Moving from Monaco to Andorra: The 2026 Tax Guide
The France-Monaco Agreement, passive residency, exit tax: everything residents of the Principality need to know before leaving
Key point: The 1963 Franco-Monegasque treaty subjects French nationals residing in Monaco to the French progressive tax scale—up to 45% on income, plus social security contributions of 17.2%. Monaco offers no real tax advantages for this group. Moving one’s residence to Andorra permanently caps the personal income tax rate at 10%, with no time limit.
You live in Monaco and have built your wealth in the Principality. The elegance of the living environment, the security, the international network—all of this is real. What is less so, for French nationals, is the tax advantage that Monaco is supposed to offer. The 1963 treaty keeps you under the jurisdiction of the French tax authorities, with a progressive tax scale identical to that of a Parisian resident. If your goal is long-term tax relief, Andorra is the only credible alternative in Europe as of 2026: income tax capped at 10% (a flat rate confirmed by Law 5/2014), no wealth tax, no inheritance tax for direct descendants, and a Franco-Andorran tax treaty in effect since 2022.
This guide details the practical aspects of relocating from Monaco to Andorra—the legal requirements, pitfalls to avoid, and timeframes to anticipate. Every figure has been verified against current Andorran law.
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I. Monaco and the French: The Tax Illusion Perpetuated by the 1963 Agreement
The Franco-Monegasque Agreement of May 18, 1963, is the document that every French resident in Monaco must read before celebrating their tax optimization. It requires French nationals who left France after 1957 to remain subject to French income tax under the same conditions as a resident of mainland France. In other words: a French entrepreneur receiving dividends from Monaco is subject to a progressive tax rate of up to 45%, plus social security contributions of 17.2% on capital gains—resulting in an overall tax burden of nearly 62% on dividends.
There are no exceptions to this rule for French individuals. Non-French residents of Monaco—including British, Belgian, Italian, and Russian nationals—enjoy a permanent 0% income tax rate. This distinction is stark, yet it is consistently overlooked in discussions about Monaco as a destination for expatriates.
Why do French residents stay in Monaco despite everything?
There are several reasons for this trend. First, the Principality’s quality of life and UHNW network hold real value, regardless of tax policies. Second, Monaco offers a residual advantage to French nationals regarding certain assets: capital gains on real estate located in Monaco are exempt from French taxation, and inheritance taxes remain more favorable than in France for Monegasque properties. Finally, the IFI (real estate wealth tax) applies only to properties located in France—a French resident in Monaco who has moved their real estate assets out of France is not subject to the IFI.
But when it comes to ordinary income—such as salaries, dividends, and business income—Monaco is tax-equivalent to France for French nationals. This reality is prompting more and more French residents of Monaco to consider a true tax breakaway each year. And in 2026, following the closure of Portugal’s NHR program, Andorra will be the only destination in Europe that makes this possible on a permanent and secure basis.
| Tax criterion | Monaco (French resident) | ★ Andorra |
|---|---|---|
| Income Tax | Progressive tax scale (FR) · up to 45% | 10% income tax · flat rate · permanent |
| Dividends | 30% flat tax or progressive tax rate (+ PS 17.2%) | 10% · no additional social security contributions |
| Capital gains on securities | 30% flat tax (on French capital) | 10% · tax exemption after holding for 3 years for certain assets |
| Corporate tax | 0% in Monaco · but French corporate income tax applies to French companies | 10% · no additional material costs |
| Wealth Tax (IFI) | For real estate in France only | No wealth tax |
| Inheritance tax | French rules on French property and French residency rights | None available |
| Agreement with France | 1963 Convention — unfavorable to the French | 2022 Agreement — Recognized Andorran Residency |
| Minimum attendance required | 183 days per year | 90 days per year (passive residence) |
| Duration of the program | Permanent | Permanent |
| Cost of living | The highest in Europe | Moderate · 30% to 40% lower than in Monaco |
Data for 2026. The Andorra column is highlighted because it corresponds to Engage’s area of expertise. Each financial situation requires a customized analysis.
