Andorra Residency Guide 2025: Passive and Active Residency, Tax Benefits, and Citizenship Path

Introduction: Why Andorra Has Become a Serious Option

Andorra is a small co-principality of approximately 77,543 residents, nestled between France and Spain in the Pyrenees mountains. Long known primarily for duty-free shopping and ski tourism, Andorra has increasingly attracted international residents — particularly Spanish, French, and UK nationals — seeking:

• A low-tax environment (income tax rates of 10% maximum; no wealth tax, no inheritance tax)
• European access (Andorra is within the Schengen area for travel, though not an EU member)
• A high quality of life (alpine scenery, safe environment, excellent skiing)
• Proximity to Spain and France (Toulouse is 3 hours by road; Barcelona is 2.5 hours)

Andorra's residency programmes have been formalised through legislation that provides two principal pathways: passive residency (for financially independent individuals) and active residency (for those establishing a business in Andorra).

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The Legal Framework

Andorra's immigration and residency system is governed by:

• Immigration Act (Llei d'immigració) of 2002, as amended
• Foreign Investment Act (Llei d'inversió estrangera) of 2012
• Tax agreements with France and Spain (limited scope; Andorra is not in a full tax treaty network)

Residency is administered by the Immigration Department (Departament d'Immigració) of the Andorran Government (Govern d'Andorra).

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Passive Residency (Residència Passiva)

Who Qualifies

Passive residency is for individuals who wish to reside in Andorra without conducting active business activities within Andorra. It is suitable for:

• Investors and financially independent individuals
• Retirees with pension or investment income
• Business owners with international businesses (managed remotely from Andorra)
• Digital professionals with foreign-source income

Investment Requirements

To qualify for passive residency, the applicant must satisfy two investment components:

Component	Requirement
Government deposit (INAF)	EUR 50,000 deposited with the Andorran National Finance Institute (INAF)
Qualifying investment	EUR 350,000 invested in: (a) Andorran real estate; OR (b) equity in an Andorran company; OR (c) Andorran government bonds
Total minimum investment	EUR 400,000 (EUR 50,000 government deposit + EUR 350,000 qualifying investment)

The EUR 50,000 INAF deposit: this is a refundable deposit with the INAF (Institut Nacional Andorrà de Finances), returned when the residency is voluntarily surrendered. It earns no interest.

The EUR 350,000 investment: for real estate, the property must be located in Andorra and serve as the applicant's residence (or an investment property in addition to the residence). Andorran real estate prices:

• Average: EUR 3,000–5,000/sqm in Andorra la Vella
• Premier ski resort areas (Grandvalira): EUR 4,000–7,000/sqm
• EUR 350,000 purchases a comfortable 70–100 sqm apartment in a good location

Alternative to the investment: some categories of passive residency applicant (particularly certain senior professionals) may satisfy the investment condition with a demonstrable passive income of EUR 250,000 per year in lieu of the EUR 350,000 investment — this is a less commonly used provision, and advice should be confirmed with current Andorran immigration authorities.

Income Requirement

The passive resident must demonstrate sufficient passive income to sustain their lifestyle in Andorra without working in Andorra:

• Minimum: EUR 14,500 per year (approximately EUR 1,208/month) for the main applicant
• Additional: 100% of the IPREM equivalent per accompanying family member

This income threshold is significantly lower than Spain (EUR 27,792) or Italy (EUR 31,000), making Andorra's passive residency accessible to a wider income range.

Minimum Presence: 90 Days

Passive residents must spend a minimum of 90 days per calendar year in Andorra to maintain residency. This is significantly less than the 183-day rule that applies to tax residency.

Important: spending fewer than 90 days may trigger non-compliance review and potentially residency cancellation.

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Active Residency (Residència Activa)

Active residency is for individuals who wish to work or conduct business in Andorra. The primary pathway is establishing an Andorran company and taking a management role.

Requirements for Active Residency

Requirement	Detail
Andorran company formation	LLC (Societat de Responsabilitat Limitada, SL) or other Andorran entity
Registered office in Andorra	Physical office space (not just a virtual address)
Management role	The applicant must hold a managerial or director position in the Andorran entity
Business activity	The company must have genuine commercial activity
Employment contract	Where the applicant is an employee of the Andorran entity (alternative to director role)

Investment not required for active residency — but the business establishment itself involves costs (company formation, office rental, business licensing).

Practical cost of establishing an Andorran company:

• Company formation: EUR 1,000–3,000 (legal fees)
• Registered office / actual office: EUR 500–2,000/month
• Comú (parish) business licence: EUR 200–1,000
• Social security (CASS — Caixa Andorrana de Seguretat Social): minimum contributions from the director

Active Residency for Foreign Business Owners

Many active residency applicants are business owners who:

• Move their existing international business to Andorra by establishing an Andorran holding company or operating entity
• Register their consulting or professional services business in Andorra
• Establish an Andorran entity for their investment management activities

The key requirement is that the Andorran entity has genuine commercial activity. A shell company with no real operations does not support active residency.

