Andorra Tax Residency Rules
Andorra offers Europe's lowest income tax cap at 10% (with a 0% band up to €24,000) and no capital gains tax. Establishing residency requires a permit plus 183+ days of annual presence. Spanish nationals face a 5-year Spanish tax tail regardless. France has no comprehensive DTA with Andorra — a significant gap for French leavers.
| Presence threshold | 183 days minimum in Andorra per calendar year |
| Maximum elsewhere | Must not exceed 183 days in any other single country |
| Permit required | Yes — residency permit (passive or active) is a prerequisite |
| Income tax (IRPF) | 0% up to €24,000 · 5% €24k–40k · 10% above €40k |
| Capital gains tax | None on financial investments |
| Complexity | Medium — Spain 5-year tail, no France DTA |
| Tax year | Jan 1 – Dec 31 |
| Spain DTA | Yes — in force from 2023 |
| France DTA | No comprehensive treaty |
| Schengen | Not a member — but de facto open borders with France and Spain |
| Official source | Govern d'Andorra ↗ |
Establishing Andorran tax residency
Andorran tax residency is a two-step process: immigration permit first, then tax status.
Without an Andorran residency permit, tax residency cannot be formally established. The two main categories are:
- Passive residency (residència sense activitat lucrativa): for individuals with sufficient passive income or assets who will not work in Andorra. Requirements include proof of sufficient income (approximately €30,000+ per year), a minimum €50,000 bank deposit with an Andorran bank, comprehensive health insurance, and a rental or purchase of Andorran accommodation. No work permitted.
- Active residency (residència amb activitat lucrativa): for employed workers (must have an Andorran employer) or self-employed individuals operating a registered Andorran business. At least 20% of any Andorran company must be owned by Andorran-resident shareholders — important for entrepreneurs incorporating a new entity.
Once permitted, the residency must be substantiated by physical presence in Andorra of at least 183 days per calendar year. This is a minimum — spending fewer than 183 days in Andorra risks losing the residency status. Simultaneously, spending 183 or more days in any other single country could trigger tax residency there (particularly Spain, Portugal, France, or Italy, all of which have day-count or family-based triggers).
Andorran residency is high-maintenance. Unlike some countries where 183 days establishes and then merely maintains residency, Andorra requires active substantiation each year. The Raonadora del Ciutadà (Andorran ombudsman) and immigration authorities track renewals. Failing to spend 183 days jeopardises the permit and thus the tax residence.
Andorra's IRPF: the tax rate structure
Andorra introduced the IRPF (Impost sobre la Renda de les Persones Físiques) in 2015, replacing the prior regime of effectively zero income tax. The rate structure:
- €0 – €24,000: 0% — entirely exempt
- €24,001 – €40,000: 5%
- Above €40,000: 10%
There is no capital gains tax on financial investments (shares, bonds, funds). Real property transfers have a specific transfer tax, not a capital gains regime.
For an individual earning €200,000: approximately €16,000 in IRPF (0% on first €24k, 5% on next €16k = €800, 10% on remaining €160k = €16,000). Effective rate: approximately 8.4%. By comparison, effective rates for the same income in Spain, France, or Germany would typically be 35–45%.
The Spanish national moving to Andorra: the 5-year trap
Spain classifies Andorra as a "país de nula tributación" (nil-taxation territory) for purposes of the Spanish IRPF anti-avoidance rules. Spanish tax law provides that when a Spanish national changes tax residence to a nil-taxation territory:
- They remain subject to Spanish income tax on worldwide income in the tax year of departure and the four following tax years
- This applies to Spanish nationals, not to other EU or foreign nationals living in Spain who move to Andorra
- The 5-year rule operates even if the individual genuinely satisfies Andorran residency requirements and spends 183+ days in Andorra each year
The Spain–Andorra double tax treaty (entered into force in 2023) provides tie-breaker rules and limits some instances of double taxation — but it does not abolish the 5-year rule for Spanish nationals. Treaty benefits and the domestic anti-avoidance rule interact in complex ways that require specialist advice for each specific case.
