Programme overview

Andorra is the smallest EU-adjacent jurisdiction with a serious tax architecture, and as of 13 February 2026 it is meaningfully more expensive to enter. The Omnibus 2 law, approved by the General Council on 22 January 2026 and in force three weeks later, restructured passive residency: the qualifying investment threshold rose from €600,000 to €1,000,000, the historically refundable AFA deposit became a non-refundable €50,000 state fee, and a parallel €400,000 Housing Fund route was introduced to direct capital toward the country’s affordable-housing crisis. Files submitted before the cut-off date follow the prior framework — a transitional protection that was generously interpreted but is now closed.

There are two principal residency tracks. Passive Residency (Category A — Residència sense activitat lucrativa) is the wealth-based route: no Andorran work, 90+ days/year minimum stay, qualifying investment, demonstrated income (300% of the Andorran minimum salary, +100% per dependent). Active Residency is the founder / employed track: it requires establishing or working for an Andorran company, 183+ days/year residence, and exposure to the Andorran personal income tax regime. Two narrower categories — Category D (Professionals of International Renown) and the cultural/sports residency — round out the framework.

What has not changed is the structural attraction. Andorra runs a 10% maximum personal income tax (with the first €24,000 exempt and a 5% middle band), a 10% corporate rate, no inheritance, gift or wealth tax, and a continually expanding double-tax treaty network. For European HNW principals — particularly those leaving Spain, France or Portugal — the move remains one of the largest legal tax-burden reductions available without leaving the continent. The new entry cost is the price of admission to a tightened, more selective programme.

Investment routes

Passive Residency — Standard (€1M from 13 Feb 2026). A permanent and effective €1,000,000 investment in Andorran assets: real estate (min €800K/unit), Andorran company equity, Andorran public debt, debt or financial instruments issued by Andorran entities, life insurance with Andorran-resident insurers, or non-remunerated deposits at the AFA. Plus a €50,000 non-refundable state fee, €12,000 per dependent. Plus annual income proof of 300% of the Andorran minimum salary plus 100% per dependent. 90+ days/year of effective residence.

Passive Residency — Housing Fund (€400K from 13 Feb 2026). A €400,000 commitment to the Fons d’Habitatge — the national affordable-housing fund, a public-private mechanism. Same rights set, lower entry. The €50K state fee still applies. Designed to align HNW capital inflow with Andorra’s domestic priorities.

Active Residency — Self-employed / Founder. Establish an Andorran company (SL: minimum share capital €3,000; SA: €60,000), deposit €50,000 with the AFA as guarantee, hold a minimum 34% shareholding initially (reducible to 20% after 3 years) plus a director role. 183+ days/year residence. Subject to Andorran personal income tax. The route for principals who plan to operate from Andorra rather than retire to it.

Active Residency — Employed. Sponsored work-permit residency. Quota-controlled and subject to a labour-market test. Used by senior hires of Andorran groups (banking, retail, hospitality).

Category D — Professionals of International Renown. Recognised cultural, scientific, sports or research professionals. Requires that 85%+ of professional income derives from outside Andorra. 90+ days/year minimum stay. Narrower documentary route.

Tax architecture

Personal income tax (IRPF) — 10% maximum. Andorra runs a progressive personal income tax: 0% on the first €24,000, 5% on €24,000-€40,000, and 10% above €40,000. There is a marriage-couple computation and a dependent-child allowance that materially reduce effective burden for households. Capital gains are taxed at 10% maximum, with a participation exemption that effectively zeroes the tax on qualifying disposals of shareholdings ≥25% held >10 years.

No inheritance, no gift, no wealth tax. Andorra imposes no inheritance tax, no estate tax, no gift tax and no wealth tax. The structural feature is comparable to Monaco’s on the inheritance side, with a lower personal income tax than every EU jurisdiction except a handful of special regimes.

Becoming an Andorran tax resident. The Active route triggers Andorran personal income tax automatically on residence. Passive residents are not automatically tax-resident — the passive permit only requires 90+ days/year of presence — but at 183+ days they cross the line and benefit from the regime. Andorra’s expanding treaty network (France, Spain, Portugal, Luxembourg, UAE, Cyprus, Liechtenstein, Malta and others — 12+ as of 2026) makes prior-jurisdiction tax severance substantially cleaner than it was a decade ago. Spain in particular has a tightened exit-tax regime that warrants careful planning.

Corporate tax — 10%. A flat 10% rate on corporate profit. A qualifying-intangibles regime can deliver a 2% effective rate on income from qualifying intangible property (subject to OECD-aligned substance requirements). VAT (IGI) is 4.5% — the lowest in Europe.

What it gets you

  • 10% maximum personal income tax with €24K exempt — the lowest IRPF in Europe outside special regimes.
  • Zero inheritance, gift, wealth and estate tax.
  • 4.5% IGI (VAT), the lowest in Europe.
  • Capital gains exemption on qualifying long-held shareholdings.
  • Two principal cities (Andorra la Vella, Escaldes-Engordany), French and Spanish on every menu, Catalan as the official language, and one-hour airports at Toulouse, Lleida and Barcelona.
  • Schooling in three systems: Andorran public, French lycée network, and Spanish school network.
  • Excellent private healthcare; access to the European Health Insurance system through reciprocal arrangements.
  • A defensible, jurisdictionally serious alternative to Monaco for clients without Monaco-bank-grade liquidity.

Our role on an Andorra file

  1. Framework diagnostic — Passive Standard (€1M) vs Passive Housing Fund (€400K) vs Active vs Category D — sized to the principal’s income profile, deployment preference and intended day-count.
  2. Investment placement: Andorran equity, public debt, real-estate selection (min €800K/unit), or the Housing Fund commitment, structured with our Andorra la Vella legal counsel.
  3. AFA state-fee processing (€50K + €12K/dependent), passport documentation, criminal-record certificates apostilled from every prior residence.
  4. Bank account opening at one of Andorra’s five licensed banks (Andbank, Crèdit Andorrà, MoraBanc, Vall Banc, BancSabadell d’Andorra) — the second-slowest workstream after AFA processing.
  5. Tax-residency severance from the prior jurisdiction — particularly important for principals leaving Spain, France or Portugal, where exit-tax regimes are aggressive.
  6. Family file integration — spouse, dependent children, and (where documented) parents in the ascending line. Schooling placement (Lycée Comte de Foix, Spanish system, or Andorran public) coordinated.