Andorra at a Glance
Andorra is a small principality of roughly 80,000 people wedged in the Pyrenees between Spain and France. It is a co-principality, governed under a shared head-of-state arrangement, and it has built its modern reputation on low taxes, personal safety, and a mountain lifestyle. For the financially independent, the entrepreneur, and increasingly the remote worker, it offers a legal path to residency in Europe—though with a set of rules that surprise people who arrive expecting a tax-free, secrecy-shrouded haven.
Two facts frame everything else in this guide, and both are widely misreported. First, Andorra is not in the European Union and not in the Schengen Area. It uses the euro under a monetary agreement with the EU, but border controls with Spain and France remain in place. An Andorran residence permit does not grant free movement across the EU. Second, Andorra does not have "no income tax," and it abandoned banking secrecy years ago. The real system is a progressive income tax topping out at 10% and a CRS-compliant banking sector with automatic information exchange. We cover both in detail below.
The Three Residency Routes
Andorra offers several immigration categories, but three matter for most international applicants. This guide centers on Passive Residence—residency without gainful activity in Andorra—because it is the route chosen by retirees, investors, and the financially independent. We cover the other two, Active Residence and the Digital Nomad route, so you can see exactly where Passive Residence fits.
| Factor | Passive Residence | Active Residence | Digital Nomad |
|---|---|---|---|
| Who it's for | Retirees, investors, financially independent | Company founders, self-employed | Remote workers with foreign clients |
| Core financial test | €1,000,000 invested (or €400,000 in the Housing Fund) | Own ≥34% of an Andorran company & be director | Income ≥3× SMI (~€54,900/yr) |
| AFA payment | €50,000 main + €12,000/dependent (non-refundable) | €50,000 (exemption only for qualifying selected/innovative projects) | None |
| Physical presence (admin) | 90 days/year | 183 days/year | 90 days/year |
| Social security (CASS) | Not available—private insurance required | Mandatory (self-employed) | Not initially; private insurance required |
| Work in Andorra? | No (portfolio self-management only) | Yes (your own company) | No—foreign clients only |
| Quota | None | None | Quota-controlled; initial 2023 allocation was 50 |
Passive Residence in Detail
Passive Residence—residència sense activitat lucrativa, "residence without gainful activity"—is for people who will live in Andorra without working there. You may manage your own investment portfolio, but you cannot take local employment or run an Andorran business under this permit. In exchange, you commit significant capital to Andorra and cover your own healthcare privately.
The Investment Requirement
The headline figure is €1,000,000 invested in eligible Andorran assets. "Eligible" is defined by the government, and you can build the €1,000,000 from a combination of the following categories:
- Andorran real estate — minimum €800,000 per property unit counted toward the requirement
- Equity in an Andorran company — shares in a company established in the principality
- Andorran public debt or Andorran-issued debt instruments
- Life insurance products approved by the AFA (Andorran Financial Authority)
- Non-remunerated deposits held with the AFA (deposits that pay no interest)
- Units in eligible collective investment funds — permitted, but for a maximum of 36 months, after which the capital must be redeployed into another eligible category
There is a lower-cost alternative that has become central to the 2026 rules. If the capital is fully invested in the Fons d'Habitatge (Housing Fund)—a national fund created to expand Andorra's housing supply—the investment requirement drops to €400,000. This is the cheapest legitimate entry point to passive residence under Law 2/2026, and it channels your capital into a public-policy priority rather than a private property purchase.
You do not need the assets in place on day one. After approval, you must deploy the investment within 6 months, a window that can be extended by a further 6 months if needed. Plan your capital transfers and any property purchase around that deadline.
The Non-Refundable AFA Payment
Separate from and in addition to the investment, passive residents make a non-refundable payment to the AFA:
- €50,000 for the main applicant
- €12,000 for each dependent included in the application
This is a genuine cost, not a deposit you get back. A couple applying together budgets €50,000 + €12,000 = €62,000 in non-refundable AFA payments, on top of their €400,000 or €1,000,000 investment.
