This Andorra tax guide covers the rules in force from 1 January 2026. Personal income tax is capped at 10%, with the first €24,000 (~$27,400) exempt; corporate tax is a flat 10% with a new 3% minimum effective rate; and IGI — Europe’s lowest VAT-style tax — runs at just 4.5%. There is no wealth, inheritance or gift tax, and most securities gains are exempt. Recent reforms have tightened foreign property investment and passive residency, so the entry rules deserve as much attention as the rates.
Introduction
Andorra is a microstate of roughly 83,000 people wedged in the Pyrenees between Spain and France, a parliamentary co-principality whose heads of state are the President of France and the Bishop of Urgell. It is not an EU member, but it uses the euro under a monetary agreement, sits in a customs union with the EU for industrial goods, and has an association agreement with Brussels awaiting ratification. The official language is Catalan (Spanish, French and Portuguese are widely spoken), the legal system blends civil-law tradition with local custom, and daily life revolves around ski resorts, duty-free retail and a growing digital-nomad scene. Cost of living is moderate by Western European standards — though housing has become notably expensive after years of inbound migration.
For internationally-mobile investors, this Andorra tax guide matters because the Principality offers one of Europe’s lightest all-round tax burdens inside a stable, euro-denominated jurisdiction two hours from Barcelona and Toulouse. Income and corporate tax both top out at 10%, dividends from Andorran companies reach resident shareholders tax-free, and capital gains on most portfolio investments are simply not taxed. The trade-off: Andorra has been steadily “normalising” — a 3% minimum corporate tax from 2024 (Law 5/2023), a foreign real-estate investment tax of 3–10% from 29 February 2024 (Law 3/2024), and a tightening of passive residency from 13 February 2026 (Law 2/2026).
Direct Taxes
Andorran tax residents are taxed on worldwide income under the personal income tax (IRPF); non-residents pay a flat 10% only on Andorran-source income (IRNR). Progressivity in the IRPF is mild — three effective bands topping out at 10%, with a separate 10% “savings” base for investment income. A company is tax-resident if incorporated in Andorra or effectively managed there, and pays corporate tax (Impost de Societats, IS) at 10%. The key concept for investors is the savings income regime: interest, foreign dividends and taxable capital gains are pooled and taxed at a flat 10% after a €3,000 (~$3,400) annual exemption — and Andorran-company dividends are excluded entirely.
Personal income tax (2026 bands)
| Chargeable income (EUR) | Rate |
|---|---|
| 0 – 24,000 (~$0 – 27,400) | 0% |
| 24,001 – 40,000 (~$27,400 – 45,700) | 5% (effective, via tax credit) |
| Over 40,000 (~$45,700) | 10% |
| Savings income (interest, foreign dividends, gains) above €3,000 (~$3,400) exemption | 10% |
| Dividends from Andorran companies | 0% (exempt) |
These bands have been stable since the IRPF was introduced in 2015. The 5% middle band operates through a bonification of up to €800 (~$900) against the liability on income between €24,000 and €40,000 (~$27,400–45,700). Married couples filing jointly can exempt the first €40,000 (~$45,700). There is no separate municipal or regional income tax, and no exit tax on individuals.
Corporate income tax
| Item | Rate |
|---|---|
| Standard corporate income tax (IS) | 10% |
| Minimum effective tax on accounting profit (from FY2024, Law 5/2023) | 3% |
| New-company reduced rate (first years, small turnover — confirm current scope) | 2–5% |
| IP-box regime (qualifying patent/software income) — effective rate | ~2% (confirm individual case) |
| Withholding tax on dividends and interest paid abroad | 0% |
| Withholding on royalties to non-residents (IRNR) | 5% (confirm) |
The headline 10% rate is unchanged, but Law 5/2023 (in force from fiscal year 2024) introduced a 3% minimum effective rate on profitable companies, ending the era when deductions could zero out the bill. A participation exemption covers dividends and capital gains from qualifying shareholdings (≥5% held for 12 months). Losses carry forward ten years. Andorra is below the €750m (~$855m) Pillar Two threshold for nearly all local businesses, and the pre-2018 offshore-style regimes (the old 80% exemptions for international trading and holding companies) were abolished after BEPS review — today’s IP box is nexus-compliant.
Social security and health contributions
| Contribution | Employee | Employer | Self-employed |
|---|---|---|---|
| CASS — general (health) branch | 3% | 7% | 10% |
| CASS — retirement branch | 3.5% | 8.5% | 12% |
| Total | 6.5% | 15.5% | 22% |
Self-employed contributions are levied not on actual income but on a base tied to the average Andorran salary (€2,672.52/month, ~$3,050, for 2026), giving a standard quota of roughly €590/month (~$670) — with reduced brackets (25–137.5% of the base) depending on net income and turnover. There is no general salary cap on employee contributions, but at a 6.5% employee share the total wedge remains far below Spain or France.
