This article has been reviewed and updated in accordance with current Andorran tax legislation (Law 5/2014 on Personal Income Tax, Law 94/2010 on Non-Resident Income Tax, Law 95/2010 on Corporate Income Tax, and Law 21/2006 on Capital Gains from Real Estate).
France and Andorra have concluded a tax treaty. Signed in Paris on April 2, 2013, and entered into force on July 1, 2015, it defines the allocation of taxing rights between the two countries and prevents the same income from being taxed twice. It applies to both French tax residents who receive income from Andorran sources (rental income, dividends, wages) and Andorran tax residents who receive income from French sources (real estate in France, pensions, capital gains). It is also relevant to entrepreneurs and investors active in both countries.
This guide details the applicable rules by income category, the specific reporting requirements, and the scope of the agreement—including what it does not cover.
What is the tax treaty between France and Andorra?
The France-Andorra Tax Treaty is a bilateral agreement based on the OECD model that entered into force on July 1, 2015, and took effect in France as of January 1, 2016, for taxes not collected through withholding.
It is based on two pillars: the elimination of double taxation, on the one hand, and the prevention of tax fraud and evasion, on the other. Regarding the latter, it refers to the information exchange agreement signed between the two countries in 2009, which has since been supplemented by Andorra’s adoption of the OECD’s CRS standard. Andorran banks now automatically transmit information regarding accounts held by French tax residents to the French tax authorities.
Taxes covered
In France: income tax and corporate tax.
In Andorra: corporate income tax (CIT), personal income tax (PIT—which replaced the former tax on income from economic activities, repealed as of January 1, 2015), tax on the income of non-residents (NIT), and capital gains tax on the transfer of real estate assets.
Note: The tax on income from economic activities (IRAE) was abolished by Law 5/2014 of April 24, effective January 1, 2015. The economic activities of resident individuals are now taxed under the personal income tax (IRPF) system. References to the IRAE in certain sources prior to 2015 are therefore obsolete.
Double taxation between France and Andorra: Which mechanism applies?
Double taxation occurs when two countries tax the same income at the same time. The treaty prevents this by designating a primary taxing country for each category of income and providing for a credit mechanism in the other country.
The agreement primarily uses the tax credit method on both the French and Andorran sides.
In France (Article 21), Andorran income is still included in French taxable income, but a tax credit is granted, equal either to the French tax corresponding to that income or to the Andorran tax actually paid, depending on the category of income in question.
In Andorra (Article 48 of Law 5/2014 on Personal Income Tax), the deduction granted is equal to the lesser of the following two amounts: the tax actually paid abroad, or the portion of the Andorran tax liability corresponding to that same income. The credit is therefore capped and cannot exceed the Andorran tax theoretically due on this income.
Important note: The agreement does not provide for any exemption mechanism on the French side. Income earned in Andorra must always be reported in France, even when the effective tax liability there is zero due to the tax credit.
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What types of income are covered? Tax rules by category
The following table provides an overview of the rules applicable to the main categories of cross-border income.
Wages and Earnings from Employment
The basic rule (Article 14) is that wages are taxed in the employee’s country of residence. They become taxable in the country where the work is performed only if the work is physically carried out there. Exception: If the employee stays in the State of employment for fewer than 183 days, the employer is not a resident there, and the remuneration is not borne by a permanent establishment in that State, taxation remains in the country of residence.
Special regime for cross-border workers: Andorran law (Article 36 bis of Law 94/2010 on Personal Income Tax) provides for a special regime for non-tax residents employed by Andorran companies who are fully enrolled in the Caixa Andorrana de Seguretat Social (CASS) system. These workers, who are often residents of France or Spain, may opt to be subject to the general rules of the Andorran personal income tax (IRPF). This regime is relevant for many French cross-border workers and warrants a personalized analysis.
Real estate income
Income from real estate is taxed in the country where the property is located (Article 6), regardless of the owner’s place of residence. An Andorran resident receiving rent from an apartment in Paris is therefore taxed in France on this income, while also having to report it in Andorra with the corresponding tax credit applied (up to the amount of Andorran tax theoretically due on this income).
Dividends
Dividends are taxed in the recipient’s country of residence (Article 10). The country of the distributing company may also withhold tax at source, capped at 5% if the recipient is a company that directly holds at least 10% of the capital, and at 15% in all other cases.