Income Floor
Beyond the investment, passive residents must show sufficient recurring income to live without working. The floor is set at roughly 300% of the Andorran minimum wage (SMI) for the main applicant—approximately €54,900 per year—plus an additional 100% of the SMI per dependent. This proves you can sustain yourself from pensions, dividends, rental income, or other passive sources rather than drawing down the invested capital or seeking local work.
Healthcare: CASS Is Not Available
Andorra's public social security system, CASS, is not open to passive residents—you are not contributing through employment, so you are not covered. Private health insurance is mandatory and must be maintained for the life of the permit. Budget roughly €2,000 to €6,400 per year depending on age, coverage level, and family size.
No Local Work
Passive residence prohibits gainful activity inside Andorra. You may manage your own portfolio—rebalancing investments, collecting dividends, overseeing your own real estate—but you cannot take a job or actively operate an Andorran business. If you want to work or run a company in Andorra, that is the Active Residence route covered below.
Permit Validity and Fees
The passive residence permit renews on a stepped schedule that lengthens as you build a track record:
- Initial permit: 2 years
- First renewal: 2 years
- Second renewal: 3 years
- Subsequent renewals: 10 years
Government fees are approximately €2,500 for the main applicant plus €500 per dependent. These are administrative processing fees, separate again from both the investment and the AFA payment.
Active Residence
Active Residence is for people who will actually work in Andorra through their own company or self-employment. It is the entrepreneur's route, and in one important respect it is cheaper than passive residence: for qualifying projects, the AFA payment is waived entirely.
Company Ownership Requirement
To hold active residence you must own at least 34% of an Andorran company and serve as its director. Foreign nationals may own 100% of an Andorran company, so the 34% floor is a minimum stake, not a cap—you can own the whole thing. The permit is tied to your role running that business.
AFA Payment and the Tech Exemption
The standard AFA payment for active residence is €50,000, non-refundable. The law provides an exemption where the company carries out a project selected through a recognised government programme or a qualifying digital-economy, entrepreneurship, innovation, or high-value technology project under the regulatory criteria. The waiver is not automatic merely because a company calls itself "tech."
Presence and Social Security
Active residents face a higher presence requirement: 183 days per year in Andorra, consistent with genuinely running a local business (and, not coincidentally, with tax residency). Because you are working, CASS social security is mandatory. For the self-employed in 2026, CASS contributions run approximately €588.21 per month, with a 50% discount for the first 12 months to ease the launch.
The Digital Nomad Route
Andorra introduced a digital nomad framework under Law 42/2022, aimed at location-independent workers. It sidesteps both the large passive-residence investment and the active-residence company requirement, but applications remain subject to a regulated quota and prior approval from the Ministry responsible for the economy.
Who Qualifies
- Remote work for foreign-only clients — your income must come from outside Andorra; you cannot serve the local market
- Ministry of Economy approval — the project is vetted by the Ministry, not only the immigration office
- Income ≥ 3× SMI — approximately €54,900 per year, plus 1× SMI per dependent
- Private health insurance — mandatory, as CASS is not provided initially
The Regulated Quota
Decree 11/2023 opened a combined quota of 100 places: 50 for digital nomads and 50 for the entrepreneur programme. That source does not establish a guaranteed new 50-place allocation every calendar year. Treat quota availability as a live eligibility check with Immigration, not a January filing strategy. There is no €50,000 AFA payment for the nomad route.
Physical Presence vs Tax Residency
This is the distinction that trips up more applicants than any other, so it deserves its own section. Andorra applies two different day-count tests for two different purposes, and passing one does not mean passing the other.
The Administrative Presence Test
To keep your passive residence permit valid, you must be physically present in Andorra for at least 90 days per year. This is an immigration requirement—it proves you actually live there rather than merely holding the card. Ninety days is a modest bar, and many passive residents structure their lives to satisfy it comfortably.