II. Andorra in 2026: A Permanent, Verified, and Secure Tax System
Andorra applies a flat income tax rate of 10% on all income earned by Andorran tax residents, in accordance with Article 43 of Law 5/2014. This rate is neither a temporary exception nor a special regime subject to abolition—it is the permanent tax structure of the Andorran state, which has a population of 77,000 and whose public finances are balanced without pressure to raise taxes.
This is confirmed by the 2022 Franco-Andorran agreement
Since the Franco-Andorran double taxation treaty came into force, Andorran tax residency has been fully recognized by the French authorities. This is the game-changer for a French resident of Monaco: Monaco could not offer this legal certainty (the 1963 treaty did precisely the opposite), whereas Andorra guarantees it—provided that the residence is genuine and documented.
The Four Pillars of the Andorran Tax System
10% personal income tax. Single tax rate, with no progressive brackets. Income from employment and real estate below €24,000 per year is exempt from filing (Art. 42 of the Personal Income Tax Regulations). Above that amount, a single rate applies to all income.
Corporate tax at 10%. Andorran corporate tax is also capped at 10%, with no requirement for costly economic substance. Since 2012, an Andorran company (SL) can be established with 100% foreign capital, and the Andorran authorities do not impose any of the additional compliance costs encountered in Monaco or Dubai.
No wealth tax, no inheritance tax on direct descendants. For a high-net-worth individual from Monaco with significant movable and immovable assets, the absence of these two taxes represents a major long-term advantage.
IGI at 4.5%. Andorra's indirect tax (IGI) is the lowest in Europe, compared to France's 20% VAT rate.
| Type of income | Monaco (French resident) | ★ Andorra | Annual profit · €500,000 in revenue |
|---|---|---|---|
| Net dividends | ~47% (flat tax + PS) | 10% | +€185,000 per year |
| Operating revenue | ~45% (marginal rate) | 10% | +€175,000 per year |
| Capital gains on securities | 30% (flat tax) | 10% | +€100,000 per year |
| Rent collected outside France | ~30% (base rate + PS) | 10% | +€100,000 per year |
Illustrative calculation based on €500,000 in income. Actual results may vary depending on the type of assets, the country of origin of the income, and applicable bilateral agreements.
III. Legal Requirements for Andorran Residency from Monaco
Andorran law distinguishes between several categories of residency. For high-net-worth individuals leaving Monaco, two options are available: residency without gainful employment (commonly referred to as “passive residency”) and active residency for entrepreneurs wishing to conduct business in Andorra.
Passive residency (without gainful employment)
Law 9/2012 amending the Qualified Immigration Law, in its consolidated Article 96, sets forth the investment requirements for residence without gainful employment. The legal framework is as follows:
| Condition | Legal requirement (2026) | Details |
|---|---|---|
| Primary investment | At least €1,000,000 | Real estate, Andorran equity investments, approved funds, Andorran life insurance products, or AFA deposits. The investment must be made within 6 months of obtaining authorization. |
| Special Case: Housing Fund | €400,000 | Only if the investment is directly or indirectly related to the Andorran Housing Fund. |
| Government contribution | €50,000 (non-refundable) | Payment to the AFA at the time of application. Non-refundable unless the initial authorization is denied. Plus €12,000 per dependent. |
| Minimum attendance | 90 days a year | Primary and actual residence in Andorra. Must be thoroughly documented (physical presence, Andorran bank statements, local utility bills). |
| Annual quota | 163 permits | For 2026 (Decree 74/2026). Allocation on a first-come, first-served basis, with priority given to nationals of countries that have signed an agreement with Andorra. |
| Health insurance | Required | Health, disability, and old-age coverage in effect for Andorra for the entire duration of the authorization. |
| Housing | Required | Owner or tenant of a residence that meets regulatory habitability standards. To be submitted when filing the application or within the following year (pending agreement). |
Real estate investment and minimum investment per property: If an investment in Andorran assets consists entirely or partially of real estate, each property acquired must represent an investment of more than €800,000. The purchase of two properties priced at €500,000 each does not meet this requirement.
