Concept
For decades Andorra operated as a duty-free zone with no income tax, but pressure from the EU and the OECD led it to establish a conventional tax system with a very low burden. Today it is a jurisdiction with income tax capped at 10 percent, the lowest VAT rate in Europe, and no tax at all on wealth, inheritance or gifts. Residency is what opens access to the regime, and in February 2026 the minimum investment for passive residents rose to €1 million.
Key parameters of the regime:
| Statutes | Immigration Law 9/2012, Law 5/2025, Law 2/2026 (in force since 13 February 2026), IRPF Law 5/2014 |
|---|---|
| Who it covers | Non-residents moving income and capital to Andorra without working in the country |
| Entry threshold | €400,000 to €1,000,000 of investment, depending on the form chosen |
| AFA deposit | €50,000 plus €12,000 per dependent, non-refundable |
| Presence | At least 90 days a year |
| Income tax | Up to 10 percent; the first €24,000 of annual income is exempt |
| IGI (VAT) | 4.5 percent; reduced rates of 2.5 and 1 percent |
| Capital taxes | No tax on net wealth, inheritance or gifts |
From a Duty-Free Zone to a Tax System
Until the early 2010s Andorra managed without direct taxes, living off duty-free trade and a closed banking sector. Harmonisation with the EU and the OECD forced it to build a tax system almost from scratch: the indirect tax IGI was introduced in 2013, corporate income tax in the early 2010s, and the personal income tax IRPF took effect in 2015. The country wound down banking secrecy in 2017 and carried out its first automatic exchange of data under the CRS standard in September 2018. In a single decade a closed jurisdiction became a low-tax jurisdiction recognised by its treaty partners.
Income Tax up to 10%
IRPF, the local personal income tax, is built in three bands. The first €24,000 of annual income is exempt, income from €24,000 to €40,000 is taxed at 5 percent, and everything above €40,000 at 10 percent. That is the ceiling: the maximum rate for an individual in Andorra is 10 percent. Corporate income tax is also 10 percent.
VAT 4.5% and No Capital Taxes
The indirect tax IGI, Andorra's equivalent of VAT, stands at 4.5 percent — the lowest standard rate in Europe, below even Switzerland's; reduced rates of 2.5 and 1 percent apply to certain goods and services. Andorra levies no tax on net wealth, inheritance or gifts. When a family moves both its income and its capital here, the overall burden is among the lowest of any country with a full tax system — on this point Andorra is closer to Monaco than to traditional offshore jurisdictions, but it levies a moderate tax rather than none. Andorra's 10% ceiling is set against Monaco, Gibraltar, Jersey, Guernsey, the Isle of Man, Bermuda, the Cayman Islands and the UAE on financial entry conditions, presence, personal tax and treaty network in the zero- and capped-tax table of special tax regimes; the residence route itself, with its €86,000 non-recoverable outlay for a family of four, is compared with the European investor programmes in investor routes in Europe.
Passive Residency: Threshold Raised in 2026
Wealthy non-residents enter Andorra through passive residency, which carries no obligation to work in the country. Law 2/2026, in force since 13 February 2026, raised the minimum investment from the previous €600,000 to €1,000,000 in Andorran assets, with reduced routes of €800,000-plus per real-estate unit and €400,000 through the state Housing Fund. In addition, there is a non-refundable AFA payment of €50,000 plus €12,000 per dependent, and the status is maintained by spending at least 90 days a year in the country. Full conditions, the income requirement, timelines and the filing process are set out in Andorra residence without work.
Passive residency is not the only route. Active residency is obtained by those who genuinely work in Andorra or run a company here: no large investment is required, but it demands real economic activity, employment or self-employment, and more presence in the country. This route is chosen by entrepreneurs and freelancers for whom running a business from Andorra matters more than holding capital here.
The 2025 residency reform and the route for sportspeople and content creators
Two Steps of the Reform
The €1 million threshold is the second step of the reform, not its start. The first was set by Law 5/2025 of 6 March 2025 on sustainable growth and the right to housing (BOPA 26.03.2025, in force since 17 April 2025): its article 37 rewrote article 96 of Immigration Law 9/2012, lifting the passive resident's investment to €600,000 (€400,000 if channelled into the Housing Fund; more than €600,000 per property unit acquired) while keeping the €50,000 deposit plus €12,000 per dependent refundable and creditable against that investment.
It was Law 2/2026 that turned the payment into a non-refundable one: the amounts are paid in definitively, the AFA transfers them to the finance ministry for the benefit of the State, and a refund is available only if the initial authorisation is refused; applications filed before that law was passed are handled under the previous rules by virtue of its transitional provision.
The grandfathering turns on the date of approval: applications filed before 22 January 2026 are completed under the previous rules — the detail of the transitional provision is in Andorra residence without work.
Fees, Language and Quota
The same Law 5/2025 (article 42) rewrote the fee table in article 154 of Law 9/2012: issuing an initial residència sense treball authorisation now costs €3,000, a renewal €500, and a dependent's authorisation €1,000.