The Tax Residency Test
To be treated as an Andorran tax resident—and thus benefit from Andorra's low tax rates on your worldwide income—you generally need to be present for 183 days per year. This is the standard international threshold. If you satisfy only the 90-day administrative minimum, your permit stays valid, but you may still be considered a tax resident of another country, where higher taxes could apply.
Active residence is built around effective, permanent residence and local business activity. The digital-nomad permit, like passive residence, publishes a 90-day administrative minimum. In either 90-day category, the mismatch with the usual 183-day tax-residence test is a planning problem to address deliberately with cross-border advice.
Questions about eligibility?
Our AI assistant can analyze your specific situation and give you personalized guidance.
Check My EligibilityThe Andorra Tax System
Andorra's low-tax reputation is real, but the details matter and the shorthand is wrong. It is neither "no income tax" nor a "flat 10%." It is a progressive income tax that runs from 0% to 10%, paired with low corporate and consumption taxes and the absence of several taxes common elsewhere.
Personal Income Tax (IRPF)
Andorra's personal income tax (IRPF) is progressive across three effective bands:
| Income band | Rate |
|---|---|
| First €24,000 | 0% |
| €24,001 – €40,000 | ~5% |
| Above €40,000 | 10% |
The government's own summary describes no tax below €24,000, an effective 5% treatment between €24,001 and €40,000 through the statutory allowance and rebate, and a 10% general rate above €40,000. Personal allowances, family reductions and the composition of savings income affect the actual bill, so these are not three simple salary-bracket percentages to multiply against gross pay.
Corporate and Consumption Taxes
- Corporate income tax (IS): 10%
- IGI (Andorra's VAT/general indirect tax): 4.5% general rate—among the lowest consumption taxes in Europe
Taxes Andorra Does Not Levy
Part of Andorra's appeal is what is absent from the tax code:
- No wealth tax
- No inheritance tax
- No gift tax
Real-Estate Capital Gains
Gains on Andorran real estate are taxed on a sliding scale that rewards holding: the rate starts at 15% for sales within the first 2 years and slides down over time to 0% after 10 years of ownership. Short-term flips are taxed; long-held property can be sold tax-free.
Banking, CRS, and the End of Secrecy
Andorra's banking sector is modern, well-capitalized, and supervised by the AFA. What it is not is secret. If your interest in Andorra is built on the idea of hidden accounts, this section is the correction you need.
No Banking Secrecy
Andorra has no banking secrecy. It signed up to both FATCA (the US Foreign Account Tax Compliance Act) and the CRS (the OECD Common Reporting Standard), which have been in force since 2018, with automatic exchange of information (AEOI). That means Andorran banks report account details to your country of tax residence automatically, every year. There is no confidential offshore layer to hide behind.
What the Sector Actually Offers
The modern pitch is different and more durable: a stable, euro-denominated, AFA-supervised, fully CRS-compliant banking sector inside a low-tax jurisdiction. Andorra uses the euro under a monetary agreement with the EU, and it has been steadily building a network of double-taxation treaties that reduce the risk of being taxed twice on the same income. For a compliant, tax-resident individual, that combination—low rates, a hard currency, treaty coverage, and clean reporting—is the real advantage.
Language and Citizenship
Catalan Is the Sole Official Language
Catalan is the only official language of Andorra, established in Article 2 of the Constitution and reinforced by the 2024 Official Language Law. Spanish, French, and Portuguese are all widely spoken in daily life—Andorra is thoroughly multilingual—but none of them is official. This distinction has real consequences as you move from resident to citizen.
- Naturalisation requires B1 Catalan — a solid intermediate level, tested formally
- Permit-renewal rules are phased — A1/A2 applies to residence-and-work permits now; passive, self-employed and digital-economy categories are scheduled to enter the A1-first-renewal/A2-second-renewal regime from 2029
In practice, you can arrive and function for years in Spanish or French, but a serious long-term plan—especially one aimed at citizenship—requires committing to Catalan early.
