Andorra Passive Residency & the 10% Flat-Tax Scheme

Andorra taxes its residents at a flat personal income-tax rate that tops out at 10%, with no wealth tax, no inheritance or gift tax, and no general capital-gains tax on most asset sales. To unlock that regime as a non-EU/EEA national without working locally, you apply for passive residency (residència sense activitat lucrativa), which requires an upfront payment to the Andorran authorities, a qualifying local investment, private health cover, and proof that you actually live there for a good part of the year.

The headline numbers are real, but they sit on top of a residency framework that has specific spending, presence, and documentation requirements. Below we break down how passive residency works, who it suits, the tax picture, and how to keep your residency defensible against the place you left.

What Andorran passive residency actually is

Andorra issues several residency permits. The two that matter for relocating individuals are active residency (for people who run a local company or work in Andorra) and passive residency (for people who do not work locally and instead live off investments, pensions, or business interests elsewhere). The passive category is sometimes called "residency without gainful activity," and it is the route most retirees, investors, and location-independent business owners take.

A passive resident commits to making Andorra their genuine home base. The permit is not a paper-only arrangement, it comes with a physical presence requirement and is renewed periodically, with the authorities reviewing whether you still meet the conditions. If you are weighing this against other low-tax options, it helps to compare it with neighboring Monaco residency and with the broader question of how presence-based rules work in our 183-day rule explainer.

The deposit and investment requirements

Passive residency is built around two money commitments. The first is an upfront payment made through the Andorran Financial Authority (the AFA); the terms attached to this payment, including whether and when any part is returnable, are set by regulation and have changed over time, so they must be confirmed against the current rules. The second is a local investment requirement, you must place a substantial amount into Andorran assets, which can typically include Andorran real estate, shares in Andorran companies, Andorran public debt, or other qualifying instruments.

• AFA payment, an upfront amount paid through the financial authority, with an additional increment per dependent on your application. Whether any portion is later returnable is governed by current regulation and has been changed in recent reforms, so confirm the treatment that applies to you.
• Qualifying local investment, a larger sum invested into Andorran assets such as property, local equity, or government bonds. Buying or renting a home in Andorra typically counts toward this.
• Private health insurance, full medical cover valid in Andorra for you and any dependents.
• Proof of income, evidence that you can support yourself without working locally, often expressed as a multiple of the Andorran minimum wage.
• Clean record and documentation, criminal-record certificates, a medical check, and standard identity and civil-status papers.

The tax picture: a flat 10%, and what's missing

Andorra introduced a modern personal income tax (IRPF) only in the last decade or so, and it is deliberately light. The top marginal rate on personal income is 10%, applied through a banded structure with a tax-free allowance at the bottom, so effective rates for most residents land below the headline figure. Corporate income tax is also low, and Andorra runs a VAT-equivalent (the IGI) that is among the lowest in Europe.

What is arguably more valuable than the low rate is what Andorra does not levy. There is no wealth tax, no annual net-worth charge, and no inheritance or gift tax between individuals. There is also no general tax on capital gains from the sale of financial assets like shares for resident individuals, with a notable carve-out for gains on Andorran real estate, which are taxed on a sliding scale that falls the longer you hold the property.

Presence: the 183-day expectation

Passive residency is conditioned on you actually living in Andorra. The permit terms require you to be physically present in the country for a minimum number of days each year, historically framed around 90 days for the passive permit itself, while tax residency follows the more familiar pattern: you are generally treated as an Andorran tax resident if you spend more than 183 days there in a calendar year, or if your center of economic interests sits in Andorra.

Those two thresholds are easy to confuse. Holding the permit is one thing; being a tax resident is another, and the country you came from will care about the 183-day line far more than the 90-day permit minimum. If your goal is to genuinely shift tax residency, plan to be in Andorra well past the 183-day mark and to keep the bulk of your life there. Track your days carefully, our 183-day calculator and expat day-counter guide exist for exactly this. If you also travel through the EU, remember Andorra is not in the Schengen Area, so watch the separate Schengen 90/180 limit on your trips north.

• Permit minimum: a baseline number of days in Andorra each year (around 90) to keep the passive permit alive.
• Tax residency trigger: generally more than 183 days in the calendar year, or your main economic interests located in Andorra.
• Practical advice: if you want the tax outcome, aim well beyond 183 days and document it.

Leaving your old country cleanly

The hardest part of an Andorra move is usually not getting in, it is getting out of your previous tax home convincingly. Most countries do not let you walk away simply by buying a permit elsewhere. They look at where your home, family, and economic center actually are, and many apply a domicile or "ordinary residence" concept that lingers after you leave.

• US citizens and green-card holders are taxed on worldwide income regardless of where they live. Moving to Andorra does not change that on its own; you would still file, and might rely on the foreign earned income exclusion or expatriation only by formally renouncing. See our digital nomad tax guide for the citizenship-based reality.
• UK leavers face the Statutory Residence Test and must break ties carefully; spending days back in the UK can pull you back in. Andorra has no double-tax treaty with every country, so check whether one exists for yours.
• Spanish and French residents, Andorra's nearest neighbors, face strict departure scrutiny precisely because the border is so close. Day-tripping back across to work or run a business can undo the move.
• Treaty tie-breakers: where a treaty exists, dual-residence conflicts are resolved by tie-breaker rules based on permanent home, center of vital interests, and habitual abode.

The throughline is evidence. Keep a clean record of your days, your Andorran home, your private health cover, and the unwinding of ties to your old country. When an old jurisdiction questions your departure, contemporaneous records, not memory, win the argument. A reliable day log is the single most useful thing you can build, which is what Tax Days is designed to keep.

Who Andorra actually suits

Andorra rewards people who can genuinely relocate and who have meaningful passive or remote income: retirees with investment portfolios, founders who have sold or who draw dividends, and location-independent professionals who do not need to live in a major city. The combination of a flat 10% top rate, no wealth tax, and no inheritance tax is hard to match in Western Europe.

It suits you less if you need the buzz of a capital, want easy long-haul travel (the nearest big airports are a few hours away in Barcelona and Toulouse), or cannot realistically spend most of the year in a small Pyrenean country. And it does almost nothing for a US citizen who is not prepared to renounce. Match the regime to your actual life, not just the tax table.