Is Andorra a tax haven? By the numbers, yes — personal income tax caps at 10%, corporate tax is a flat 10%, there is no inheritance, gift, or wealth tax, and the VAT-equivalent is just 4.5%. By the older meaning of the phrase, no. The principality between France and Spain now shares bank account data automatically with foreign tax authorities, sits on the European Union’s cooperative jurisdictions list, and has a growing network of double taxation treaties. What you get today is a genuinely low-tax country that plays by modern transparency rules, not a secrecy enclave.
The Low Rates That Fuel the Reputation
Andorra’s personal income tax, the IRPF, uses three simple bands. Income up to €24,000 is taxed at 0%. Income between €24,001 and €40,000 is taxed at an effective 5%, applied through a credit of up to €800 on the tax owed. Everything above €40,000 is taxed at 10%, and that 10% is the ceiling no matter how much you earn.1Govern d’Andorra. Impost sobre la renda de les persones físiques (IRPF) Deductions for dependents, disability in the household, and mortgage payments on a primary residence can push the effective rate lower still. France’s top marginal rate is 45% and Spain’s is 47%, which is most of the reason high earners look south into the Pyrenees.
Companies pay a flat 10% corporate tax on worldwide profits, with no graduated scale.2Govern d’Andorra. Impost sobre Societats (IS) Non-residents earning Andorran-source income face a 10% withholding tax, though dividends and bank interest paid to non-residents are currently exempt.
Capital gains are folded into personal income tax at 10%, with a blanket exemption on the first €3,000 of gains each year. Equity gains get more favorable treatment: if you own 25% or less of a company, gains on the sale of those shares are fully exempt. Above 25%, the 10% rate applies unless you held the shares for more than ten years, at which point the gain becomes tax-free.
There is no inheritance tax, no gift tax, no estate tax, and no annual wealth tax. A resident who receives an inheritance or gift owes nothing to the Andorran treasury regardless of the amount or the relationship between the parties, and no distinction is drawn between close family and unrelated beneficiaries. That single feature makes Andorra one of the most attractive jurisdictions in Europe for passing wealth between generations. Residents who are citizens of countries that do tax inheritances or gifts still need to check whether their home-country obligations apply.
On the indirect side, the Impost General Indirecte (IGI) has a general rate of 4.5%, the lowest VAT-equivalent in Europe.3Govern d’Andorra. Impost General Indirecte (IGI) France charges 20% and Spain 21%. Basic necessities carry a 0% rate, while banking and financial services sit at an increased 9.5%. Property purchases trigger a separate transfer tax of roughly 4% of declared value, split between the central government and the local parish.
Why It’s No Longer a Secrecy Haven
Andorra’s classic tax-haven reputation effectively ended in 2009, when the OECD removed it from its list of non-cooperative jurisdictions. The bigger change came with Law 19/2016, which required Andorran financial institutions to automatically share account data with foreign tax authorities under the Common Reporting Standard. Andorra signed the CRS Multilateral Competent Authority Agreement in December 2015, and first exchanges began in 2018. Banks now perform due diligence on every account holder’s tax residency and report balances, interest, dividends, and proceeds to the Andorran tax authority, which passes the data to partner jurisdictions.
The European Union currently lists Andorra as a cooperative jurisdiction with no pending commitments, the best possible classification under the EU’s tax haven screening process.4Council of the European Union. EU List of Non-Cooperative Jurisdictions for Tax Purposes Andorra has also signed double taxation agreements with France, Spain, Portugal, Luxembourg, Liechtenstein, Malta, Cyprus, and the United Arab Emirates, among others, with more under negotiation. These treaties prevent the same income from being taxed twice and provide mechanisms to resolve cross-border disputes.
The practical takeaway: hiding money in Andorran bank accounts no longer works. Any jurisdiction participating in CRS receives automatic reports on its residents’ Andorran accounts. Institutions that fail to comply face fines and potential loss of their banking license. Banking secrecy in Andorra is over in any meaningful sense.
What It Actually Costs to Live There
Low rates only matter if you can qualify as a resident, and the price of qualifying has climbed sharply. The baseline test is the standard 183-day rule: spend more than half the calendar year physically present in Andorra. People who fall short of 183 days can still qualify if their primary center of economic or professional interest is in the country.
There are two routes in. Active residency is for people who intend to work in Andorra, either as employees or through their own business. Self-employed applicants must own at least 20% of an Andorran company and serve as a managing director or board member. All active residents register with the CASS social security system from day one, and the applicant makes a non-refundable payment of €50,000 to the Andorran Financial Authority.
Passive residency is aimed at retirees, investors, and high-net-worth individuals who don’t intend to run a local business. A law approved in January 2026 raised the bar substantially. The standard path now requires a minimum investment of €1,000,000 in Andorran-based assets, such as real estate, equities in Andorran companies, or government debt, with real estate purchases required to exceed €800,000 per property unit. A reduced threshold of €400,000 is available if the funds go permanently into Andorra’s national Housing Fund. On top of that, applicants pay €50,000 for the main applicant and €12,000 per dependent, and unlike the old refundable deposit system, these payments are non-refundable. The previous framework required only a refundable €50,000 bond and far less capital, so the 2026 reform is a dramatic shift.
Then there is social security. Every active resident contributes to CASS at a combined 22% of gross salary: 6.5% from the employee (3% healthcare and temporary benefits, 3.5% retirement) and 15.5% from the employer (7% healthcare, 8.5% retirement). Self-employed individuals pay the full combined rate. That cost is lower than French or Spanish social charges but easy to overlook when comparing headline tax rates. Passive residents are not required to contribute to CASS the same way, but they must secure private health insurance or opt into the system voluntarily.
What Americans Should Know Before Moving
American citizens and green card holders owe US federal income tax on their worldwide income no matter where they live. Moving to Andorra doesn’t change that. The United States has no bilateral income tax treaty with Andorra, so there is no dedicated mechanism to prevent double taxation between the two countries.5Internal Revenue Service. United States Income Tax Treaties – A to Z
Two general provisions do most of the work. The foreign earned income exclusion lets qualifying Americans abroad exclude up to $132,900 of earned income from US tax for the 2026 tax year.6Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill The foreign tax credit lets you offset US tax liability dollar-for-dollar with income taxes paid to Andorra. Because Andorran rates cap at 10%, the credit may not fully cover US tax owed at higher income levels, but it stops the same dollar from being taxed twice.
Reporting obligations are separate from tax obligations and often more dangerous to miss. The FBAR (FinCEN Form 114) must be filed if the combined value of all foreign accounts exceeds $10,000 at any point during the year.7Internal Revenue Service. Report of Foreign Bank and Financial Accounts (FBAR) FATCA reporting on Form 8938 begins at higher thresholds for taxpayers living abroad: $200,000 on the last day of the tax year or $300,000 at any time during the year for single filers, and $400,000 or $600,000 respectively for married couples filing jointly.8Internal Revenue Service. Summary of FATCA Reporting for U.S. Taxpayers Penalties for missing these filings can dwarf the underlying tax.
State income tax is a separate problem. Some US states treat you as a resident until you establish a new domicile through concrete steps like selling your home, moving your family, and surrendering your driver’s license. Spending time in Andorra alone may not be enough to break ties with an aggressive state, so Americans leaving states with income taxes should check their former state’s specific rules before assuming the obligation ends on departure.