Citizenship and the Dual-Nationality Ban
Andorran citizenship is available by naturalisation after 20 years of legal residence. It is a long road, and there is a hard catch at the end: Andorra prohibits dual citizenship. To naturalise, you must renounce your existing nationality. For many applicants, particularly those unwilling to surrender a US, UK, or EU passport, this makes Andorran citizenship a theoretical goal rather than a practical one. Residency, however, does not require renouncing anything.
Timeline & Costs
Realistic Timeline (Passive Residence)
| Phase | Duration | Notes |
|---|---|---|
| Document preparation | 1–3 months | Background checks, apostilles, certified translations |
| Application submission & review | 1–3 months | Immigration review of the passive-residence file |
| Approval & AFA payment | Weeks | €50,000 main + €12,000/dependent, non-refundable |
| Deploy investment | Within 6 months | Extendable a further 6 months |
| Permit issuance | After investment confirmed | First permit valid 2 years |
Total: roughly 3–6 months from starting document prep to holding a permit, with the investment deployed inside the 6-month post-approval window.
Cost Breakdown
| Item | Passive Residence | Notes |
|---|---|---|
| Investment | €400,000 (Housing Fund) or €1,000,000 | Recoverable, subject to fund/asset terms |
| AFA payment (main applicant) | €50,000 | Non-refundable |
| AFA payment (per dependent) | €12,000 | Non-refundable |
| Government fees (main) | ~€2,500 | Administrative processing |
| Government fees (per dependent) | ~€500 | Administrative processing |
| Private health insurance | ~€2,000–€6,400/year | Mandatory; CASS unavailable to passive residents |
| Income floor to demonstrate | ~€54,900/year main + 100% SMI/dependent | ~300% of Andorran SMI for the main applicant |
Solo applicant, Housing Fund route: €400,000 invested + €50,000 AFA + ~€2,500 fees + insurance. Couple, Housing Fund route: €400,000 invested + €62,000 AFA (€50,000 + €12,000) + ~€3,000 fees + insurance for two.
Common Mistakes
1. Believing Andorra Has "No Income Tax"
It does not. The government's summary is 0% below €24,000, effective 5% treatment from €24,001 to €40,000, and a 10% general rate above €40,000, with allowances and rebates affecting the calculation.
2. Using the Old €47,500 Refundable-Deposit Figures
The €47,500 refundable deposit, €15,000-per-member figures, and €350,000 threshold are void under Law 2/2026. The current passive-residence numbers are a €1,000,000 investment (or €400,000 via the Housing Fund) plus a non-refundable AFA payment of €50,000 + €12,000 per dependent.
3. Confusing the 90-Day and 183-Day Rules
Ninety days a year keeps a passive permit valid; 183 days is generally needed for Andorran tax residency. Satisfying only the 90-day minimum can leave you tax-resident somewhere else, at higher rates, while you believe you've relocated your tax base to Andorra.
4. Expecting Banking Secrecy
Andorra has none. FATCA and CRS have been in force since 2018 with automatic information exchange. Andorran accounts are reported to your home tax authority. Plan for full transparency.
5. Assuming an Andorran Permit Means EU Free Movement
Andorra is outside both the EU and Schengen. Border controls with Spain and France remain, and your residence permit does not grant the right to live or work elsewhere in the EU.
6. Underestimating the Language Path
Catalan is the sole official language and naturalisation needs B1. For passive and digital-nomad permits, A1/A2 renewal requirements are scheduled from 2029; starting earlier avoids a compressed language deadline.
7. Treating Passive Residence as a Route to Work
Passive residence forbids gainful activity in Andorra beyond managing your own portfolio. If you intend to work or run a company, that is Active Residence—with its 183-day presence, mandatory CASS, and a €50,000 AFA payment unless the project meets the statutory exemption criteria.
8. Missing the Digital Nomad Quota
The route is quota-controlled, and the initial 2023 decree allocated 50 nomad places. Official sources do not promise a fresh 50 each January, so confirm live availability before relying on this route.
9. Forgetting Health Insurance Is Mandatory
Passive residents and initial digital nomads cannot use CASS. Private health insurance—roughly €2,000–€6,400/year—is required and must stay in force for the permit's life.
