Malta and Andorra: Why the Tax Differential Justifies the Transition

Malta has built its reputation on attractive tax regimes: the Global Residence Program (GRP) and the Malta Residence Program (MRP) have attracted many European nationals. But these programs are not without limitations. The standard income tax rate in Malta can reach 35% for ordinary residents. Inheritance is subject to a tax of up to 5%. The corporate tax rate is 35%, although a partial refund mechanism applies in certain circumstances. And Malta’s VAT rate, set at 18%, remains one of the highest in the Mediterranean region.

Andorra offers a radically different and structurally more favorable profile across these four dimensions. Personal income tax is capped at 10%—with a tax-free allowance on the first 24,000 euros of net income. There is no inheritance tax among residents, nor is there a wealth tax. The IGI (general indirect tax, equivalent to VAT) is 4.5%. And the corporate income tax rate is set at 10%, with no additional substance requirements.

For a Maltese resident with significant assets or a business that generates substantial income, the annual difference in taxable income alone can amount to tens of thousands of euros. This is not a temporary benefit: it is the permanent tax structure of a sovereign state governed by the rule of law, in compliance with OECD and CRS standards, whose tax regime does not depend on any special provisions that could be repealed.

Data verified in June 2026. The Andorra column reflects current Andorran law (Llei 5/2014 for personal income tax, Llei 9/2012 for residency). Each situation requires an individual analysis.

Residency requirements in Andorra for a citizen of Malta

Andorra offers several types of residency status depending on the applicant’s profile. For a Maltese resident in transition, two statuses are generally relevant: passive residency (residency without gainful employment) for annuitants, retirees, and investors; and residency for remote workers for self-employed individuals or employees who work remotely.

Passive residency (residency without gainful employment)

The passive residency program is intended for individuals who do not engage in economic activity in Andorra and have sufficient financial resources. It requires a minimum physical presence of 90 days per year in Andorra—half the threshold required in Malta or Portugal. It is one of the most flexible passive residency programs in Europe in terms of mandatory presence.

In accordance with Article 96 of the Llei qualificada d'immigració (as amended by Law 9/2012), the principal holder of a residence permit for non-gainful activities must make a permanent and effective investment of at least €1,000,000 in Andorran assets, in the following categories: real estate, equity interests in resident companies, debt instruments issued by Andorran entities, life insurance policies taken out with Andorran entities, or non-interest-bearing deposits with the Andorran Financial Authority.

This threshold is reduced to €400,000 if the investment is made directly in the Andorran Housing Fund. In the case of a residential real estate investment, each unit purchased must be valued at more than €800,000. In addition, a non-refundable deposit of €50,000 is required to be paid to the Andorran Financial Authority (plus €12,000 per dependent, if any).

The Residency for Remote Workers (Residency with an International Focus)

This status is intended for individuals whose professional activities are conducted entirely remotely, with no mandatory physical presence in Andorra. It also requires 90 days of presence in Andorra per year, proof of stable income from foreign sources, and available housing within the country. No minimum investment in Andorran assets is required, but the income and health insurance requirements still apply.

Eligible Profiles Under Maltese Law

Andorran Taxation in Detail: What You'll Actually Pay

It is essential to understand the details of Andorra’s tax system before making any decision to relocate. The published rates mask various tax-free allowances and exemptions that make the actual tax burden even lower than the percentages alone would suggest.

Individual Income Tax (IRPF)

Andorran personal income tax is governed by Law 5/2014 of April 24, 2014. The tax rate is 10% (Article 43). However, the taxable income is reduced by a personal exemption of €24,000 (Article 35)—which means that no tax is due on the first €24,000 of annual net income. In practice, a taxpayer with €60,000 in net income will pay tax only on €36,000, or €3,600—an effective tax rate of 6%.

Dividends paid by Andorran resident companies are exempt from personal income tax (Article 5, j). Capital gains on the sale of securities are exempt when the seller holds less than 25% of the capital, or when the seller has held the securities for more than 10 years. Transfers without consideration between relatives (spouse, descendants, and ascendants up to the third degree) are fully exempt (Article 5, m).

These are indicative estimates based on statutory rates. The effective tax rate in Malta depends on residency status (GRP, MRP, ordinary resident) and the nature of the income. These figures are not a substitute for personalized tax advice.

Corporate Income Tax (CIT)

The Andorran corporate income tax rate is set at 10% (Law 95/2010). It applies without any specific economic substance requirements beyond the company’s actual residence in Andorra. Unlike Dubai’s free zones or offshore structures, no annual maintenance fees are required. Andorran holding companies may qualify for exemptions on dividends and capital gains upon disposal, subject to certain ownership and holding requirements.

The Absence of Inheritance Taxes

Andorran personal income tax fully exempts transfers made without consideration (gifts and inheritances) between residents related by blood up to the third degree (Article 5(l) and (m) of Law 5/2014). For a head of household or business executive seeking to plan the transfer of their assets, this benefit often represents savings of several hundred thousand euros over the course of a generation.

Terminating Your Maltese Tax Residency: What You Need to Do Before Leaving

The absence of a bilateral tax treaty between Malta and Andorra creates a real risk of double taxation if the change of residence is not handled in accordance with legal procedures. Both tax authorities may consider you to remain a tax resident in their respective territories if you cannot provide sufficient evidence of the change.

Maltese tax residency is terminated through a combination of actions and formalities. It is not enough simply to leave the island: you must notify the tax authorities, obtain a certificate of non-residency, settle any outstanding tax obligations, and terminate any local contractual obligations.

How to Successfully Relocate from Malta to Andorra in 7 Steps

Sample Timeline for a Relocation from Malta to Andorra

Living in Andorra After Leaving Malta: How Daily Life Has Changed

Beyond tax considerations, the move from Malta to Andorra involves concrete changes in daily life. Both destinations offer a safe environment and a high quality of life, but their practical aspects differ significantly.

Health and Social Security

All Andorran residents are enrolled in the CASS (Caixa Andorrana de Seguretat Social), the Principality’s social security system. Non-working residents must provide proof of private health insurance that covers all medical care within the country before submitting their application. The Andorran National Hospital (SAAS) offers comprehensive general care, supplemented by hospitals in Barcelona and Toulouse for specialized care.

Language and Integration

Catalan is the official language of Andorra. In practice, Spanish, French, and English are widely used in professional and business settings. English-speaking residents from Malta generally adapt within a few months. Schools offer programs in three languages (French, Spanish, and Andorran-Catalan).

Cost of Living Comparison

FAQ — Traveling from Malta to Andorra