Carlos is a Spanish national with a profitable online business. He obtains Andorran passive residency, moves to Andorra in January, and spends 200 days there per year. His Andorran IRPF liability: approximately 8–10% effective rate. His Spanish liability during the 5-year tail: Spanish IRPF at up to 47% on worldwide income applies concurrently. The Spain–Andorra treaty provides some relief to avoid literal double taxation, but the effective cost of the 5-year tail is substantial. Carlos should plan around this — potentially structuring income timing or using treaty relief — before the move.
The French national moving to Andorra: no DTA safety net
France has not concluded a comprehensive double tax treaty with Andorra. This creates a meaningful risk for French tax residents relocating to Andorra:
- If the French DGFiP asserts that the individual retains French domicile fiscal (via the foyer test — family in France, or via the economic interests test — French business or assets), there is no treaty tie-breaker to resolve the conflict.
- In the absence of a treaty, French law and Andorran law each operate independently. Both jurisdictions could assert full tax residency with no relief mechanism other than domestic French unilateral credit provisions (which are limited).
- French nationals considering an Andorra move should: genuinely transfer the foyer (family relocation), sever economic ties to France, obtain documented Andorran residency, and seek specific advice on the France–Andorra legal gap before relying on expected tax savings.
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Frequently asked questions
What is the tax residency threshold in Andorra?
183 or more days per calendar year, with no single other country receiving 183 or more days. Additionally, an Andorran residency permit must be in place — tax residence cannot be established without immigration status. Physical presence tracking is active; failing to meet 183 days jeopardises permit renewal.
What is Andorra's income tax rate?
0% on income up to €24,000, 5% on the next €16,000 (up to €40,000), and 10% above €40,000. No capital gains tax on financial investments. This is a comprehensive income tax — not a nil-tax jurisdiction — but with one of the lowest effective rates in Europe.
Does Spain's 5-year rule apply to me if I move to Andorra?
Only if you are a Spanish national (ciudadano español). The 5-year tail applies specifically to Spanish nationals relocating to nil-taxation territories — not to citizens of other countries who have been living in Spain and then move to Andorra. If you are French, German, or any other nationality, the Spanish 5-year rule does not apply.
Does Andorra have a tax treaty with France?
No comprehensive double tax treaty. France and Andorra have partial arrangements on customs and VAT, but no income tax treaty. This means French nationals who move to Andorra have no treaty-based tie-breaker if the DGFiP asserts continued French domicile fiscal. This is a material risk, particularly for those with French family or French business interests.
Is Andorra in the Schengen area?
No — Andorra is not a Schengen member. However, it is landlocked between France and Spain, both Schengen states. EU nationals can move freely between Andorra and neighbouring Schengen countries. Non-EU nationals travelling through France or Spain use their Schengen visas at those countries' external borders; crossing into Andorra is technically a Schengen exit, so Andorra days do not count against the 90/180 Schengen limit. In practice, borders are unstamped.
Can I work remotely from Andorra as a self-employed person?
Yes, via active residency. You would need to register a self-employed activity (autònom) with Andorran authorities, which requires registering a business with at least 20% Andorran-resident ownership. Alternatively, if you work exclusively for foreign clients with no Andorran business registration, the passive residency route may apply — though this is a grey area. Consult an Andorran tax adviser (assessor fiscal) on the correct permit category.
Related guides and tools
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This page is for informational purposes only and does not constitute tax or legal advice. The Spain–Andorra treaty (in force from 2023) continues to be interpreted through new administrative guidance. The France–Andorra tax gap involves unresolved legal complexity. The active/passive residency rules and ownership requirements for Andorran businesses are set by Andorran immigration law and may change. Consult a qualified Andorran assessor fiscal and your home-country tax adviser before relocating.