Indirect Taxes
Andorra is outside the EU VAT area. Its equivalent is the IGI (Impost General Indirecte), a VAT-style tax on goods and services — at 4.5%, the lowest general rate in Europe. It is the main indirect tax and a major reason Andorran retail prices undercut Spain (21% VAT) and France (20%).
General indirect tax (IGI)
| Rate | Applies to (examples) |
|---|---|
| 4.5% (standard) | Most goods and services |
| 9.5% (increased) | Banking and financial services |
| 2.5% (reduced) | Transport, culture, art, private education services |
| 1% (super-reduced) | Food, books, newspapers, magazines |
| 0% | Public healthcare, public education, housing rental, certain exempt supplies |
Excise and other indirect taxes
| Tax | Notes |
|---|---|
| Excise duties | On tobacco, alcohol and fuel — still low enough to sustain cross-border shopping tourism |
| Property transfer tax (ITP) | ~4% on resale property (split between state and comú), paid at the notary |
| Foreign real-estate investment tax (Law 3/2024) | 3–10% progressive, on acquisitions by non-residents and residents of under 3 years; 90% rebate if the property is rented as a primary home for 10+ years |
| Customs duties | EU customs union covers industrial goods; agricultural products treated separately |
Other Taxes Worth Knowing
| Tax | Andorra treatment |
|---|---|
| Capital gains — listed shares & funds | Exempt |
| Capital gains — unlisted shares, holding ≤25% | Exempt |
| Capital gains — unlisted shares, holding >25% | 10%, exempt after 10 years’ holding |
| Savings income exemption (shared) | First €3,000 (~$3,400) per year tax-free |
| Capital gains — Andorran real estate | 15% down to ~1% by holding period; exempt after 10 years (integrated into IRPF/IS/IRNR from 1 Jan 2024) |
| Dividends (resident individual, Andorran company) | 0% — exempt |
| Dividends (resident individual, foreign company) | 10% savings rate above the €3,000 (~$3,400) exemption |
| Interest (resident individual) | 10% above the shared €3,000 (~$3,400) savings exemption |
| Rental income | IRPF general rates (max 10%); non-residents ~8% effective (10% on 80% of gross) |
| Wealth / net worth tax | None |
| Inheritance / estate tax | None |
| Gift tax | None |
| Immovable property tax (annual) | Minor parish (comú) levies only — typically a few hundred euros (a few hundred US dollars) |
| Exit tax (individuals) | None |
The practical upshot: a resident investor holding a diversified portfolio of listed equities and funds pays zero on realised gains and 10% on dividends and interest above €3,000 (~$3,400) — and if the operating wealth sits in an Andorran company, profits bear 10% once and distribute tax-free. Shares in companies whose assets are 50%+ Andorran real estate lose the ≤25% exemption and fall under the property-gain rules (an anti-avoidance change from Law 5/2023).
Disadvantages & Risks
Andorra’s constraints are physical and reputational. It is a small economy — under 100,000 residents, no airport, dependent on Spanish and French road access — concentrated in tourism, retail and finance. The banking sector carries the memory of the 2015 Banca Privada d’Andorra collapse under US money-laundering accusations; the system has since consolidated and reformed, and Andorra participates in CRS automatic exchange of information (with updated EU protocols effective 1 January 2026), but account opening involves heavy compliance and some foreign institutions remain cautious with Andorran clients. The Principality is not on the EU or OECD blacklists or grey lists, and is evaluated by Moneyval under FATF standards — scrutiny is ongoing rather than adverse.
The second risk is erosion of the advantage by design. The direction of travel is unmistakable: a 3% minimum corporate tax (2024), a 3–10% tax on foreign property purchases (2024), and Law 2/2026 tightening passive residency — the investment threshold rising (reported at up to €1,000,000, ~$1.14 million — confirm final figure) and the AFA deposit becoming non-refundable from 13 February 2026. Housing is scarce and expensive, and political pressure to slow foreign inflows is real. The pending EU association agreement, which faces a referendum, could improve market access but also imports more EU regulatory alignment over time. Substance matters too: Spain and France police paper residencies aggressively, so a genuine move — home, days, life — is essential.
