Andorra Tax Residency and Company Formation Guide 2026

Most guides to Andorra tax residency and company formation are already out of date. The figures you still see quoted online — passive residency from EUR 350,000 to EUR 600,000 — were overtaken in January 2026, when Andorra's parliament passed the 'Omnibus 2' law and raised the minimum passive-residency investment to EUR 1,000,000, effective 13 February 2026 (IMI Daily). If you are budgeting against an older number, your plan is wrong by hundreds of thousands of euros.

The tax case for the principality is still strong. Personal income tax runs from 0% to a top rate of 10%, corporate tax is a flat 10% with an effective rate near 2% for qualifying holdings, and VAT is just 4.5% — the lowest in Europe (Immigrant Invest; TaxRatesByCountry). What has changed is the price of entry and the privacy. From 1 January 2026, an updated EU tax-cooperation agreement brings Andorra fully into automatic exchange of financial-account information (European Commission).

This guide treats residency and company formation as one decision, because for most people they are. It covers active versus passive residency, the 183-day and 90-day rules, the SL and SA company types, capital and social-security costs, and how Andorra now compares to Monaco, Liechtenstein, San Marino and Spain.

What are Andorra's actual tax rates in 2026?

Andorra is a genuine low-tax jurisdiction, not a zero-tax one, and the distinction matters. Personal income tax (IRPF) is progressive: 0% on the first EUR 24,000 of income, 5% on the band from EUR 24,001 to EUR 40,000, and a top rate of 10% above EUR 40,000, with no wealth tax and no inheritance tax (Immigrant Invest). For most residents the effective rate lands well below the headline 10%.

Corporate income tax (Impost sobre Societats) is a flat 10%. Qualifying holding companies that invest outside Andorra can reach an effective rate of roughly 2% through the participation-exemption regime (PwC Tax Summaries). VAT, known locally as IGI, sits at a standard 4.5% — the lowest in Europe — with reduced rates of 0%, 1% and 2.5%, and a 9.5% rate on certain activities such as banking (TaxRatesByCountry).

Withholding tax is light. Andorra applies a 5% withholding on royalties paid to non-residents but does not withhold on dividends or interest (PwC Tax Summaries). On investment income, savings up to EUR 3,000 a year are exempt, with the excess taxed at 10%, and capital gains on shares are exempt where the seller holds less than 25% of the company (PwC Tax Summaries).

Tax	Andorra 2026 rate	Notes
Personal income (IRPF)	0% / 5% / 10%	0% to EUR 24k; top rate above EUR 40k
Corporate (IS)	10%	~2% effective for qualifying holdings
VAT (IGI)	4.5%	Lowest in Europe; 9.5% on some activities
Withholding (dividends/interest)	0%	5% on royalties to non-residents
Wealth / inheritance	0%	None levied

Sources: Immigrant Invest; PwC Tax Summaries; TaxRatesByCountry.

Key takeaway: Andorra's tax appeal is the combination — a 10% ceiling on income, 10% corporate (about 2% for holdings) and 4.5% VAT — but the 2026 reforms have made entry far more expensive and financial privacy effectively non-existent.

How does the new EUR 1 million passive-residency rule work?

This is the single most important 2026 change, and the one competing pages miss. The 'Omnibus 2' law raised the minimum passive-residency investment to EUR 1,000,000 in Andorran assets, effective 13 February 2026, replacing the older lower thresholds that many guides still quote (IMI Daily). There is one cheaper route, and several fees layered on top.

The EUR 1 million can be held in qualifying Andorran assets — property, equity, public debt or bank deposits. A lower EUR 400,000 commitment is possible if the investment is directed to the national Housing Fund, a policy lever aimed at the principality's acute housing shortage (IMI Daily). If you choose real estate, the minimum property value is EUR 800,000 per unit (Andorra Inc.).

On top of the investment sits a non-refundable state fee of EUR 50,000 for the main applicant plus EUR 12,000 per dependent (Andorra Inc.). Passive residents must also live in Andorra at least 90 days per calendar year (Auge Legal & Fiscal).

Passive residency at a glance

Element	2026 requirement
Minimum investment	EUR 1,000,000 in Andorran assets
Reduced route	EUR 400,000 to the national Housing Fund
Real estate minimum	EUR 800,000 per property unit
State fee (non-refundable)	EUR 50,000 main applicant + EUR 12,000 per dependent
Minimum physical presence	90 days per calendar year

Sources: IMI Daily; Andorra Inc.; Auge Legal & Fiscal.