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The 90-Day Minimum Presence vs 183-Day Tax Residency

This distinction is crucial and frequently confused:

Status	Days Required	Consequence
Maintaining Andorra residency (passive)	90+ days in Andorra	Residency permit remains valid
Becoming an Andorran tax resident	183+ days in Andorra	Can obtain Andorran Tax Residency Certificate
Losing Andorran residency	Fewer than 90 days	Residency may be reviewed/cancelled

The two-track reality:

A passive resident who spends 90–182 days in Andorra (satisfying the residency minimum) has Andorran residency but is not an Andorran tax resident. They remain tax resident in whatever country they spend more than 183 days or have their centre of vital interests.

A passive resident who spends 183+ days in Andorra is both an Andorran resident and an Andorran tax resident. They may then apply for an Andorran Tax Residency Certificate (Certificat de Residència Fiscal Andorrana), which is used to demonstrate tax residence in Andorra for the purposes of claiming treaty benefits or establishing non-residency in a home country.

Andorra's Tax Treaty Position

Andorra has a limited tax treaty network. Key treaties:

• Spain (DTA): signed 2015; in force
• France (DTA): signed 2013; in force
• Portugal (DTA): signed
• United Arab Emirates (DTA): signed

No UK-Andorra DTA: as of 2025, there is no bilateral tax treaty between the UK and Andorra. UK residents moving to Andorra rely on the UK's domestic non-residency rules (SRT) to cease UK tax residency; treaty protection is not available for UK-Andorra moves.

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Andorra Tax Rates

Personal Income Tax (IRPF — Impost sobre la Renda de les Persones Físiques)

Income Bracket	Rate
Up to EUR 24,000	0%
EUR 24,001–40,000	5%
Over EUR 40,000	10%

The maximum income tax rate of 10% applies to all income above EUR 40,000. There is no additional rate, wealth tax, or capital gains tax.

Comparison with UK: a UK additional rate taxpayer on GBP 500,000 income pays approximately 45% in UK income tax. In Andorra, the same income would attract 10% maximum. Annual saving: approximately GBP 175,000.

Other Taxes

• No wealth tax: Andorra has no annual wealth tax
• No inheritance tax: assets pass to heirs free of Andorran succession tax
• No capital gains tax: gains on assets are not subject to Andorran capital gains tax
• IGI (VAT equivalent): 4.5% standard rate (compared to Spain's 21% and France's 20%)

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Annual Renewal Requirements

Passive Residency Renewals

The Andorran residency permit must be renewed annually for the first year (initial permit), then biannually thereafter. For each renewal:

• Confirm continued presence of at least 90 days in the prior period
• Provide updated proof of income (bank statements; investment portfolio statements)
• Confirm the qualifying investment remains in place
• No criminal proceedings or convictions

Renewal fee: approximately EUR 200–500 (government administrative fee).

Maintaining the INAF Deposit

The EUR 50,000 INAF deposit must remain on deposit throughout the residency period. If the deposit is withdrawn, the passive residency status is immediately at risk.

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Path to Andorran Citizenship

The 20-Year Rule

The standard requirement for Andorran citizenship (Adquisició de la Nacionalitat) is 20 years of continuous legal residence in Andorra. This is one of the longest naturalisation periods of any country in the world.

Exception: children born in Andorra to Andorran residents require only 10 years of residence (the residence commenced at birth).

Practical Implications

For most adults who establish Andorran residency, citizenship is a 20-year commitment. Given that most Andorran residents establish residency in their 30s–50s, citizenship will be acquired (if pursued) in their 50s–70s.

Andorran citizenship provides:

• A highly mobile Andorran passport (approximately 165+ country access)
• Full Andorran rights including voting, property ownership on same terms as nationals, access to Andorran social security

For most Andorran residents, the primary objective is the tax efficiency and lifestyle benefits of residency — not citizenship. The 20-year path to citizenship is noted but rarely the primary planning objective.

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Andorra vs Monaco: Quick Comparison

Feature	Andorra	Monaco
Income tax	10% maximum	None
Investment required	EUR 400,000	EUR 500,000 (bank deposit)
Annual lifestyle cost	EUR 50,000–120,000	EUR 165,000–330,000
Distance from Barcelona	2.5 hours	9+ hours
Distance from London	~3 hours (via Barcelona flights)	~2 hours (Nice airport)
Property prices	EUR 3,000–7,000/sqm	EUR 50,000–65,000/sqm
Climate	Alpine (cold winters; alpine skiing)	Mediterranean
Path to citizenship	20 years	Possible (long-term residents)
Minimum presence	90 days/year	Genuine residency required

Andorra is more cost-effective than Monaco but has income tax (albeit at a maximum 10% rate). Monaco has no income tax but is vastly more expensive to live in.

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HPT Group and Andorra Residency Advisory

HPT Group advises clients on establishing Andorra passive and active residency, covering the investment structure (INAF deposit + qualifying investment), the documentation requirements, the 90-day presence planning, and the Andorran Tax Residency Certificate process for clients seeking to establish Andorra as their primary tax residence. We work with Andorran legal practitioners (assessors) and tax advisers to manage the residency application process and advise on the interaction between Andorran tax residency and the client's departure country tax obligations. For clients comparing Andorra with Monaco, Spain, or Italy as a European residency destination, we provide a comprehensive comparison analysis. Contact HPT Group to discuss Andorra residency planning.