Andorra tax residency

Personal income tax (IRPF) Andorra’s personal income tax, the IRPF, has just three bands: 0% on the first €24,000 of annual income, 5% between €24,001 and €40,000, and 10% above €40,000. There is no higher bracket — 10% is the ceiling, one of the lowest top rates in Europe. Tax residents are taxed on their worldwide income; non-residents pay a separate non-resident tax only on Andorran-source income. Savings and capital gains sit inside the same framework at up to 10%, with real exemptions — for example, gains on a main home held long enough.

Corporate tax (Impost sobre Societats) Companies tax-resident in Andorra pay corporate tax on worldwide profit at a standard 10%, again a ceiling rather than a starting point, with reduced effective rates for some qualifying new or small activities. This is why Andorra is used as a base for holding and digital businesses — but substance rules apply. A letterbox company with no real activity or staff will not hold up, especially given the treaty and information-exchange framework below.

Indirect tax (IGI, the Andorran VAT) On the indirect side, Andorra levies the IGI — its value-added tax — at a general rate of 4.5%, the lowest VAT in Europe. Reduced rates apply to essentials such as food and healthcare, and a higher rate applies to banking and financial services. For a resident the practical effect is plain: everyday consumption is taxed far more lightly than across the border in France or Spain.

What Andorra does not tax Just as important is what is absent. Andorra has no wealth tax and no general inheritance or gift tax — a large part of why it attracts holders of significant assets. That does not make an estate untouchable everywhere: assets located abroad can still fall under a foreign succession regime. But Andorra itself adds no wealth or inheritance layer on top of the low income tax.

Social security and health cover Income tax is not the whole bill. Andorra runs its own social security fund, the CASS, financed by contributions that are separate from income tax. A passive resident does not work locally, so in practice the relevant requirement is private health insurance covering Andorra rather than employee CASS contributions. Confirm the current cover requirement with the Govern when you apply.

Double-taxation treaties and exchange of information Andorra is no longer the closed jurisdiction of its reputation. It has built a network of double-taxation treaties (convenis per evitar la doble imposició) — including with its neighbours France, Spain and Portugal and a growing list of others — which is what stops the same income being taxed twice once you move. It also takes part in the automatic exchange of financial-account information (CRS), so a change of tax residency is transparent to your former country, not hidden from it. Check the current treaty list on the Govern d’Andorra tax portal for your own country before you plan.

Residency does not make you tax-resident Here is the point marketing skips. Acquiring Andorran residency by investment gives you a permit; it does not by itself make you tax-resident. Tax residency generally turns on actually living in Andorra — broadly, spending more than 183 days a year there, or having your centre of economic interests in the country — while the passive residency requires only 90 days. Keep your home, family and business abroad, and your old country may still treat you as its tax resident. Leaving a tax residence is also rarely instant or free: exit taxes, deemed-disposal rules and continuing-ties tests can follow you, as we set out in the guide to second citizenship and taxes.

The honest bottom line Andorra’s tax regime is genuinely among the lowest in Europe, and for someone who truly relocates it can be transformative. But the benefit comes from moving and meeting the residency test, not from holding a permit — exactly as with any residency by investment programme. Model your real residency, confirm the current rates and your treaty position with the Govern d’Andorra and a qualified tax adviser in both countries, and treat this page as verified general information, not advice on your situation. See how we check every figure on our methodology page.