 0% wealth tax, 0% inheritance and gift tax, and a 4.5% VAT (IGI) — the lowest consumption tax in Europe. The headline pathway for foreign nationals is Passive Residency (Residència Passiva), a non-working residence permit that requires a defined investment in the Principality and a relatively light physical-presence test of around 90 days per year.
It is important to start with a status note: Andorra’s Digital Nomad Visa was discontinued on 15 November 2025 with no replacement announced. Remote workers who previously eyed Andorra now need to fit themselves into the Passive Residency, Active Residency, or Golden Visa frameworks instead. The rest of the regime — including the favourable income, capital gains, and wealth tax treatment — remains in force for 2026.
This guide walks through how the Andorran tax system actually works, who qualifies for which residency category, the all-in cost of relocating, and how Andorra compares to alternatives such as Monaco, Switzerland, and the Maltese GRP for European HNW relocation.
Snapshot
| Metric | Value |
|---|---|
| Personal income tax (max) | 10% above €40,000 of taxable income |
| Income up to €24,000 | 0% (tax-exempt) |
| Income €24,000–€40,000 | 5% |
| Capital gains tax | Generally 10%; broad exemptions for share sales (holdings <25% or held long-term) — verify with official source |
| Wealth tax | 0% — none |
| Inheritance / gift tax | 0% |
| Corporate tax | 10% flat |
| VAT (IGI) | 4.5% standard rate (Europe’s lowest) |
| Minimum investment (Passive Residency) | €600,000 in Andorran assets + €50,000 non-interest-bearing deposit at the AFA (+ €10,000 per dependent) |
| Days/year required (Passive) | ~90 days/year physical presence in Andorra |
| Days/year required (Active / tax residency) | 183+ days |
| Processing time | Approximately 3–6 months from complete file |
| Path to citizenship | 20 years of legal residence (single nationality — Andorra does not generally permit dual citizenship) |
| Total upfront ballpark | €650,000–€700,000+ including investment, deposits, fees |
Why Andorra for Tax Residency
- 10% maximum personal income tax with the first €24,000 fully exempt — one of the lowest effective rates in Europe for mid-to-high earners.
- No wealth, inheritance, or gift tax — meaningful for HNW families and intergenerational planning.
- 4.5% VAT (IGI) — the lowest in Europe, which compounds into a lower cost-of-consumption versus a 20–25% VAT jurisdiction.
- Schengen-adjacent location with road access to Barcelona (~3 hours) and Toulouse (~3 hours), and a developing infrastructure for international banking and asset management.
- Lifestyle: ski resorts, mountain sports, low crime, small population (~80,000), and a French/Catalan/Spanish cultural mix.
- Bilateral tax treaties with Spain, France, Portugal, and a growing list of jurisdictions help avoid double taxation for incoming residents.
Tax Regime in Detail
Personal income tax (IRPF)
Andorra introduced a personal income tax (Impost sobre la Renda de les Persones Físiques, IRPF) in 2015 as part of its modernisation and treaty-network expansion. The structure is deliberately simple and progressive only at the margin:
- 0% on the first €24,000 of taxable income
- 5% on the band from €24,000 to €40,000
- 10% on income above €40,000
The marginal cap of 10% means that even very high earners pay a far lower effective rate than they would in neighbouring France or Spain. Married couples can elect joint taxation, with the brackets broadly doubled.
Andorran tax residency is established the conventional way: spending 183+ days per year in Andorra, having the centre of one’s economic interests in Andorra, or residing in Andorra together with a dependent spouse and minor children. Holders of Passive Residency permits are generally expected to spend at least 90 days per year in Andorra, but to access full benefits of the IRPF regime they typically need to meet the 183-day tax-residency test.
Capital gains tax
Capital gains are in principle taxed within IRPF at the same 10% top rate. However, Andorra provides important exemptions on the disposal of shares: gains from selling a participation of less than 25% in a company are generally exempt, and long-held positions may benefit from additional reliefs. Real-estate gains are subject to a separate plusvàlua tax that decreases with the holding period and reaches 0% after roughly ten years (verify with official source for the current scale).
Corporate tax
Andorra applies a flat 10% corporate income tax, identical to the personal top rate. Special regimes can lower the effective rate for international holding structures and IP-intensive businesses, but these are subject to substance requirements consistent with EU and OECD norms (BEPS).
Dividends, interest, rental income
Domestic dividends from Andorran companies are generally exempt at the shareholder level (the underlying corporate tax is treated as discharging the liability). Foreign dividends and interest are taxable within IRPF, with credits available for foreign withholding tax under Andorra’s treaty network. Rental income from Andorran property is taxed within IRPF after deduction of allowable expenses.