[UNIQUE INSIGHT] The EUR 400,000 Housing Fund option is more than a discount. It signals where Andorra is steering wealthy applicants: away from buying up scarce housing and toward funding it. Read against the EUR 800,000 per-unit property floor, the message is that the principality wants passive residents' capital, not their pressure on the local property market.

Active versus passive residency: which fits you?

The choice hinges on whether you intend to work in Andorra, and the day-count rules follow from that. Tax residency in Andorra generally requires spending more than 183 days a year in the country, but the two residency permits set different floors: active (work) residents must spend at least 183 days, while passive residents must reside at least 90 days per calendar year (Auge Legal & Fiscal).

Active residency suits people who will live and earn in Andorra — founders running a local company, employees, self-employed professionals. It carries the higher presence requirement but does not demand the EUR 1 million passive investment. Instead, the gating cost is company formation and social-security registration, covered below.

Passive residency suits investors and retirees whose income comes from outside Andorra and who want a lighter physical footprint. The 90-day floor is workable for someone splitting time across countries, but it comes at the EUR 1 million-plus price set in 2026. Either way, the 183-day test for tax residency itself is the line your home country will scrutinise, so the day count is a tax matter, not just an immigration one.

[PERSONAL EXPERIENCE] In practice, the 90-day passive figure trips people up. It is the immigration minimum to keep the permit, not a safe harbour for tax residency. If you spend only 90 days in Andorra and the rest split across higher-tax countries, the country where you actually spend most of your time may still claim you as a tax resident. The permit and the tax result are two separate tests.

What does it cost to form an Andorran company?

Company formation is the practical core of active residency, and the capital requirement is modest by European standards. Andorra offers two main vehicles: the private limited company (Societat Limitada, SL), requiring EUR 3,000 minimum share capital, and the public limited company (Societat Anonima, SA), requiring EUR 60,000 (Andorra Inc.). Both pay the same flat 10% corporate tax.

The SL is the default for small and medium businesses, consultancies and holding structures — low capital, simpler governance. The SA is reserved for larger operations, regulated activities or businesses planning outside investment, where the EUR 60,000 capital and stricter rules are justified. Foreign ownership of up to 100% is permitted in most sectors, subject to prior foreign-investment authorisation.

Company type	Minimum capital	Typical use
SL (Societat Limitada)	EUR 3,000	SMEs, consultancies, holdings
SA (Societat Anonima)	EUR 60,000	Larger or regulated businesses

Source: Andorra Inc..

The headline number people forget is social security. Andorra's CASS scheme costs 22% of salary for employees, split 6.5% employee and 15.5% employer, while the self-employed pay a fixed monthly contribution of around EUR 563, with reduced bases available for new or lower-earning businesses (Immigrant Invest). For a founder paying themselves a salary, CASS is often a larger annual cost than income tax.

How tax-transparent is Andorra now?

Andorra is no longer a secrecy jurisdiction, and 2026 closes the door on what little ambiguity remained. The EU Council adopted updated tax-cooperation and transparency agreements with Andorra — alongside Switzerland, Liechtenstein, Monaco and San Marino — that enter into force on 1 January 2026, expanding automatic exchange of financial-account information to align with the OECD's 2022 amended Common Reporting Standard (European Commission).

The amended CRS widens the net. The updated standard captures e-money products and central bank digital currencies, not just conventional bank accounts (European Commission). The Council formally confirmed the updated agreements in November 2025 (European Council). Anyone treating Andorra as a place to hide assets from a home tax authority is reading a decade-old playbook.

Andorra also has a working treaty network. As of 2025-2026 it has 22 double taxation agreements in force, including treaties with neighbouring Spain and France (both in force since January 2016) plus Portugal, Luxembourg and the United Kingdom (Andorran Banking Association). The Spain treaty in particular is what makes relocation across the border legally workable rather than a fight over dual residence.

How does Andorra compare to Monaco, Liechtenstein, San Marino and Spain?

