Immigration
6/11/2026
Andorra attracts a growing number of traders and investors seeking a lighter tax burden than France's. It is often claimed that trading there is entirely tax free, but the reality is more nuanced. Certain gains, such as capital gains on shares, are indeed exempt from taxation, while other financial products remain taxable, at a rate that is still very advantageous. This guide reviews each product in turn, compares the Principality with France, and sets out the residence conditions for a trader wishing to settle there.
The tax framework for trading in Andorra
In Andorra, a trader's taxation depends on their tax residence. Once resident, their income falls under personal income tax (IRPF), the maximum rate of which is 10%. That is already well below the French flat tax of 30%, but the regime goes further thanks to a system of exemptions on certain financial gains.
The framework remains declarative and regulated. Andorran banks apply strict anti money laundering rules, which requires the trader to evidence the origin and traceability of their funds. Keeping a complete record of transactions on the financial markets is therefore not optional, but a necessity in order to secure the activity.
Taxation of capital gains on shares and funds: the key exemption
This is the core of Andorra's appeal for stock market investors, and the point that warrants the most precision.
The exemption principle
Andorran IRPF law, in its article 5k), provides that capital gains derived from the sale of shares, company holdings or units in collective investment undertakings, in other words investment funds, are exempt from tax. In practical terms, a resident investor who sells their shares at a gain pays no tax on that gain.
The 25% condition
This exemption applies provided that no more than 25% of the company or fund concerned is held. The exemption also applies beyond a 25% holding where the securities have been held for at least ten years prior to their sale. This 25% threshold is assessed taking into account the holding of the taxpayer's spouse and close family. In practice, unless one is a reference shareholder in a large listed company, this condition is met by the vast majority of retail traders and investors.
The exemption does not apply where the company sold is made up of 50% or more of real estate located in Andorra.
The condition of holding as an individual
The exemption applies to an investment made as an individual. If the trader operates through a company or entrusts the management of their financial products to a dedicated structure, a rate of 10% then applies, with scope for optimisation on dividends depending on the circumstances.
Take a concrete example. An investor holds an Apple share and sells it at a profit. In France, they would have to pay the 30% flat tax on the capital gain. In Andorra, provided their holding, combined with that of their relatives, does not exceed 25% of the company and they operate as an individual, this capital gain is exempt: the gain is free of tax.
Taxation of other financial products
This is where the shortcut of trading taxed at 0% shows its limits. The exemption under article 5k) covers only the sale of shares and funds. Other products remain taxable, at a rate that is still highly competitive.
CFDs
Many traders operate through platforms offering contracts for difference (CFDs). A CFD is not an equity holding but a speculative instrument whose underlying asset is a share. The exemption therefore does not apply, and gains are taxed at the maximum rate of 10%, compared with the 30% flat tax in France.
Derivatives, warrants and options
Warrants, spread bets, options and other derivatives are not regarded as shares by the Andorran authorities. They benefit from no exemption, but remain subject to the advantageous rate of 10%.
Interest
Interest received in respect of capital loans, coupons or bonds is taxed at a maximum of 10%, after application of the €3,000 exemption provided for savings income.
Dividends
The treatment of dividends deserves particular attention. Dividends of Andorran origin, paid by companies in the principality, are exempt from tax. Dividends of foreign origin, however, are taxed at a maximum of 10%. An important point: when they come from a country with which Andorra has not signed a double taxation agreement, they may be subject to withholding tax in the country of origin, which increases the overall tax burden. This is one of the blind spots of the Andorran regime, to be anticipated depending on the composition of one's portfolio.
| Type of product | Taxation in Andorra | Taxation in France |
|---|---|---|
| Capital gains on shares and funds (holding of 25% maximum including close relatives, or securities held for at least 10 years, held as an individual) | Exempt, except for companies made up of 50% or more of Andorran real estate | 31.4% (flat tax) |
| CFDs | Up to 10% | 31.4% (flat tax) |
| Derivatives, warrants, options | Up to 10% | 31.4% (flat tax) |
| Interest | Up to 10% (after 3,000 € exempt) | 31.4% (flat tax) |
| Dividends of Andorran origin | Exempt | 31.4% (flat tax) |
| Dividends of foreign origin | Up to 10% (withholding tax possible) | 31.4% (flat tax) |
Taxation of trading: Andorra compared with France
The comparison speaks for itself. In France, trading gains fall under the 30% flat tax, which applies to capital gains as well as dividends, and certain assets may be subject to wealth tax. This tax burden drives many traders towards expatriation.
In Andorra, a trader benefits either from a full exemption on capital gains from shares and funds, or from a rate capped at 10% on other products. At equivalent income levels, the difference quickly amounts to tens of thousands of euros per year. The move must nonetheless be genuine and compliant, as the benefit of this regime is conditional on effective tax residence in the principality.
How to become an Andorran tax resident as a trader?
Two main routes lead to tax residence, depending on whether you set up an activity locally or invest in the country.
Active residence
Active residence involves setting up a company in Andorra. It requires spending at least 183 days a year in the country, holding more than 34% of the company's shares, sitting on its board, making a final, non-refundable payment of 50,000 € to the AFA (retained by the State) and paying social security contributions of around 533 € per month.
Passive residence
Passive residence is intended for those who invest without carrying out any local activity. It requires a presence of at least 90 days a year and health cover compliant with the country's standards. It also requires a final, non-refundable payment of 50,000 € to the AFA (retained by the State), plus 12,000 € per dependant. To this is added an investment of at least 1,000,000 € in Andorran assets, an amount reduced to 400,000 € if the investment is made in the Housing Fund (Fons d'Habitatge).
In both cases, the applicant must provide a clean criminal record, go through the compliance process with local banks and justify the origin of their funds. These amounts and thresholds change regularly, so it is essential to check the conditions in force at the time of your project.
Setting up a trading or wealth management company in Andorra
A trader may choose to create a structure to house their activity or manage their assets. The choice depends above all on the nature of the activity.
Managing one's own capital is one thing. Managing third-party assets is another: this activity is strictly regulated in Andorra and requires a trading licence as well as the explicit authorisation of the Andorran financial regulator. A professional trader managing client funds must therefore go through a compliance review before starting.
In terms of share capital, setting up an SL (societat limitada) requires €3,000 of capital, compared with €60,000 for an SA (societat anònima). The choice of structure depends on the volume of activity, the profile and the wealth objectives, and is best decided with specialised advice.
Andorra's other advantages for traders
Beyond taxation, the Principality offers an environment well suited to trading activity. The country has one of the fastest internet networks in Europe, with full fibre optic coverage, a decisive advantage for operating on the markets in real time. The cost of electricity, among the lowest on the continent, is an advantage for energy-intensive activities such as cryptocurrency mining.
Added to this are political stability, a demilitarised and neutral country, a very low crime rate and a recognised quality of life, less than two hours' drive from cities such as Toulouse or Barcelona. All of these make Andorra a serious operational base for a trader.
Optimising your tax position as a trader in Andorra
Andorra offers traders one of the most competitive tax frameworks in Europe: exemption of capital gains on shares and funds, a rate capped at 10% on other products, and a first-rate living and infrastructure environment. But the regime is neither a universal 0% nor an automatic arrangement. It requires effective residence, rigorous compliance and a sound understanding of how each type of product is treated. Tailored support makes it possible to decide between active and passive residence, to structure your assets and to secure your establishment in the Principality.