Active Residency — For Entrepreneurs
Individuals wishing to conduct business in Andorra may opt for the self-employed residency and work permit. This status requires a minimum presence of 183 days per year, the establishment of an Andorran company in which the applicant holds a stake of more than 34%, a non-refundable deposit of €50,000 to the AFA, and proof of actual economic activity within the country. Since 2026, a detailed business plan has been required for new applications.
Which status should you choose if you're coming from Monaco?
Rentier / passive investor
→ Passive houseInvestment income, dividends, rental income, capital gains. The standard threshold is an investment of €1 million; proof must be provided within 6 months of approval.
Retired with a substantial net worth
→ Passive housePensions from foreign sources, real estate income. 10% personal income tax with no time limit. No tax comparable to the French progressive tax scale.
Active entrepreneur
→ Active residenceFormation of an Andorran limited liability company (SL) with actual business operations in the Principality. Corporate income tax (IS) at 10%, personal income tax (IRPF) at 10%. 183 days of physical presence required.
Family with children
→ Passive houseA contribution of €12,000 per dependent. Trilingual education in Andorra. Quality of life and safety among the best in Europe.
Isabelle, 54 — Founding owner, resident of Monaco for 8 years
Isabelle has been running a cybersecurity consulting firm from Monaco since 2016. As a French resident in Monaco, she is subject to the full 30% flat tax and 17.2% social security contributions on the dividends she receives. After selling her company for €3.2 million, the French tax authorities are demanding 47% of the net capital gain—amounting to nearly €1.5 million in taxes—as if she had been residing in Paris. She contacted Engage 14 months before the planned sale to conduct a comprehensive audit. The strategy implemented: transfer of residence to Andorra with passive residency (€1 million investment in real estate in the Principality), audit of the exit tax on her equity interests, restructuring of the sale via an Andorran limited liability company holding the intellectual property rights of her company. The sale took place 13 months after she established her Andorran tax residence. The capital gain was taxed at 10% in Andorra instead of 47% in France. The net savings exceeded €1.18 million on this transaction alone.
"For the past eight years, I thought Monaco was my tax haven. I discovered that I had been on the French tax scale all along. Engage restructured everything in 14 months—the timeline was tight but doable. I’m not going to redo the calculations for past years, but I won’t make that mistake again."
IV. Exit Tax and Remaining French Obligations: Plan Ahead Before You Leave
Moving from Monaco to Andorra may trigger the French exit tax for taxpayers who have been French tax residents for at least 6 of the past 10 years and who hold significant equity interests.
The conditions for triggering the exit tax
The exit tax applies to unrealized capital gains on equity interests and securities when their value exceeds €800,000 or when the equity interests represent more than 50% of a company’s profits. For a French resident of Monaco who holds equity interests in an unlisted company valued at several million euros, this threshold is almost always met.
A payment deferral may be possible, but the terms depend on the destination of the transfer. Since Andorra has signed a double taxation treaty with France, specific terms may apply—these should be verified on a case-by-case basis with a Franco-Andorran tax attorney.
Remaining reporting obligations to France
Even after establishing residency in Andorra, certain obligations remain. The declaration of termination of tax residency in France must be filed within the legal deadlines. Income from French sources (property income from assets located in France, dividends from French companies) remains taxable in France under the Franco-Andorran tax treaty, at the applicable withholding tax rate or the reduced treaty rate. Foreign bank accounts must be reported. If you own real estate in France, the IFI tax continues to apply to these properties.
Coordinating the exit from Monaco and the entry into Andorra is the most challenging part of the entire process. A period of administrative limbo—during which you are no longer officially a resident of Monaco but not yet a resident of Andorra—creates uncertainty regarding your actual tax residence and can result in several months of additional taxation at the full rate.
V. The 7 Steps to a Successful Relocation from Monaco to Andorra
Comprehensive financial review — 12 to 18 months before departure
Map out the entire estate: ownership interests, real estate assets in France and elsewhere, unrealized capital gains, matrimonial property regime, and heirs’ rights. Identify exit tax risks and determine the actual cost of relocating. This audit will inform all subsequent decisions.
Choosing Andorran residency status
Passive residency (90 days/year, €1 million investment), residency for professionals with international operations (90 days/year, professional activity conducted outside Andorra), or active residency (183 days/year, professional activity in Andorra). The nature of one’s income and residency requirements determine the optimal status.