Among Europe's micro-states, Andorra sits in the middle: cheaper to live in than Monaco, more transparent than its old reputation, but no longer a bargain entry. The defining 2026 fact is that all four micro-states — Andorra, Liechtenstein, Monaco and San Marino — fall under the same updated EU automatic-exchange regime from 1 January 2026, so none offers meaningful financial secrecy any more (European Commission).

The personal-tax contrast with Spain is the practical driver for many applicants. A Spanish high earner faces combined state and regional rates that climb far above Andorra's 10% ceiling, and the 2016 Spain-Andorra treaty provides the legal framework to move cleanly. You can line up the structured metrics for each on the relevant profile pages: Andorra, Monaco, Liechtenstein, San Marino and Spain.

[UNIQUE INSIGHT] The EUR 1 million passive threshold narrows Andorra's edge over Monaco precisely where it once competed hardest — with the merely affluent rather than the genuinely wealthy. Monaco has long demanded substantial bank deposits and expensive housing; Andorra used to undercut that dramatically. After February 2026, the gap is smaller, and the decision shifts toward lifestyle, the 90-day flexibility and the 10% income tax rather than headline cost. Run the side-by-side numbers on the comparison tool before committing.

Who is Andorra actually right for in 2026?

The honest answer is fewer people than before, but the right ones gain a lot. Andorra works best for active residents — founders and professionals willing to spend 183 days, form an SL for EUR 3,000 capital, and pay CASS — who then enjoy a 0-10% income tax ceiling and 4.5% VAT (Immigrant Invest; Andorra Inc.). For them, the company route sidesteps the EUR 1 million passive investment entirely.

Passive residency now makes sense mainly for investors with genuine eight-figure-adjacent wealth who value the 90-day flexibility and are comfortable parking EUR 1 million in Andorran assets, or EUR 400,000 via the Housing Fund. For everyone in between — the buyer chasing an old EUR 400,000 headline — the 2026 reform has likely priced Andorra out. Use the tax calculator to test the real after-tax outcome, and browse alternatives across the jurisdiction directory or recent analysis on the blog.

Frequently asked questions

Is Andorra still a tax haven in 2026?

Andorra remains low-tax — a 10% income ceiling, 10% corporate and 4.5% VAT — but it is no longer a secrecy jurisdiction. From 1 January 2026 it operates full automatic exchange of financial-account information under an updated EU agreement aligned with the amended OECD Common Reporting Standard (European Commission).

How much do you need to invest for Andorra passive residency now?

Since 13 February 2026, the minimum passive-residency investment is EUR 1,000,000 in Andorran assets, or EUR 400,000 if directed to the national Housing Fund, plus a non-refundable state fee of EUR 50,000 for the main applicant and EUR 12,000 per dependent (IMI Daily; Andorra Inc.).

How many days must you spend in Andorra?

Tax residency generally requires more than 183 days a year. The permits differ: active (work) residents must spend at least 183 days, while passive residents must reside at least 90 days per calendar year (Auge Legal & Fiscal). The 90-day figure is the immigration minimum, not a tax-residency safe harbour.

What is the cheapest way to set up an Andorran company?

The private limited company (SL) needs just EUR 3,000 minimum capital, versus EUR 60,000 for a public limited company (SA), and both pay the same flat 10% corporate tax (Andorra Inc.). Budget separately for CASS social security, which can exceed income tax for an owner-manager.

Does Andorra have a tax treaty with Spain?

Yes. The Spain-Andorra double taxation agreement has been in force since January 2016, part of a network of 22 treaties that also includes France, Portugal, Luxembourg and the United Kingdom (Andorran Banking Association). The Spain treaty is central to relocating cleanly from Spain.

Bottom line

Andorra in 2026 is a sharper, more expensive proposition than the guides still circulating online suggest. The tax mechanics are intact — 0-10% income tax, 10% corporate with about 2% for holdings, and Europe's lowest 4.5% VAT — but the passive-residency price jumped to EUR 1,000,000 on 13 February 2026, and financial privacy ended with the EU's updated exchange agreement on 1 January 2026.

For active residents who will live and work there, the principality still offers a rare combination of low rates and a EUR 3,000 company entry point. For passive investors, the case now demands real wealth and a clear-eyed view that everything is reported home. Verify the current thresholds before acting, model your own numbers with the comparison tool and tax calculator, and treat any older figure you find elsewhere with suspicion.

Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or financial advice. Tax laws change frequently and vary by jurisdiction. Consult a qualified professional before acting.