Andorra Tax Residency: The Complete Guide for Entrepreneurs

Active Residency (Residència Activa)

For entrepreneurs who will run their business from Andorra. Requirements: spend 183+ days per year in Andorra, main economic activity must be in Andorra, local registered office and housing, EUR 50,000 deposit with AFA (refundable), clean criminal record, and health insurance.

Active residency allows you to work, manage your company, and participate fully in Andorran economic life. The residency permit is initially issued for 1 year, then renewable in 2-year periods. After 20 years of continuous residency, you can apply for Andorran nationality.

Passive Residency (Residència Passiva)

For individuals with significant capital who want to live in Andorra without running an active business there. Requirements: EUR 600,000 minimum investment in Andorran assets (real estate, government bonds, or equity in Andorran companies), EUR 50,000 AFA deposit, spend 90+ days per year in Andorra, no employment in Andorra (though you can manage foreign companies), and clean criminal record and health insurance.

Passive residency is primarily used by high-net-worth individuals, retirees, and investors. The lower physical presence requirement (90 days vs 183 days) gives more flexibility for travel.

Residency Without Economic Activity

A third option exists for retirees and individuals without economic activity. This requires: proof of sufficient income (pension or other passive income), EUR 50,000 AFA deposit, 183+ days presence, health insurance, and proof of housing.

This option is less common for entrepreneurs but may suit founders who have sold their business and want a quiet European base.

Personal Income Tax (IRPF)

EUR 0–24,000: 0% tax EUR 24,001–40,000: 5% tax Above EUR 40,000: 10% tax

Andorra taxes worldwide income for tax residents. However, the low rates mean the total burden is modest even on high incomes. An entrepreneur earning EUR 200,000 would pay approximately EUR 18,200 in personal income tax — compared to EUR 60,000+ in France or Spain.

Corporate Tax (IS)

Flat 10% on worldwide profits. Deductible expenses are broadly defined and include salaries, rent, professional fees, travel, and other ordinary business costs. Special regimes exist for holding companies (reduced rates on qualifying income) and intellectual property (effective rates as low as 2% on income from IP developed in Andorra).

Social Security (CASS)

All economically active residents must register with CASS. Self-employed contributions are approximately EUR 500/month, covering healthcare and pension. This is mandatory — not optional.

What's Not Taxed

Wealth tax: None Inheritance tax: 0% for direct family (spouse, children, parents) Capital gains on shares held 10+ years: Potentially exempt IGI (VAT equivalent): 4.5% on business transactions — not a personal tax

Preparation Phase (Month 1)

Gather documents: criminal record certificate (apostilled and translated), medical certificate, passport copies, proof of housing in Andorra (rental contract or property deed), and proof of the EUR 50,000 AFA deposit. Find and secure housing — rental or purchase. Open an Andorran bank account (required for the AFA deposit).

Company Formation (Month 1–2)

For active residency, you typically form your company before or simultaneously with the residency application. The company formation process (SL) takes 3–6 weeks. You'll need business authorization from the government, which adds 4–6 weeks.

Residency Application (Month 2–4)

Submit the complete application to the Immigration Department (Servei d'Immigració). Processing time is 6–12 weeks. You may be called for an interview. Once approved, you receive your residency permit and can register for CASS and begin operating.