The Catalan requirement is provided for in articles 54 bis and 58: the first renewal of a residence-and-work authorisation requires level A1 and the second level A2, evidenced by an official Andorran Government diploma or a recognised equivalent — passive residents are outside this requirement. The quota under article 23.10 covers the tracks for professionals of international projection and for scientific, cultural and sporting interest, whereas passive residents (articles 91, 93 and 94) are not counted against it.
Decree 407/2025 Conditions
Procedure is set by Decree 407/2025 of 12 November 2025 (in force from 14.11.2025): an income requirement for the applicant, a deadline for completing the investment and annulment of the authorisation if it is not documented — the figures and timelines are in Andorra residence without work.
Science, Culture and Sport
Sportspeople and content creators are served by a separate route — residència per raons d’interès científic, cultural i esportiu (articles 100–101 of Law 9/2012). There is no €1 million investment here: the AFA deposit is €47,500 plus €9,500 per dependent and it remains refundable — as it also does for professionals of international projection under article 99 of Law 9/2012; it is only on the passive route that the payment became non-refundable, while mandatory presence is only 90 days per calendar year.
International recognition of talent in science, culture or sport is required; the applicant's own professional activity is permitted provided its principal recipients are non-residents, a test treated as met where at least 85 percent of the services are used outside Andorra. The Government is expressly given full discretion in assessing that recognition, and the statute does not name content creators as a category of their own — they enter either through the cultural track or through the digital regimes of Law 42/2022.
Who Moves, and Why
The most prominent example is Spanish bloggers and streamers. Rubén Doblas (El Rubius), TheGrefg, Vegetta777, Willyrex, Patry Jordan and dozens of less prominent creators moved to Andorra in the early 2020s. The tax rationale for relocating is that in Spain income above €60,000 is taxed on a progressive scale of roughly 45–47 percent, while in Andorra the ceiling is 10. The mass relocation of 2021 triggered public debate in Spain and promises to tighten control over income shifting.
A residency dispute is settled on the text of the statute. Article 8 of IRPF Law 5/2014: an Andorran tax resident is a person who spends more than 183 days of the calendar year in the country (sporadic absences count unless tax residency elsewhere is proved) or whose main nucleus or base of activities and economic interests is in Andorra; a presumption applies through a spouse and minor children. Article 9 of Spain's Law 35/2006 (LIRPF) is worded in the same terms.
Beyond media creators, the country draws traders, crypto entrepreneurs and owners of digital businesses, attracted by the proximity of Barcelona, two and a half hours away. For those who remain in Spain, the domestic alternative is the Beckham law, but its rate and duration are limited.
Transparency and CRS
Today an Andorran resident's account is visible to their former tax authority. The country takes part in automatic exchange under the CRS standard and shares data with more than a hundred jurisdictions. That is why a genuine change of tax residency with a real relocation is what makes sense; this regime does not help conceal assets abroad.
Andorra and the EU: development of relations
Andorra is integrating into Europe gradually and without EU membership. A trade agreement has been in force since 1990, a monetary agreement since 2011, and since 2013 the country has officially used the euro. The next step is an association agreement with the EU: negotiations concluded in December 2023, and on 16 July 2026 the Council of the EU approved the text and the decision to sign it; signature itself and the European Parliament's consent are still ahead.
Andorra promised to put the agreement to a referendum, but no date has been set: the vote has been postponed repeatedly and will only follow ratification at EU level. The outcome is not a foregone conclusion — polls suggest around 46 percent of residents lean towards voting against, out of concern for the low taxes and sovereignty. For prospective residents this means that Andorra's fiscal model is stable for now but may over time converge with the pan-European one.
Q/A
Can passive residence be held without becoming an Andorran tax resident?
Yes. Immigration status and tax residence are separate tests. Passive residence has its own presence condition, while tax residence generally follows more than 183 days in Andorra or the main base of activities or economic interests; household facts can also create a presumption.
Does 183 days in Andorra automatically end residence in the former country?
No. Andorra may treat a person as resident after the statutory day or economic-interest test, but the former country can apply its own domestic rules. If both claim residence, the applicable tax treaty and the person’s actual home, interests and habitual abode must be analysed.
Is Andorran personal income tax charged at 10% on every euro?
No. For the general base, net income below EUR 24,000 is untaxed, the EUR 24,001–40,000 band has an effective 5% burden through a 50% relief against the 10% general rate, and income above EUR 40,000 reaches 10%. The savings base has its own treatment: the first EUR 3,000 is exempt and the remainder is taxed at 10%.
Is IGI always charged at the headline rate of 4.5%?
No. The general IGI rate is 4.5%, but the statute also provides a 2.5% special rate, a 1% reduced rate, a 0% super-reduced rate and a 9.5% increased rate for banking and financial services. The applicable rate follows the particular supply, not the taxpayer’s residence status.
Does an Andorran bank account remain outside automatic tax reporting?
No. Andorra’s automatic exchange regime has applied since 1 January 2017 under the OECD Common Reporting Standard and related agreements. A reporting institution identifies reportable accounts and transmits prescribed information for exchange with the account holder’s jurisdiction of tax residence.