Andorra is one of Europe's most unusual jurisdictions: a small co-principality of approximately 77,000 people nestled in the Pyrenees between France and Spain, with a maximum income tax rate of 10%, no wealth tax, no inheritance tax on close family, and a standard of living anchored in outdoor sport, luxury retail, and some of Europe's most spectacular mountain scenery.
For HNW individuals who can structure their professional and personal lives around a genuine physical presence in Andorra, it offers one of the most tax-efficient legal residency arrangements available within Europe — without the bureaucratic complexity of offshore jurisdictions or the isolation of some island alternatives.
This guide covers how Andorra's tax system works, how to obtain residency as a UK national, what genuine residency in practice looks like, and how to manage UK financial ties from Andorra.
Why Andorra attracts HNW individuals
The combination of features is rare in Europe:
- Maximum income tax of 10% — the top rate applies to income above €40,000; income up to €24,000 is taxed at 0% and the band in between at 5%. The effective rate for many residents is lower still.
- No wealth tax — assets are not subject to an annual levy.
- No inheritance tax between direct family members — estate planning across generations is significantly simplified.
- No capital gains tax on most assets — capital gains are generally not taxed unless the asset is property in Andorra (and even then, rates are low and taper with time).
- VAT (IGI) at 4.5% — one of Europe's lowest rates, making goods and services genuinely cheaper than across the border in France or Spain.
- Proximity to major cities — Barcelona is approximately three hours by road; Toulouse is two hours. Both have international airports.
- World-class skiing — the Grandvalira ski domain is one of Europe's largest. Outdoor leisure (hiking, mountain biking, climbing) is extensive.
These factors have attracted a community of high-income entrepreneurs, professional athletes, influencers, fund managers, and business owners who structure their lives around a genuine Andorran base.
Andorran residency: the categories
Andorra does not automatically grant residency to anyone who wishes to move there. There are defined categories, each with requirements. UK nationals (as non-EU nationals) fall under the general third-country national framework.
Active residence (residència activa)
For those who work in Andorra — either employed by an Andorran company or self-employed (treball per compte propi). To be self-employed, you typically need to establish a business in Andorra and demonstrate genuine business activity there. Active residents must spend a minimum of 183 days per year in Andorra.
Passive residence — investments (residència passiva per inversió)
The most relevant category for HNW individuals without an Andorran employer. Requirements (note these were substantially increased by Andorra's Law 2/2026, approved January 2026):
- Make a qualifying investment in Andorra of at least €1,000,000 — for example in authorised financial instruments or Andorran company shares, €800,000 in Andorran real estate (per dwelling), or a €400,000 contribution to the Andorran Housing Fund. (These thresholds replaced the previous €600,000 requirement.) In addition, the main applicant must place a definitive, non-refundable deposit of €50,000 with the Andorran Financial Authority (AFA), plus €12,000 for each dependant.
- Have no other country of tax residency.
- Spend a minimum of 90 days per year physically in Andorra.
- Demonstrate sufficient income to support yourself (approximately €37,000–€40,000 net per year as of 2026 for a single person).
- Take out Andorran private health insurance.
Professional activities without being an employee (residència activa per a professionals amb activitat econòmica internacional)
A route for professionals who earn income from international activities — remote work, consulting, board membership, royalties — without needing to be employed by an Andorran entity. Requirements include demonstrating the international nature of the income and establishing genuine Andorran economic ties.
Andorran income tax: the detail
Andorra's income tax system (Impost sobre la Renda de les Persones Físiques, IRPF) is the cornerstone of its attraction.
The rates
- Income up to €24,000: 0%
- Income €24,000–€40,000: 5%
- Income above €40,000: 10%
A family allowance of €3,000 per child and other standard deductions apply. The effective rate for a single individual with €500,000 in income would be approximately 9.5% on the taxable amount.
What is taxed
Andorran IRPF taxes worldwide income for residents. This includes:
- Employment income from Andorran or foreign employers
- Self-employment income
- Rental income (Andorran or foreign)
- Investment income (dividends, interest)
Capital gains
Capital gains on financial instruments (shares, funds, bonds) are exempt from Andorran income tax if the individual is not a professional trader. This is one of the most significant benefits for investors with actively managed portfolios or significant equity stakes.
Capital gains on Andorran real property are taxed under the Impost sobre les Plusvàlues en les Transmissions Patrimonials Immobiliàries (IPTP), with rates tapering to zero after ownership for ten years or more.
No wealth tax, no inheritance tax between spouse/children
Andorra's attractiveness for wealth preservation is clear: no annual depletion of assets through a wealth levy, and no inheritance tax between spouses and direct descendants — allowing the efficient intergenerational transfer of wealth.
The 90-day vs 183-day question: substantiating residence
Andorran residency requires physical presence. Passive residents must be in Andorra for 90 days per year; active residents for 183 days. But residency in Andorra (and the corresponding tax benefit) also requires that no other country is claiming you as tax resident.
