Immigration
8/10/2026
As soon as Andorra is mentioned, one phrase keeps coming up: tax haven. The Principality has carried this reputation for decades, to the point that it clouds any understanding of its actual tax system. The short answer, however, is clear: no, Andorra is no longer a tax haven, neither for the OECD, nor for the European Union, nor for France. It nonetheless remains a low-tax country, modern and transparent, which explains its appeal to entrepreneurs, investors and families. Here is a full analysis of the Principality and its tax system.
What is a tax haven according to international organisations?
Before reaching a conclusion, it is worth knowing what the term covers. According to the OECD, a tax haven is characterised by several combined criteria: a complete absence of taxation or near-zero taxation, a lack of transparency, a refusal to exchange financial information with other States, and regimes that encourage opacity.
These are the criteria used to classify, or not, a jurisdiction among tax havens. Applied to Andorra today, they give an unambiguous answer.
Is Andorra officially a tax haven?
No. Andorra no longer appears on any official list of non-cooperative jurisdictions, and has not for several years.
It appears neither on the European Union list of non-cooperative jurisdictions for tax purposes, nor on the French list of non-cooperative States and territories. As for the OECD, its Global Forum on Transparency and Exchange of Information for Tax Purposes has given Andorra a positive assessment with regard to international standards of fiscal transparency.
Officially, Andorra is therefore no longer a tax haven. It is today classified as a cooperative and transparent jurisdiction. The perception that persists stems from a historical legacy and from a tax system that has remained significantly lighter than that of its neighbours.
The Andorran tax system: low but very real
Andorra has modernised its entire tax system, first between 2010 and 2016, then with more recent adjustments to align with European standards. The country now has a complete range of taxes, simply calibrated at low rates.
Personal income tax (IRPF)
The maximum rate of personal income tax is 10%, with low or even exempt brackets for modest incomes. This is a far cry from the progressive scales of neighbouring countries, but the tax does indeed exist.
Corporate income tax
The standard rate of corporate income tax is 10% on profits. Income derived from the exploitation of certain intangible assets (patents, utility models and copyright-protected software) may qualify for an 80% reduction of the taxable base, i.e. an effective rate of 2%, subject to prior authorisation from the Ministry of Finance and under certain conditions.
IGI, the Andorran VAT
IGI, the general indirect tax equivalent to VAT, stands at 4.5%. It is one of the lowest rates on the continent, well below European standards.
No wealth tax or inheritance tax
This is one of the most distinctive features of the Andorran tax system. The Principality applies no wealth tax, nor any tax on inheritance and gifts. Capital gains on real estate are taxed according to a scale that decreases with the number of years of ownership.
| Tax | Andorra | France (order of magnitude) |
|---|---|---|
| Income tax | Maximum 10% | Up to 45% |
| Corporate income tax | 10% (effective rate of 2% on certain intangible-asset income, subject to authorisation) | Around 25% |
| Dividends received by a resident shareholder | Exempt (Andorran company) | 31.4% (flat tax) |
| VAT / IGI | 4.5% | 20% |
| Wealth tax | None | IFI on real estate |
| Inheritance and gifts | None | Up to 45% in direct line |
The Andorran tax system therefore does exist, it is clear and based on self-assessment, but it remains much lighter than that of neighbouring countries.
Why Andorra is no longer a tax haven: the end of banking secrecy
Andorra was indeed a tax haven in the past. That model disappeared between 2009 and 2016, as the result of a series of far-reaching reforms.
The Principality ended banking secrecy as early as 2016, then introduced the automatic exchange of financial information (CRS standard) from 2018. It has established an anti-money-laundering framework compliant with FATF standards and has signed around twenty bilateral tax transparency agreements. More recently, the association agreement negotiated with the European Union has accelerated the country's integration with European standards, while preserving its local taxation.
These changes have been recognised by the OECD, the European Union, the FATF and the French Ministry of the Economy. This is precisely what shifted Andorra from the status of tax haven to that of a cooperative jurisdiction.
Andorra and France taxation: the real comparison
Comparing the two countries on corporate tax rate alone would be simplistic. The real difference lies in the number of times the same profit is taxed before it reaches the shareholder's pocket.
Corporate tax
In Andorra, the company applies a maximum of 10% on its profit, then has the remainder available to reinvest or distribute. In France, the general corporate tax rate is around 25%. For an equivalent result, the Andorran company therefore retains more net profit after this first layer of taxation.
The treatment of dividends
This is where the gap really widens. In Andorra, when an individual shareholder who is a tax resident receives dividends from an Andorran company, those dividends are not subject to their IRPF. The profit is taxed only once, at company level. In France, the distributed dividend is additionally subject to the 31.4% flat tax, resulting in effective double taxation close to 50%.
A worked example on €1,000,000 of profit
Consider a company that makes one million euros in profit and decides to distribute it in full. In Andorra, it pays 10% corporate tax, i.e. €100,000. The remaining €900,000 is paid to the resident shareholder with no additional taxation: they therefore receive €900,000 net.
In France, the same company pays 25% corporate tax, i.e. €250,000. On the €750,000 distributed, the 31.4% flat tax takes a further €235,500. The shareholder then keeps only around €515,000. Same activity, same pre-tax profit, but a radically different final outcome. The combination of a lower tax rate and the absence of a second layer of taxation on dividends is precisely what makes the difference.
Beyond the figures, many directors also note a more direct relationship with the Andorran administration, an environment perceived as more stable and less bureaucratic than the French framework.
Why is it still referred to as a tax haven?
If the label still clings to Andorra, it is simply because its taxation remains lower than in the vast majority of European countries. Not nil, not opaque, just competitive.
Income tax is capped at 10%, IGI is minimal, legal certainty is strong, the country is politically stable and social charges are low. This combination sustains the myth. But it is no longer a tax haven in the opaque and illegal sense of the term: Andorra is a country with optimised and transparent taxation, along the same lines as Ireland, Switzerland or Singapore.
What tax advantages for a resident or an investor?
For anyone who genuinely settles in Andorra, the benefits are concrete. The lighter tax burden makes it possible to preserve a far larger share of one's income and assets. The absence of wealth tax and inheritance tax is a major asset for the transfer of wealth. Legal certainty and political stability offer a predictable framework, while reduced social charges benefit entrepreneurs and the self-employed.
This framework attracts a wide range of profiles: entrepreneurs, self-employed workers, digital nomads, investors, professional athletes and families seeking stability. For service companies and holdings able to genuinely establish themselves and operate from the Principality, Andorra becomes a strategic option where profit is not only generated, but also preserved.
How to benefit from Andorran taxation: conditions and procedures
Andorran taxation cannot be decreed from a distance: it requires effective tax residence in the country. Two main paths exist: active residence, linked to a professional activity or to the creation of a company on site, and passive residence, open to those who can demonstrate sufficient income and an investment in the country.
In both cases, access to the Andorran tax regime is conditional on a genuine presence and an authentic establishment, and not on a mere façade domiciliation. The procedures involve compiling a file, obtaining a residence permit and, where applicable, creating a legal structure. Specialised support makes it possible to secure these steps and to verify eligibility in light of each person's situation.
Planning to relocate to Andorra?
Andorra is no longer a tax haven in the international sense: it is transparent, cooperative and has a complete tax system. But it remains a low-tax country, legal and attractive, where entrepreneurs, investors and families find a clear and stable framework. The right way to present it is therefore not as a tax haven, but as a country where one can breathe easy in tax terms, while complying with international rules. Planning to relocate to Andorra? Feel free to book a free 30-minute consultation!
