Andorra Passive Residency by Investment 2026

Programme Overview

The Principality of Andorra is, by most measures, one of Europe's best-kept secrets in the world of tax-efficient residency. Tucked between France and Spain in the eastern Pyrenees, this microstate of approximately 80,000 inhabitants offers one of the most compelling combinations of tax efficiency, European lifestyle, and geographic accessibility of any residency jurisdiction on the continent.

Andorra is not an EU member state, which is central to its appeal. It has retained independent control over its tax system, maintaining rates that would be constitutionally impossible in EU member states subject to broader fiscal coordination pressures. Yet for practical purposes of daily life and travel, Andorra functions as a Schengen-adjacent territory — residents travel freely to France and Spain for day-to-day activities, and Andorra's border crossings with both countries are routine.

The Passive Residency category is designed for individuals who wish to establish Andorran tax residence without maintaining active business operations in the principality — investors, retirees, remote professionals, and high-net-worth individuals deriving income from overseas sources.

The Tax Advantages

Andorra's tax regime is the programme's primary draw:

Income tax: Andorra levies zero income tax on the first €24,000 of annual income. Above this threshold, income is taxed at a flat 10% rate — making Andorra's maximum personal income tax rate one of the lowest in Europe. There are no additional municipal or regional income taxes. This compares with UK rates of up to 45% on employment income, or EU rates typically ranging from 40% to 55% in Western European states.

No wealth tax: Andorra levies no annual wealth or net worth tax, in sharp contrast to France, Spain, Norway, and Switzerland (cantonal levels).

No inheritance tax: Andorra has no inheritance tax, which is significant for estate planning purposes. Assets held in Andorra can pass to heirs without the 40%+ inheritance tax rates that apply in France and Spain.

Capital gains: Capital gains on investments held for more than ten years are exempt from Andorran tax. Gains on shorter-held investments are subject to a modest capital gains rate.

VAT equivalent (IGI): Andorra levies an Indirect General Tax (IGI) at a standard rate of 4.5% — the lowest standard consumption tax rate in Europe, compared with VAT rates of 20%–25% in most European countries. This makes consumer goods and services substantially cheaper in Andorra, contributing to a lower effective cost of living for residents.

CRS compliance: Andorra has implemented the OECD Common Reporting Standard (CRS) for automatic exchange of tax information. Andorran banks report account information to the tax authorities of account holders' countries of residence, as applicable. Andorra is no longer a secrecy jurisdiction in the pre-2010 sense; the tax advantages are legitimate and fully transparent.

Passive Residency Requirements

The Andorran passive residency permit requires the following:

Qualifying Investment: Following the Omnibus 2 Law (approved January 2026, in force 13 February 2026), passive residents must make a permanent and effective investment of at least €1,000,000 in qualifying Andorran assets (Andorran real estate, financial instruments issued in Andorra, shares in Andorran companies, or Andorran collective investment funds). This minimum is reduced to €400,000 where the investment is made, directly or indirectly, in the Andorran Housing Fund (Fons d'Habitatge). Where the investment is made in real estate, current rules require a unit value above €800,000.

Mandatory AFA Payment: Applicants must also make a payment of €50,000 to the Autoritat Financera Andorrana (AFA), Andorra's financial regulator, plus €12,000 for each dependent. Under the Omnibus 2 Law this payment is non-refundable (previously it was a refundable bond). This payment is separate from and additional to the qualifying investment.

Minimum Income: Applicants must demonstrate annual income of at least 300% of the Andorran minimum wage (approximately €49,000–€55,000 per year, depending on the prevailing minimum wage) for the primary applicant, plus an additional 100% of the minimum wage for each dependent. The income must be reliably documented and sufficient to cover living expenses in Andorra without working locally.

Physical Presence: Passive residents must spend a minimum of 90 days per calendar year physically present in Andorra. Among programmes with a formal presence requirement, Andorra's 90-day threshold is unusually low. (Note that Spain's Golden Visa, which had no minimum-stay requirement, closed to new applicants on 3 April 2025 and is no longer a route for new investors.)

Background Checks: A clean criminal record is required from the applicant's country of nationality and any country of residence in the preceding five years.

Health Insurance: Applicants must hold valid private health insurance covering treatment in Andorra and internationally, as passive residents are not automatically enrolled in the Andorran social security system (CASS).