Prior Asset and Corporate Restructuring
If you hold significant equity interests, the restructuring must take place before or at the same time as the transfer of residence—never after, or else the exit tax will apply to assets that you have not yet optimized. Consider setting up an Andorran holding company or an SL as the new holding entity.
Finding a place to live and signing a lease or a preliminary agreement
Proof of residence is a required document for the residency application. A preliminary sales agreement is accepted, provided that a final deed is executed within one year. The parishes of Escaldes-Engordany, Andorra la Vella, and La Massana account for the majority of properties available for purchase or rent.
Submission of the application to the Immigration Office
Compilation of the complete application package: official application form, passport, clean criminal record (issued within the last 3 months), proof of residence, valid health insurance for Andorra, proof of sufficient financial means (exceeding 300% of the annual Andorran minimum wage for the principal applicant). Simultaneous payment of €50,000 to the AFA. Processing time: 2 to 4 months.
Investing in Andorran assets
Within 6 months of obtaining the authorization, invest the required amount (€1 million as standard, €400,000 through the Housing Fund) and submit the supporting documents to the Immigration Service within one month of the deadline. Without this proof, the authorization is automatically revoked (Art. 79.h of Law 9/2012).
Deregistration in Monaco and notification of departure to the French authorities
Coordinate the deregistration with the Monegasque authorities and the departure declaration in France (closure declaration). Registration with the Andorran comú (certificate of parish registration) must take place within 3 months of obtaining authorization. Enrollment in the CASS (Caixa Andorrana de Seguretat Social) completes the settlement process.
Indicative reverse schedule
Mistakes to Avoid When Relocating from Monaco to Andorra
Mistake #1 — Confusing an Andorran residence permit with actual tax residency
Obtaining an Andorran residence permit is not enough. The French tax authorities require proof of 183 days of actual physical presence in Andorra if they contest the transfer. The minimum legal presence in Andorra (90 days per year for passive residency) does not meet the 183-day requirement that France may impose to recognize foreign residency if other criteria for tax domicile (permanent home, center of interests) remain in France.
Solution: Keep a detailed attendance log, retain all physical documentation (tickets, Andorran bank statements, local subscriptions, medical appointments in Andorra), and genuinely shift the center of your life to the Principality.
Mistake #2 — Restructuring equity stakes after the departure
Some residents transfer their residence to Andorra and then restructure their equity holdings in the following months, believing they will benefit from the Andorran tax rate. If unrealized capital gains existed at the time of departure and the exit tax was triggered, the post-departure restructuring does not eliminate them—it may even worsen the situation if it is perceived as an act of abusive tax planning by the French authorities.
Solution: Any restructuring must be planned and, to the extent possible, carried out before or at the same time as the change of residence, as part of a plan coordinated with a Franco-Andorran advisor.
Mistake #3 — Underestimating the timeframe for the mandatory investment
The €1 million investment must be made within 6 months of obtaining the authorization, with a possible extension of an additional 6 months in cases of force majeure or due to the fault of a third party. After this period, the authorization is automatically revoked. In Andorra’s sometimes tight real estate market, finding and finalizing a property worth more than €800,000 (the mandatory threshold for real estate) within six months requires preparation well in advance of the residency application.
Solution: Identify the property or target asset before submitting the application. A signed preliminary agreement at the time of application speeds up the process and ensures a clear timeline.
Mistake #4 — Ignoring the annual quota for passive housing
For 2026, Decree 74/2026 sets the number of residence permits for non-working residents available each year at 163. These spots are allocated on a first-come, first-served basis, with priority given to nationals of countries that have signed an agreement with Andorra (including France). An application submitted late in the year may exceed the quota and be deferred to the following year.
Solution: Submit the application at the beginning of the calendar year. By planning 12 to 18 months in advance, you can time your application to coincide with the opening of the quota window and avoid waiting periods.
Mistake #5 — Overlooking the implications for matrimonial property regimes and inheritance
Establishing habitual residence in Andorra may affect the law applicable to matrimonial property regimes and inheritance for couples who are not married under a contract or whose regime is governed by the law of their country of residence. For families with heirs residing in France, the rules governing Andorran succession—where no inheritance tax applies to direct descendants—must be coordinated with the French rules applicable to property located in France.
