logotipo nómadas fiscales

Tax Residency in Andorra: Taxation and Requirements

TABLE OF CONTENTS

residencia fiscal en andorra

Andorra is the old glory of tax residencies for Tax Nomads in Europe.

“Since forever,” large fortunes (particularly from Spain and France) have moved to this country to pay fewer taxes. Why?

Because evidently, the tax system in Andorra is almost unbeatable and, moreover, other options were not known.

Andorra continues to offer a very advantageous tax system, as well as other characteristics that may be attractive to entrepreneurs and investors.

However, the small size of the country and the high demand for residency have led to significant changes in both government policies and living conditions that are worth considering.

Is Andorra still a good option for our tax domicile?

In this article, you will learn about Andorra’s taxation, the requirements to obtain active, passive, and Digital Nomad tax residency, and our opinion on the matter.

Taxation in Andorra

To understand why so many people wish to obtain this tax residency, one must know its main benefits.
 

Among others, we find the following tax advantages for an individual acquiring Andorran tax residence:

  • Personal Income Tax 0% up to €24,000 and a maximum of 10%
  • Gift Tax 0%
  • Inheritance Tax 0%
  • Wealth Tax 0%
  • Exempt dividends if received from your Andorran company
  • Foreign dividends taxed at a maximum of 10%
  • Capital gains tax under income tax rules (maximum 10%)
  • VAT (known as IGI in Andorra) at 4.5%
  • No exit tax
  • Andorran Corporate Tax at 10%
  • No CFC Rules
  • Andorra is currently not considered a tax haven

There is no doubt that it ranks among the world’s top tax systems.

However, social security contributions in Andorra are somewhat high:

The monthly contribution for self-employed individuals (and self-employed company owners) in Andorra is calculated annually and amounts to 22% of the country’s average salary, which is €533.87 in 2024.

vivir en andorra

Requirements for residency in Andorra

Andorran legislation establishes that a person will be considered a tax resident in Andorra if they meet any of the following requirements:

  • Reside more than 183 days in the country (90 days for passive and digital nomad residency).
  • The center of economic interests is located in the country (i.e., where the majority of personal income originates).
  • The nucleus of family interests or vital interests if married or responsible for dependents is in the country.

There are 4 main types of residency permits in Andorra:

Active Residency in Andorra

If your intention is to start your own business, you will need a self-employed work residency permit.

If your goal is to work in an Andorran company, you will need an employed work residency permit (being hired by an Andorran company).

Among the main requirements to obtain the self-employed work permit are:

  • Establishing a company in Andorra or acquiring at least 34% of an Andorran company.
  • Making a mandatory deposit (refundable upon leaving the country) of €50,000 with the Andorran Financial Authority (AFA).
  • Presenting the rental or purchase contract of an Andorran residence.

Your first active residency permit is valid for one year.

After this first year, you must renew it every two years, up to three more times.

After seven years in Andorra, you must renew the active residency permit every 10 years.

Passive Residency in Andorra

Unlike active residency, passive residency allows you to live in Andorra but not work.

To obtain it, you must demonstrate sufficient assets or income to sustain yourself in Andorra without working.

Passive residency requires several requirements:

  • Spending at least 90 days in Andorra per calendar year.
  • Investing €600,000 in real estate, an Andorran bank product, or in the capital of an Andorran company.
  • Depositing €50,000 with the Andorran Financial Authority (AFA), and an additional €10,000 for each dependent.
  • Demonstrating sufficient financial means (300% of the country’s minimum wage + 100% of the minimum wage for each dependent).
  • Maintaining health insurance covering all medical expenses in Andorra throughout the stay.

Digital Nomad Visa in Andorra

Digital Nomad Residency in Andorra offers an option for professionals conducting online activities without needing a physical establishment.

This program allows beneficiaries to obtain administrative and tax residency in Andorra, taxing their income derived from professional activities.

To apply, a favorable resolution from the ministry is required, filtering applicants based on their contribution to digital economy development, entrepreneurship, or innovation in Andorra.

This process takes 2-4 weeks and is highly selective, admitting only highly technological, innovative, and digitalized profiles.

Similar to passive residency, only 90 days of stay in the country are required.

Its main advantage is the exemption from the €50,000 deposit and self-employed fee.

Those under this regime are not part of the “active worker” system, which means they do not contribute to Social Security payments and, therefore, do not receive coverage from it.

For this reason, proof of sufficient financial means is also required, with Andorra establishing clear requirements: applicants must demonstrate income equivalent to three times the minimum wage, plus an additional minimum wage for each dependent.

Additionally, private health insurance and housing availability (rented or purchased) are also required.

More information on Digital Nomad residency can be found in this article.

Professionally Autonomous Residency in Andorra

Alongside Digital Nomad Residency, this is the most economical way to reside in Andorra.

This type of residency also does not require the €50,000 deposit to the AFA and allows operation without establishing a company in Andorra.

However, it requires practicing a regulated profession with a university degree (licensed) and a favorable resolution from the ministry.

How is living in Andorra?

