Andorra Tax Guide: 10% Cap, and the Million Now Required

Andorra sits 25th out of 217 in our world ranking, with a FiScore of 8.2 out of 10. It is the lightest tax system in western Europe, three hours from Toulouse and two from Barcelona.

It is no longer a tax haven in the old sense: it created an income tax in 2015, signed treaties and joined automatic exchange of information. What it kept is a low ceiling.

And the door has just narrowed. A law in force since 13 February 2026 raised the investment required for passive residence from EUR 600,000 to one million, and turned the EUR 50,000 deposit into a payment you never get back. Most English-language pages still quote the old figures.

The scale, and its ceiling

A general allowance of EUR 3,000 applies on top.

Ten percent, and it stops there. There is no higher band. Someone declaring EUR 60,000 and someone declaring three million pay the same marginal rate.

And Andorra levies no wealth tax, no inheritance duty and no gift duty. For an established estate that absence often weighs more than the income tax rate.

VAT, called IGI, is 4.5%: the lowest rate in Europe.

The 2% company rate no longer exists

Corporate income tax is 10%, from the first euro.

You will often read that an Andorran company selling abroad pays 2%. That was true. Andorra granted an 80% reduction to companies trading goods internationally without those goods passing through the country. Under OECD and EU pressure it was dismantled in steps: 60% in 2018, 40% in 2019, 20% in 2020, and nothing from 2021.

Any page still advertising an effective 2% is describing a regime that has not existed for five years.

The 90-day trap

This is the most common confusion about Andorra, and it can be expensive.

Passive residence requires 90 days of presence a year. That is true, and those are immigration days: the condition for keeping your permit.

Tax residence is a different question, set by article 8 of law 5/2014:

• more than 183 days in Andorra in the year, or
• your main centre of economic interests in Andorra.

The consequence is blunt. Ninety days in Andorra leaves 275 days somewhere else. If those 275 days are largely in the country you came from, with your family, your home and your business, that country will treat you as its resident, and it will have good arguments.

A residence permit is not a tax residence certificate, and a tax residence certificate is not immunity. Three separate things.

What passive residence now costs

Two changes matter more than the headline. The deposit no longer comes back: it used to be returned on departure and is now a definitive payment. For a family of four that is EUR 74,000 gone.

And the debt and investment-fund route is capped at 36 months, after which the capital has to move into permanent assets to keep the permit.

The tax nobody mentions: buying property

Since 2024, and adjusted in 2026, a foreign investor buying Andorran property pays a specific tax: 6% on a simple purchase, 10% beyond defined limits.

It applies to non-residents and to residents who cannot show three years or more of effective residence in the last ten. Someone who arrives and buys straight away pays it.

Since the passive route very often runs through property, the real bill is not one million but one million plus 6 to 10% on top, plus the deposit you never see again.

Social contributions, the other half

Comparing Andorra to a neighbour on income tax alone is meaningless. The CASS takes:

The self-employed base is fixed rather than proportional to what you actually earn: very favourable above a certain income, much less so below it.

If you are American

Citizenship-based taxation applies as everywhere, and Andorra adds a specific problem: it is not in the European Union, and its treaty network is thin. There is no US treaty to smooth the overlap, so a 10% Andorran tax generates very little credit against a US bill.

For an American, Andorra is a place to live cheaply and safely in Europe, not a tax outcome.

The drawbacks

Not in the EU. An Andorran company has no freedom to provide services across the Union and no benefit from the parent-subsidiary directive. For a business selling to European clients, that costs work and money.

Small and landlocked. 468 km², no airport, no railway. Toulouse or Barcelona are two to three hours of mountain road.

Few banks, and demanding ones. Opening an account takes a solid file on the origin of funds.

Automatic exchange of information. Your Andorran account is reported to where you came from.

Housing is scarce and expensive, which is precisely why the foreign property investment tax exists.

So, who is Andorra for?

• An entrepreneur genuinely moving the activity: the best case. 10% on profits, 10% at most on income, an active residence that makes the departure credible, and 22% of social contributions.
• An estate to pass on: no inheritance duty at all, and that does not depend on a revocable regime.
• A high earner wanting to stay near France or Spain: the 10% ceiling is still the argument, but the entry ticket has gone up sharply.
• Anyone wanting the permit without living there: the weakest plan, and the 2026 law made it the most expensive.

The full table of Andorran rates is on our Andorra page, and the comparison tool puts it next to anywhere else. Before deciding anything, read how to actually leave.

Sources

Law 2/2026 of 22 January 2026, published in the Andorran official gazette on 12 February and in force from 13 February: text on the Andorran legal portal, with summaries from firms established in the principality. Law 5/2014 for the definition of tax residence, law 3/2024 for the foreign property investment tax. Rates verified in August 2026. An error reported to us gets fixed.

This page informs, it does not advise. Before deciding anything, talk to a professional who will look at your situation, as our terms of use set out.