The key risk is Spanish or French tax residency being asserted by those neighbouring authorities. Spain, in particular, has been active in questioning the tax residency of Andorran residents with strong ties to Spain (properties, family, cars registered in Spain, bank accounts). The Spanish authorities apply their own 183-day rule and have specific provisions to combat what they characterise as "Spanish residents claiming Andorran tax status".
Practical implications
- Keep detailed records of days spent in Andorra (entry/exit records, hotel receipts, credit card transactions).
- Minimise days spent in France and Spain — particularly below the 183-day Spanish threshold.
- Establish genuine life in Andorra: Andorran bank accounts, health insurance, utility bills, club memberships, social ties.
- Ensure the passive-residence investment requirement (raised to €1,000,000 in qualifying assets, or the alternative real-estate or Housing Fund routes, under Law 2/2026) is properly structured and documented.
- Do not retain a Spanish or French habitual residence.
This is not a paper exercise — it requires a genuine change of lifestyle and base. Those who attempt to use Andorran residence purely for tax purposes without genuine presence face significant audit risk from Spanish and French tax authorities.
Post-Brexit visa requirements for UK nationals
UK nationals are not EU citizens and require a formal residence permit for Andorra. The application is made to the Andorran Immigration Department (Servei d'Immigració). Required documentation typically includes:
- Valid passport
- Criminal record certificate (UK police record, apostilled)
- Medical certificate
- Proof of housing in Andorra (rental contract or property ownership)
- Proof of health insurance
- Proof of income and evidence of the required passive-residence investment (from January 2026, €1,000,000 in qualifying assets, or the alternative €800,000 real-estate or €400,000 Housing Fund routes, plus the non-refundable AFA deposit)
- Application fees
Residence permits are initially granted for one year and renewed annually for two-year periods, then five-year periods.
Cost of living in Andorra
Andorra is not cheap in absolute terms, but the combination of low taxes and low VAT makes it excellent value.
As of 2026:
- Renting a two-bedroom apartment in Andorra la Vella or Escaldes-Engordany: approximately €900–€1,400/month.
- Buying an apartment: €3,000–€5,500 per square metre depending on location and quality.
- Property purchase costs: stamp duty (Impost de Transmissions Patrimonials i Actes Jurídics Documentats) at 4% of the purchase price, plus notary and registry fees.
- Groceries: significantly cheaper than France or Spain on VAT-sensitive goods.
- Petrol is materially cheaper than in France or Spain.
- Healthcare: private (Andorra has no state health service in the UK sense — residents must have private insurance, and medical costs are paid and then partially reimbursed through the social insurance system CASS).
Healthcare in Andorra
Andorra operates CASS (Caixa Andorrana de Seguretat Social), the social security system. Workers and self-employed individuals contribute to CASS, which reimburses a proportion of medical costs. There is a modern hospital (Hospital Nostra Senyora de Meritxell) in Andorra la Vella. For passive residents who are not in the CASS system, private health insurance is compulsory and used for all medical expenses.
UK financial affairs from Andorra
- UK state pension: receivable in Andorra. No UK–Andorra DTA exists, so the default position under UK domestic law is that the UK state pension is potentially taxable in the UK (as a UK-source income). Specific advice is needed.
- UK private pensions: in the absence of a UK–Andorra DTA, UK pension drawdown may be subject to UK withholding or taxed in Andorra; the position is complex and advice is essential.
- UK rental income: taxed in the UK; potentially taxable in Andorra depending on the rules. No DTA to allocate rights.
- UK ISAs: lose UK tax-free status; income/gains subject to Andorran IRPF (though rates are low).
- Capital gains on investments: potentially exempt in Andorra if not professional trading activity.
Compliance caveat
Andorran tax law and residency requirements are subject to change. Andorra has also been increasing international information exchange in recent years under OECD BEPS and CRS frameworks — offshore non-disclosure is not a safe strategy. The absence of a UK–Andorra DTA makes cross-border pension and income planning complex. Always take specialist advice from advisers experienced in both UK and Andorran law. Spanish tax risk for Andorran residents is a real and active concern that requires careful management.
How Global Investments Can Help
Andorra's tax regime is genuinely one of Europe's most attractive, but the physical presence requirements, Spanish tax risk, and the absence of a UK–Andorra double tax treaty create real complexities for UK nationals. Global Investments works with HNW individuals considering Andorra, helping them understand the full financial picture, model the tax savings versus the cost and commitment of genuine relocation, and connect with specialist Andorran and UK cross-border advisers.
We also help clients reviewing their UK pension, investment, and property arrangements to ensure everything is properly positioned before the move. Contact Global Investments today to explore whether Andorra is right for you.
This guide is for general information only and does not constitute financial, legal or tax advice. Rules, fees and regulations change frequently; verify current requirements with a qualified adviser before acting.