Solution: Consult a Franco-Andorran notary before departure to assess the implications of the move on the matrimonial regime and the transfer of assets.
We regularly assist French residents of Monaco who discover—sometimes after many years—that Monaco has not provided them with any real tax benefits. Relocating from Monaco to Andorra is one of the most technically complex moves we handle—exit tax, Monegasque-Andorran-French coordination, mandatory investment, annual quota. But it is also one of the moves where the net gain over five years is most easily documented. Our team is well-versed in every step of the process.
Take a closer look
These articles supplement the Monaco–Andorra guide on the tax and practical aspects of moving to the Principality.
Ready to start the process of moving to Andorra?
Exit tax, choice of legal status, mandatory investment, Monaco-Andorra coordination: our experts analyze your financial situation and work with you to develop the strategy best suited to your profile and timeline.
Schedule an appointment with an expertFAQ — Moving from Monaco to Andorra
Does a French resident in Monaco really pay French income tax?
Yes, without exception. The Franco-Monegasque Agreement of May 18, 1963, subjects French nationals who left France after 1957 to income tax under the same conditions as residents of mainland France. This rule applies to all income—salaries, dividends, capital gains on securities, and property income—regardless of its geographical source. Monaco offers no tax advantages for this category of taxpayers on ordinary income.
What is the exact amount of the mandatory investment for a passive house in Andorra in 2026?
Article 96 of Law 9/2012 (consolidated version 2026) sets the standard threshold at €1,000,000 in Andorran assets (real estate, holdings in Andorran companies, approved investment funds, Andorran life insurance products, or deposits with the AFA). This amount is reduced to €400,000 if the investment is in the Andorran Housing Fund. In the case of real estate investments, each property acquired must be valued at more than €800,000 individually. In addition, there is a non-refundable government contribution of €50,000 to the AFA.
How many days do you need to spend in Andorra to qualify for passive residency?
Andorran law requires that the residence be the primary and actual residence, without explicitly setting a number of days for passive residence (without gainful employment). In practice, 90 days per year is the threshold commonly used and applied by the Servei d'Immigració. Please note: this Andorran threshold does not necessarily align with the French tax authorities’ criteria for recognizing a foreign residence (183 days or center of vital interests). An actual and documented presence is essential.
Does the exit tax apply when moving from Monaco to Andorra?
The French exit tax applies to taxpayers who have been French tax residents for at least 6 of the last 10 years and who hold equity interests valued at more than €800,000 or representing more than 50% of a company’s profits. A French resident in Monaco, who is considered a French tax resident despite living in Monaco, falls under this category. A payment deferral may be obtained under certain conditions. It is essential to consult with a tax attorney before taking any action.
Can you keep real estate assets in France after moving to Andorra?
Yes. It is possible to own real estate in France from Andorra. These properties remain subject to French taxation under the Franco-Andorran tax treaty: property income is taxable in France (either through withholding tax or at the treaty rate), and the IFI applies to real estate assets located in France if the €1,300,000 threshold is reached. Andorran residency does not eliminate these obligations—it reduces non-French income.
How long does the entire transfer process from Monaco to Andorra take?
Allow 12 to 18 months for a smooth transition. The initial asset audit takes 4 to 6 weeks; any restructuring of holdings may take 3 to 6 months; opening a bank account in Andorra takes 4 to 8 weeks; processing the residency application takes 2 to 4 months; and the mandatory investment must be completed within 6 months of authorization. Starting the process 18 months in advance eliminates any risk of tax uncertainty between the two residences.
Is Andorra a jurisdiction recognized for tax purposes by France?
Since the Franco-Andorran double taxation treaty came into force (2022), Andorran tax residency has been fully recognized by the French authorities. Andorra complies with OECD standards, is a signatory to the Convention on Mutual Administrative Assistance in Tax Matters, and participates in the CRS system for the automatic exchange of financial information. It is not an opaque jurisdiction—it is a jurisdiction with a legally reduced tax burden, which is radically different.