Accommodation: Applicants must either own or rent property in Andorra. A property purchase is not mandatory, but demonstrating settled accommodation is required.

The Real Estate Option

Andorran real estate is one of the permitted forms of qualifying investment. Under the current (Omnibus 2) framework, a property purchase can satisfy the €1,000,000 investment requirement, with rules requiring a unit value above €800,000. The €50,000 non-refundable AFA payment (plus €12,000 per dependent) applies in addition. In practice, many passive residency applicants meet their investment requirement through Andorran property, as owning property is a natural choice for those planning to spend significant time there. The reduced €400,000 threshold is available only for investment through the Andorran Housing Fund, not for a standard open-market purchase.

The Andorran real estate market is compact. Andorra la Vella and Escaldes-Engordany are the main urban centres; the ski resorts of Grandvalira and Vallnord attract significant international interest. Prices have risen sharply in recent years, driven by a combination of limited supply (mountainous terrain constrains development) and strong demand from Spanish and French residents attracted by Andorra's tax advantages.

What Passive Residency Provides

A successful passive residency applicant receives:

• Andorran Temporary Residence Permit: Initially valid for two years, renewable for subsequent three-year periods.
• Andorran travel document (identity card): Permits routine border crossing into France and Spain for day-to-day activities, and travel throughout the Schengen Zone.
• Access to Andorra's banking system: Andorra hosts several internationally recognised banks (MoraBanc, Crèdit Andorrà, Banc Sabadell d'Andorra) with a tradition of solid private banking services.
• Eligibility for Andorran healthcare registration on a contributory basis.
• The right to live, invest, and spend time in Andorra without restriction on passive activities.

Passive residency does not confer the right to work in Andorra, establish an Andorran business as a sole trader, or draw income from Andorran sources without a separate work authorisation.

Path to Andorran Citizenship

Andorra is notably not a citizenship-by-investment jurisdiction. Andorran citizenship is only available after 20 years of legal residence for foreign nationals. The pathway is therefore extremely long and is unlikely to be a realistic objective for most investor residents.

There are reductions for those with special ties: 10 years for individuals of Andorran heritage or descent, and reductions may apply for spouses of Andorran nationals who have met the standard civil status requirements. But in general, Andorra should be evaluated purely as a residency and tax efficiency programme rather than a route to acquiring a second passport.

Lifestyle and Practical Considerations

Andorra offers a genuine quality of life that makes the residency genuinely desirable, not merely a tax mechanism:

• Outdoor lifestyle: World-class skiing at Grandvalira (one of the largest ski areas in the Pyrenees), hiking, mountain biking, and year-round outdoor activities.
• Duty-free shopping: Consumer goods in Andorra are substantially cheaper than in France or Spain due to the 4.5% IGI rate. Major electronics retailers, sports equipment, and luxury goods are popular purchases.
• Barcelona is 3 hours away; Toulouse is 2.5 hours away — two major international airports with connections to London, major European hubs, and intercontinental routes.
• Languages: Catalan is the official language; French and Spanish are widely spoken; English is used in the business and tourism sector.
• Education: Both the French and Spanish national school systems operate in Andorra, alongside private international schools.
• Population: Small, safe, low crime rate. The permanent population is approximately 40% native Andorrans, 60% residents of Spanish, Portuguese, French, and other nationalities.

How Global Investments Can Help

Global Investments advises high-net-worth individuals and families on Andorran passive residency applications, from initial eligibility assessment through to qualifying investment structuring, the AFA payment, property acquisition (where relevant), and ongoing compliance with the 90-day presence requirement.

We work with specialist Andorran legal counsel to manage the application process in Catalan and Spanish, and with international tax advisers to ensure that clients' home-country tax obligations are correctly managed during and after the transition to Andorran residency.

Contact our team for a confidential consultation on whether Andorra's passive residency programme suits your tax planning and lifestyle objectives.

The €50,000 AFA payment (plus €12,000 per dependent) is non-refundable under the Omnibus 2 Law in force since February 2026, and the qualifying investment requirement is now €1,000,000 (or €400,000 via the Housing Fund) — both should be factored into the total programme cost. Tax and immigration regulations may change; this guide reflects conditions as of June 2026. Professional legal and tax advice is essential before any residency decision.