10. Planning Around Citizenship Without the Renunciation Reality
Naturalisation takes 20 years and Andorra bans dual citizenship. If keeping your current passport matters, treat Andorran citizenship as off the table and plan around long-term residency instead.
Frequently Asked Questions
Money and Investment
What is the minimum to get passive residence in Andorra in 2026?
The cheapest legitimate route is €400,000 fully invested in the Fons d'Habitatge (Housing Fund), plus a non-refundable AFA payment of €50,000 for the main applicant. The alternative is €1,000,000 across eligible Andorran assets plus the same AFA payment.
Is the AFA payment refundable?
No. The €50,000 (main applicant) and €12,000 (per dependent) AFA payments are non-refundable. Only the investment itself is recoverable, subject to the terms of the fund or assets you hold.
Do I need the full investment before applying?
No. After approval you have 6 months to deploy the investment, extendable by a further 6 months.
Living There
How many days a year must I actually spend in Andorra?
For passive residence, 90 days per year keeps the permit valid. To be an Andorran tax resident, you generally need 183 days. Active residents need 183 days.
Can I use Andorra's public healthcare?
Not as a passive resident or initial digital nomad—CASS is not available to you, so private health insurance is mandatory. Active residents contribute to and use CASS.
Do I need to speak Catalan?
Not for the initial passive or nomad permit, and Spanish or French works widely day to day. A1/A2 renewal requirements are scheduled to reach these categories from 2029, while naturalisation requires B1 Catalan.
Tax and Banking
Does Andorra really have no income tax?
No. Personal income tax is progressive from 0% to 10%: 0% on the first €24,000, about 5% from €24,001 to €40,000, and 10% above €40,000. Corporate tax is 10% and IGI (VAT) is 4.5%.
Is Andorran banking confidential?
No. Andorra has no banking secrecy. FATCA and CRS have been in force since 2018 with automatic exchange of information, so your accounts are reported to your country of tax residence.
Are there wealth or inheritance taxes?
No. Andorra levies no wealth, inheritance, or gift tax. Real-estate capital gains slide from 15% (sold within 2 years) to 0% after 10 years of ownership.
Status and Citizenship
Does Andorran residency let me live anywhere in the EU?
No. Andorra is not in the EU or Schengen. Border controls with Spain and France remain, and the permit grants no EU free-movement rights.
Can I become an Andorran citizen while keeping my current passport?
No. Naturalisation takes 20 years and Andorra prohibits dual citizenship—you must renounce your existing nationality to naturalise.
Which route is cheapest overall?
On paper, the digital nomad route: no €50,000 AFA payment and no large investment. The binding constraint is eligibility plus a live place in the regulated quota.
Resources & Next Steps
Official Government Resources
- Govern d'Andorra — Immigration — current residency and permit pages
- Govern d'Andorra — Digital-nomad residence — route requirements and renewal terms
- Law 2/2026 — current passive and active residence capital rules
- Govern d'Andorra — IRPF rates — current personal income-tax bands
What to Verify Before You Apply
Andorran immigration rules changed materially under Law 2/2026, and older third-party guides frequently repeat the void figures. Before committing capital, confirm the following directly against the official sources above or with a qualified Andorran adviser:
- The current investment threshold and eligible asset categories for your situation
- The exact AFA payment for your family composition
- Whether your active-route project meets the statutory AFA-payment exemption criteria
- The current digital-nomad quota decree and whether a place is available
- Your cross-border tax position, especially the 90-day vs 183-day question
Get Personalized Guidance
Every Andorra case turns on the same few variables: how much capital you can commit, how many days you can spend there, whether you'll work, and where you're currently tax-resident. Our AI assistant can analyze your specific situation and help you:
- Choose between passive, active, and digital nomad routes
- Model the real cost—investment plus non-refundable AFA payment plus fees
- Understand the 90-day permit rule versus 183-day tax residency
- Plan around the CRS reality and Andorra's treaty network