Interest and royalties
Interest (Article 11) is taxed in the recipient’s State of residence, with a possible withholding tax limited to 5% in the source State. Exceptions allow for exclusive taxation in the State of residence for interest paid between States, central banks, or financial institutions.
Royalties (Article 12), copyrights, patents, trademarks, and software follow the same principle: taxation in the country of residence with a withholding tax capped at 5%. Notable exception: royalties for copyrights on literary and artistic works (excluding software and films) are taxable only in the country of residence, with no withholding tax in the source country.
Capital gains
Capital gains on real estate are taxed in the country where the property is located (Article 13.1.a). The sale of an apartment in France by an Andorran resident is therefore subject to taxation in France under the regime applicable to non-residents, with a tax credit in Andorra. For companies with a predominantly real estate portfolio (more than 50% of assets consisting of real estate in a given country), the same rule applies.
For substantial interests, where the transferor, alone or together with related persons, holds 25% or more of a company’s profits, the gains are taxable in the company’s state of residence (Article 13.4).
A critical point that is often overlooked—the exit tax (Article 167 bis of the French General Tax Code) may apply when transferring tax residency from France to Andorra, on unrealized capital gains associated with certain securities. The tax treaty does not eliminate this mechanism, which must be taken into account before any plansto relocate for tax purposes to Andorra.
Please note—Andorran withholding tax on real estate sales: in the event of the sale of real estate located in Andorra by a non-Andorran tax resident (for example, a French resident), the purchaser is required, pursuant to Article 7 of Law 21/2006 on the tax on capital gains from real estate transfers (as amended by Law 17/2017), to withhold 5% of the total sale price and remit it to the Andorran tax authorities. This practical obligation does not exempt the buyer from the final calculation of the Andorran capital gains tax.
Pensions and retirement benefits
Private pensions (Article 17) are taxed exclusively in the country of residence. A private-sector retiree living in Andorra will therefore have their pension subject to Andorran tax, with no residual taxation in France.
Public pensions (Article 18.2) remain taxable in the country that pays them. A former French civil servant residing in Andorra therefore remains subject to taxation in France on his or her pension, unless he or she holds Andorran nationality without holding French nationality, in which case the tax liability falls to Andorra.
Tax residency: the prerequisite that determines everything
The application of the treaty depends entirely on each taxpayer's tax residence.
Andorran domestic law (starting point)
Under Article 8 of Law 5/2014 on personal income tax, an individual is considered a tax resident of Andorra if they meet either of the following two conditions:
- Staying in Andorra for more than 183 days a year (occasional absences are counted, unless tax residency in another country is demonstrated);
- The core of its business or the basis of its economic activities or interests is located in Andorra, either directly or indirectly.
These residency requirements in Andorra constitute the legal framework of reference. It is only when a conflict of residency arises between the two countries that the criteria set forth in the treaty take precedence.
Criteria for conflict resolution (Agreement, Article 4.2)
In the event of a conflict regarding residence, the agreement establishes a hierarchy of criteria: permanent residence → center of vital interests → habitual residence → nationality.
The 183-day rule is therefore just one criterion among others. The protocol to the treaty further specifies that merely holding an Andorran residence permit or Andorran citizenship is not sufficient to establish Andorran tax residency within the meaning of the treaty. A taxpayer whose family home and principal assets remain in France may have their Andorran residency challenged by the French authorities based on the criterion of the center of vital interests.
Note: Article 25.1.d of the treaty (according to the numbering of the officially published version) contains a safeguard clause under which France may tax French nationals residing in Andorra as if the treaty did not exist. This provision, which is rare in modern French treaties, may have practical implications for French nationals who wish to live in Andorra and warrants special attention in any personalized analysis.
What the agreement does not cover
The agreement is limited to direct taxes on income and profits. Several important areas of taxation are excluded from it.
The IFI: An Andorran resident who owns real estate in France may remain subject to the IFI under the French rules applicable to non-residents if the net value of that French real estate exceeds 1.3 million euros. The treaty does not provide for any adjustment mechanism for this tax.
Inheritance and gift taxes: There is no agreement between France and Andorra on this matter. An estate involving a deceased person who was a resident of Andorra and had assets in France, or French heirs, may be subject to French inheritance tax without any mechanism to eliminate double taxation.
VAT and Andorra's General Indirect Tax (IGI): Indirect taxation is not covered here and is governed by the specific rules of each country.