When we talk about Andorra, we must not forget that we are talking about a micro-state in the Pyrenees.

Therefore, living conditions in the country deserve a thorough review before making the decision to move.

Cost of Living:

The cost of living is higher than, for example, in Spain.

Especially in housing, with a real estate market constantly rising and significant challenges in finding rental accommodations.

Safety:

Andorra stands out for its low crime rate and tranquility.

Climate and Quality of Life:

With a mountain climate, Andorra experiences quite cold winters and cool summers, perfect for outdoor activities.

Andorra is renowned for its beautiful mountain landscapes, prestigious ski resorts, and low levels of pollution.

Its climate with distinct seasons favors both winter and summer sports.

Cultural diversity, blending Catalan, French, Spanish, and Portuguese influences, is reflected in its gastronomy and multicultural community.

Politics and Stability:

The economic orientation is more liberal, with a favorable tax system and less restrictive economic regulations compared to many other countries.

Networking:

Andorra has undergone an economic transformation, moving away from traditional dependence on tourism and retail.

Emerging sectors like technology and finance offer new business opportunities.

Local collaboration is significant in this small country, fostering joint projects and beneficial synergies for all parties involved.

residencia fiscal en andorra

Our Review on Andorra Tax Residency

Tax residency in Andorra may appeal to those with substantial wealth seeking tax advantages, as it offers an attractive tax regime.

It is also appealing to entrepreneurs and business owners looking to establish businesses in a less restrictive economic regulatory environment.

However, due to recent changes such as the increased cost of living and restrictions on property purchases, Andorra might be more suitable for those with high incomes or who meet the strict requirements of the new Digital Nomad residency.

If you want to obtain tax residency, set up a company in Andorra or wish to receive a comprehensive analysis of your situation to discover your best options, simply fill out the form below and let us know your case and needs.

Contact us

Among its taxes we find:

  • Personal Income Tax ranges from 0% to a maximum of 10%.
  • Gift Tax, Inheritance Tax, and Wealth Tax are all 0%.
  • Capital Gains Tax has a maximum rate of 10%.
  • Corporate Tax for Andorran companies is 10%.
  • Foreign Dividends are taxed up to 10%.
  • VAT (IGI) is 4.5%.

Andorra’s tax system is advantageous for minimizing tax burdens, especially for individuals and businesses.

 

In Andorra, there are several types of residencies and permits available:

  1. Active Residency: For individuals starting their own business or employed by an Andorran company.

  2. Passive Residency: Allows living in Andorra without working, requiring financial investments and meeting income criteria.

  3. Digital Nomad Visa: Specifically for professionals engaged in online activities, exempting them from certain financial requirements.

  4. Professionally Autonomous Residency: For licensed professionals practicing regulated professions.

Each type of residency has specific requirements and benefits tailored to different professional and personal situations.

The requirements to become a tax resident in Andorra include:

  • Residing more than 183 days in the country per year (90 days for passive and digital nomad residency).
  • Demonstrating that the center of economic interests is in Andorra, where the majority of personal income originates.
  • Establishing the nucleus of family interests or vital interests in the country if married or responsible for dependents.

To obtain active residency in Andorra:

  • Start a business or work for an Andorran company.
  • Meet financial requirements, including a 50.000€ deposit with the Andorran Financial Authority.
  • Provide proof of residence, demonstrate economic ties, and maintain health insurance.
  • Renew the permit annually initially, then every two years up to seven years, and every ten years thereafter.

In Andorra cryptocurrencies are not subject to wealth tax or Personal Income Tax.

However, gains derived from the sale of cryptocurrencies could be considered capital gains and may be subject to a 10% tax (with the first 3,000 euros exempt).

The requirements for the digital nomad visa in Andorra include:

  • Engaging in remote work or online business activities.
  • Obtaining a favorable resolution from the ministry, assessing contributions to the digital economy.
  • Spending a minimum of 90 days per year in Andorra.
  • Demonstrating sufficient financial means and maintaining private health insurance.
  • Providing proof of housing availability in Andorra (rented or purchased).

No, currently Andorra is not considered a tax haven.

Although historically attractive to high-income individuals due to its favorable tax regime, the country has implemented measures to comply with international standards and avoid being classified as a tax haven.

Andorra has worked on tax transparency and international cooperation in tax matters.

La residencia fiscal en Andorra puede interesar a aquellos con grandes fortunas que buscan ventajas fiscales, ya que ofrece un régimen fiscal atractivo. 

También es atractivo para emprendedores y empresarios que desean establecer negocios en un entorno con regulaciones económicas menos restrictivas. 

Sin embargo, debido a recientes cambios, como el aumento del costo de vida y restricciones en la compra de propiedades, Andorra podría ser más adecuada para aquellos con ingresos elevados o quienes cumplan los estrictos requisitos de la nueva residencia para Nómadas Digitales. Cada caso debe evaluarse individualmente.

Where your tax freedom starts

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top

We have received your message!

We will contact you via email as soon as possible.

logotipo nómadas fiscales
×