Strategy & Ideal Profile
The cleanest structure remains personal residence plus, where there is an active business, an Andorran SL. The company pays 10% (minimum 3% effective) on profits; dividends flow to the resident owner at 0%; and a later sale of the company can be exempt if the stake exceeds 25% and has been held over 10 years — or fully exempt at any time if the stake is 25% or less. A holding layer benefits from the participation exemption on foreign subsidiaries (≥5%, 12 months), and there is no withholding on outbound dividends or interest, though the still-modest treaty network (Spain, France, Portugal, Luxembourg, UAE, Malta, San Marino and a dozen-odd others) should be checked against source countries before relying on it.
Who it suits: company owners running location-independent businesses capture the 10%-then-0% chain that few European jurisdictions can match; investors and traders in listed securities pay nothing on gains and 10% over €3,000 (~$3,400) on yield; dividend earners with Andorran operating companies extract profits tax-free; high-earning employees and athletes keep 90%+ of income above modest thresholds; retirees with investment income face effectively 0–10% and no estate tax. Tax residency follows the familiar tests — more than 183 days in the country, or centre of economic interests — but the immigration permit is the gate: active residency (work/company, ~183 days’ presence, €50,000 (~$57,000) non-refundable AFA payment for self-employed owners holding ≥34% of a local company) or passive residency (90 days’ minimum presence, substantial investment under the post-2026 rules).
Who it does not suit: anyone unwilling to actually live in the Pyrenees — the days requirement plus hostile scrutiny from Spanish and French tax authorities make nominal residency dangerous; buyers of multiple investment properties, who now face the 3–10% foreign-investment tax on top of 4% transfer tax; and founders needing deep capital markets, EU passporting or a major airport on the doorstep. The headline benefits have no sunset, but the 2024–2026 reform run shows the entry price can rise with little notice — the rates are stable, the door is narrowing.
FAQ
Is Andorra a tax haven?
Not in the formal sense. Andorra taxes income (up to 10%), exchanges bank information automatically under CRS, is not on the EU or OECD blacklists or grey lists, and abolished its BEPS-non-compliant regimes years ago. It is best described as a low-tax, cooperative jurisdiction.
What is the corporate tax rate in Andorra in 2026?
A flat 10% on worldwide profits of resident companies, with a minimum effective rate of 3% on accounting profit introduced by Law 5/2023 (from fiscal year 2024). There is no withholding tax on dividends distributed abroad.
How are dividends taxed for an Andorran resident?
Dividends from Andorran companies are fully exempt from IRPF — the classic 10% + 0% owner structure. Foreign dividends fall into the savings base: 10% above a €3,000 (~$3,400) annual exemption shared with interest and taxable gains.
What is the 183-day rule in Andorra?
You are Andorran tax-resident if you spend more than 183 days per year in the country (sporadic absences count as days present) or if your centre of economic interests is there. Passive residents need only 90 days of physical presence to keep their permit — but that alone may not make you tax-resident, nor protect you from claims by your previous home country.
Does Andorra tax capital gains?
Narrowly. Gains on listed shares and investment funds are exempt, as are unlisted stakes of 25% or less; larger stakes pay 10% unless held over 10 years. Andorran real-estate gains are taxed on a sliding scale (about 15% in year one, falling to zero after 10 years of ownership).
Is there inheritance or wealth tax in Andorra?
No. Andorra levies no inheritance tax, no gift tax and no wealth tax. Combined with the exemption for most securities gains, estates pass to heirs without Andorran taxation.
How much does it cost to buy property as a foreigner in Andorra?
Beyond the ~4% transfer tax and notary fees, Law 3/2024 (in force 29 February 2024) adds a foreign real-estate investment tax of 3% on a first home, 5% on a second, rising to 10% for portfolios and developments — with a 90% rebate if the property is dedicated to long-term residential rental for at least 10 years.
Sources
All figures should be checked against the primary government sources below.
- Govern d’Andorra — Departament de Tributs i de Fronteres (DTF) — IRPF, IS, IGI, IRNR rates and forms — impostos.ad
- CASS (Caixa Andorrana de Seguretat Social) — social security rates and 2026 contribution base — cass.ad
- BOPA (Butlletí Oficial del Principat d’Andorra) — Law 5/2023, Law 3/2024, Law 2/2026 — bopa.ad
- Govern d’Andorra — official portal (residency and immigration procedures) — govern.ad
- European Commission, Taxation and Customs Union — automatic exchange of information with Andorra (effective 1 Jan 2026) — taxation-customs.ec.europa.eu
- European Central Bank — EUR/USD reference rate — ecb.europa.eu
USD figures are indicative conversions at ~1 EUR = 1.14 USD (ECB reference rate, early July 2026) and rounded.
Last verified: 5 July 2026.
This is general information, not personal tax or legal advice. Tax outcomes depend on your specific facts; consult a qualified Andorran tax adviser before acting.
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