Concept
For decades Andorra ran as a duty-free zone with no income tax, but pressure from the EU and the OECD pushed it to assemble a conventional — if very light — tax system. 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 entry threshold for passive residents rose to €1 million.
The key parameters of the regime are set out below.
| 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 haven turned into 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 real tax system — on this point Andorra is closer to Monaco than to the classic offshores, but it charges a moderate tax rather than none.
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 in Andorran assets from the previous €600,000 to €1,000,000; in all, an applicant has three forms of investment to choose from.
| Form of investment | Amount | What counts |
|---|---|---|
| Andorran assets | €1,000,000 | Financial instruments, stakes in local companies, government bonds or insurance products |
| Real estate | €800,000 | A single residential property |
| Housing Fund | €400,000 | Contribution to the state fund, threshold left unchanged |
The amount is not the only condition: on top of this comes a €50,000 deposit with the financial authority (AFA) and €12,000 per dependent; the deposit used to be refundable but is now non-refundable once the status is granted. Residency is maintained by spending at least 90 days a year in the country.
Passive residency is not the only door. Active residency is taken out 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 Sport-and-Creator Track
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.
That grandfathering turns on the date of approval rather than publication or entry into force: transitional provision two speaks of applications "presentades abans de l'aprovació d'aquesta Llei", meaning those filed before 22 January 2026, so applications lodged between that date and entry into force on 13 February 2026 already fall under the new thresholds.
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 sits 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): income of at least 300 percent of the annual minimum wage plus 100 percent for each dependent (with the minimum wage at €1,568.67 a month from 1 July 2026 following an extraordinary 2.8 percent rise, that is roughly €56,500 a year for a principal applicant), six months to complete the investment (extendable by another six on force majeure) and annulment of the authorisation if the investment is not documented.
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 loudest 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 logic is simple: 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 exodus 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, kept close by 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 an honest change of tax residency with a real relocation is what makes sense; this regime is no help in hiding assets abroad.
Andorra and the EU: What Comes Next
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, 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.