Crypto-assets: not mentioned in the treaty. Their treatment in a cross-border context between France and Andorra depends on the legal characterization under each country’s domestic law and must be analyzed on a case-by-case basis.
Shell companies: The treaty contains anti-abuse provisions (Article 25) that allow for the denial of its benefits if the primary purpose of a transaction is to obtain those benefits without engaging in any actual economic activity in the relevant country. Any strategy fortax optimization strategy in Andorra must therefore be based on a genuine presence and economic activity.
Reporting Requirements: Essential Steps
The treaty does not exempt taxpayers from filing returns. It determines where income is taxed, but the filing requirements in each country remain in full force.
French tax residents with income from Andorra: worldwide reporting requirement in France. Income from Andorra must be reported on Form 2047 and then transferred to Form 2042. The tax credit then applies, but the income must be reported.
Andorran bank accounts held by a French tax resident: Under French tax law (Article 1736 IV of the General Tax Code), any bank account held abroad must be reported using Form Cerfa 3916. Penalties under French law can reach up to 1,500 euros per undeclared account. This obligation and these penalties are governed by French law, not by Andorran tax legislation.
Andorran resident with income from French sources: declaration in France of French income (rental income, government pensions, capital gains on real estate) in accordance with the rules applicable to non-residents, and a comprehensive tax return in Andorra with a tax credit—capped at the amount of Andorran tax due—for income already taxed in France.
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FAQ: Your questions about the France-Andorra tax treaty
Is a French national residing in Andorra fully protected under the convention?
Not necessarily. Article 25.1.d of the treaty allows France to tax its nationals residing in Andorra as if the treaty did not exist. This safeguard clause can have significant practical implications depending on the circumstances. A personalized analysis is essential for any French national living in Andorra.
Does the agreement cover inheritance taxes?
No. The treaty applies only to direct income taxes. There is no Franco-Andorran treaty governing inheritance matters. An estate involving an Andorran resident and assets or heirs in France may be subject to French inheritance tax without any offsetting mechanism, a key consideration in any cross-border estate planning.
Is a private-sector retiree living in Andorra still subject to taxation in France on their pension?
No, provided that tax residency in Andorra is actually established. Article 17 assigns the taxation of private pensions exclusively to the country of residence. However, former civil servants remain subject to taxation in France on their public pensions, except in specific cases related to nationality.
What is the exit tax, and should you plan for it before moving to Andorra?
The exit tax (Article 167 bis of the French General Tax Code) taxes unrealized capital gains on certain securities when a taxpayer transfers their tax residence outside of France. The France-Andorra tax treaty does not exempt this tax. If you hold significant equity interests whose value has increased, this tax liability must be assessed and planned for before any plans totax expatriation to Andorra.
Can the French government find out what I own in Andorra?
Yes. Since Andorra adopted the OECD’s CRS standard, Andorran financial institutions have been automatically reporting information each year to French authorities regarding accounts held by French tax residents. Andorra is no longer a blind spot for the French tax authorities.
If you own a company in Andorra without residing there, are you eligible for the benefits of the treaty?
No, in most cases. A French tax resident who owns an Andorran company remains subject to taxation in France. If the company has no real economic substance in Andorra (premises, effective management, actual business activity), it risks being reclassified as a French permanent establishment.
What are the rules regarding tax residency in Andorra?
Under Andorran domestic law (Article 8 of Law 5/2014 on personal income tax), the residency requirements in Andorra are established when either of the following two conditions is met: staying in Andorra for more than 183 days per year, or having the main center of economic activities or interests located in Andorra. These legal criteria serve as the starting point for any analysis, even before examining the treaty rules for conflict resolution.
Key Andorran legislative sources
Law 5/2014, of April 24, on Personal Income Tax (IRPF) — Art. 8 (Residence), Art. 48 (Double Taxation)
Law 94/2010, of December 29, on Income Tax for Non-Residents (IRNR) — Art. 36 bis (cross-border workers)
Law 95/2010, of December 29, on Corporate Income Tax (CIT)
Law 21/2006, of December 14, on the Capital Gains Tax on Real Estate Transactions — Art. 7 (Withholding Tax for Non-Residents)
Law 17/2017, of October 20, on the Tax Treatment of Corporate Reorganizations (Amendment to Law 21/2006)