Inheritance, gift, wealth tax
Andorra has no inheritance tax, no gift tax, and no annual wealth tax. This is one of the most distinctive features of the regime and is a primary reason families with significant net worth establish residency in the Principality.
VAT / consumption tax
The Impost General Indirecte (IGI) is 4.5% at the standard rate, with reduced rates of 1% and 2.5% for essentials and a higher 9.5% rate for certain financial services. By comparison, France charges 20%, Spain 21%, and most of the EU sits in the 19–25% band — the spread is meaningful for high-spending households.
Residency Programs Available
Passive Residency (Residència Passiva)
The flagship route for foreign HNW individuals not intending to work in Andorra.
- Minimum investment: €600,000 in Andorran assets — typically a combination of real estate, an Andorran bank deposit, public debt, or shares in an Andorran company.
- Mandatory deposit: €50,000 at the Andorran Financial Authority (AFA), non-interest-bearing, plus €10,000 per dependent.
- Physical presence: approximately 90 days per year in Andorra.
- Health insurance: comprehensive private cover required.
- Duration: initial permit 2 years, then renewable 2 / 3 / 10 years.
- Best for: retirees, founders post-exit, investors, and online business owners who can structure their affairs to satisfy the investment and presence tests.
Active Residency (Residència Activa)
For individuals who intend to live and work in Andorra — either as employees of an Andorran company or as the owner-directors of one.
- Requires either a local employment contract or the establishment of an Andorran company with an Andorran-resident director (typically the applicant).
- Capital and substance requirements apply for company formation.
- Physical presence: at least 183 days per year to maintain the permit and tax residency.
- Best for: entrepreneurs and professionals genuinely operating their businesses on the ground in Andorra.
Golden Visa / Investor Residency
Andorra also offers an investor route closely related to Passive Residency, where the qualifying investment of €600,000+ is concentrated in Andorran real estate or government bonds. This pathway is often used by purchasers of high-value Andorran property who want a clean, single-package application.
Self-Employed Residency
A separate sub-category of Active Residency for self-employed professionals operating an Andorran-registered business; broadly similar to Active Residency in physical-presence and substance terms.
Note on the Digital Nomad Visa: This program was closed on 15 November 2025 and is no longer accepting applications. Remote workers should evaluate Passive Residency or alternatives such as Cyprus or Malaysia.
Requirements & Costs
| Requirement | Details (Passive Residency) |
|---|---|
| Qualifying investment | €600,000 in Andorran real estate, deposits, bonds, or company shares |
| AFA deposit (refundable on exit) | €50,000 for the principal applicant + €10,000 per dependent |
| Health insurance | Comprehensive private cover for applicant and family |
| Documents | Passport, criminal record certificate (apostilled), proof of income/wealth, marriage/birth certificates, medical certificate |
| Government & administrative fees | Typically €1,500–€3,000 per application |
| Legal/advisory fees | €8,000–€20,000+ depending on complexity |
| Total upfront (excluding investment) | €60,000–€80,000 of liquidity tied up in deposits and fees |
| Total upfront (including investment) | €650,000–€700,000+ |
| Annual renewal admin | Modest renewal fees; presence test must be re-met each cycle |
Costs above are indicative ranges from current advisory practice and exclude property transaction costs (notary, transfer tax, etc.).
Application Process
- Initial assessment — Confirm eligibility, choose between Passive, Active, or investor pathway, and structure the qualifying investment.
- Document preparation — Gather apostilled criminal record, civil status documents, financial proofs, and arrange health insurance and Andorran address.
- Investment & deposit — Place the €50,000 AFA deposit and execute the qualifying investment (e.g., property purchase or government bond subscription).
- Filing — Submit the application to the Servei d’Immigració in Andorra la Vella, including biometric appointment.
- Approval — Decision typically within 3–6 months; medical examination and in-person interview may be required.
- Move-in & registration — Collect the residence card, register at the local comú (parish), open Andorran bank accounts, and arrange utilities.
- Annual compliance — Maintain the qualifying investment, presence threshold, health insurance, and file annual IRPF returns once tax-resident.
Pros & Cons
| ✅ Pros | ⚠️ Cons |
|---|---|
| 10% maximum income tax with €24K fully exempt | €600K qualifying investment is a hard floor |
| 0% wealth, inheritance, and gift tax | Digital Nomad Visa closed since Nov 2025 |
| 4.5% VAT — lowest in Europe | Andorra is not in Schengen; border formalities apply |
| Strong privacy and political stability | Citizenship requires 20 years and renouncing previous nationality |
| Mountain lifestyle, low crime, central European location | Limited international banking compared to Switzerland |
| Treaty network with Spain, France, Portugal, Luxembourg, others | Smaller talent pool and infrastructure than major EU capitals |
How Andorra Compares to Alternatives
For a European HNW base with very low tax, the natural comparators are Monaco, Switzerland, Cyprus non-dom, and Malta GRP. Andorra typically wins on headline tax efficiency at lower wealth levels: a Passive Residency at €600K is far below Monaco’s effectively €500K bank-deposit-plus-housing requirement (where Monégasque rentals push real entry costs much higher) and below the Swiss lump-sum forfait, which is generally a better fit for €5M+ wealth tiers. See our deeper Monaco vs Switzerland comparison for context.
Where Andorra loses ground is on flexibility and prestige: it is not in Schengen, citizenship is highly restrictive, and the financial services ecosystem — while modernised post-2018 — is shallower than in Zurich, Geneva, or even Luxembourg. For purely territorial-tax setups with no European footprint, the UAE or Paraguay are usually a better fit.
For online entrepreneurs displaced by the closure of the Andorran DN visa, the practical alternatives are Cyprus’s non-dom regime or Portugal’s IFICI for science/tech professionals — see our persona guide for digital nomads.
Frequently Asked Questions
What is the maximum tax rate in Andorra?
The maximum personal income tax rate is 10%, applied to taxable income above €40,000. Income up to €24,000 is fully exempt, and income between €24,000 and €40,000 is taxed at 5%. Corporate income tax is also 10%.
Did Andorra cancel its Digital Nomad Visa?
Yes. The Digital Nomad Visa was discontinued on 15 November 2025 with no replacement program announced. Remote workers must now apply under Passive Residency, Active Residency, or the investor route — all of which carry materially higher financial requirements than the DN visa did.
How many days do I need to spend in Andorra?
Passive Residency holders are generally required to be physically present in Andorra for at least 90 days per year to maintain the permit. To be considered an Andorran tax resident, the standard test is 183+ days, or having the centre of one’s economic interests in Andorra.
Can I get Andorran citizenship?
Yes, but the path is long and restrictive. It generally requires 20 years of legal residence and Andorra does not normally permit dual citizenship — you would typically be required to renounce your prior nationality.
Is Andorra in the EU or Schengen?
Andorra is neither an EU member nor part of the Schengen Area, although it has a customs union with the EU and uses the euro. Cross-border travel still requires standard ID checks, although in practice these are light.
Does Andorra tax cryptocurrency gains?
Crypto gains are treated within the standard IRPF framework, generally as capital gains taxable at up to 10%, with the same exemptions and reliefs that apply to other capital assets. Specific tokenisation and DeFi treatment is evolving — verify with a local tax adviser before structuring large positions.
How does Andorra compare to Monaco?
Both jurisdictions cap personal tax at very low levels, but Monaco offers true 0% personal income tax for non-French residents, at a significantly higher entry cost (bank deposits typically €500K–€1M and Monaco rents). Andorra is meaningfully cheaper to enter at the €600K investment level and has a richer outdoor lifestyle, but it lacks Monaco’s prestige, banking depth, and Schengen-adjacent location. See our Monaco country guide for a full comparison.
Can my family come with me?
Yes. Spouses and dependent children can be included in the Passive Residency application. Each dependent adds €10,000 to the AFA deposit requirement, and full health insurance must be arranged for every family member.
Ready to Make Andorra Your Tax Residency?
Andorra remains a strong fit for HNW individuals and families willing to commit at least €600,000 of capital to the Principality and meet the 90-day presence test. With the Digital Nomad Visa now closed, structuring matters more than ever — the difference between a clean Passive Residency file and a rejected one often comes down to how the qualifying investment is built and how tax residency is established in the first year.
Our team has structured Andorran relocations for entrepreneurs, retirees, and post-exit founders. Book a free consultation to model your specific tax exposure and timeline.
Last updated: 2026-04-26
Sources:
– Andorran Government — Servei d’Immigració official portal (immigracio.ad)
– PwC Worldwide Tax Summaries — Andorra (taxsummaries.pwc.com)
– IMI Daily — Andorra Digital Nomad Visa closure announcement, November 2025 (imidaily.com)
– Global Citizen Solutions — Andorra Residency Guide 2026 (globalcitizensolutions.com)