Leaving Cyprus for Andorra: The 2026 Strategic Guide
Cypriot non-dom, the 17-year rule, Andorran income tax: everything you need to know before leaving
Key Consideration for 2026: Cyprus’s non-resident (non-dom) status is limited to 17 years. Upon expiration, the expatriate transitions to a progressive tax regime of up to 35%, and the Special Defense Contribution (SDC) applies to dividends and interest. Planning ahead for the end of non-dom status is essential—Andorra offers a permanent alternative with no time limit, as confirmed by Andorran law.
You reside in Cyprus as a non-dom. The tax regime is attractive, the international community is well-established, and the climate is pleasant. But the deadline is approaching: 17 years as a non-dom is a short time in the context of a wealth management strategy. And beyond that limit, Cyprus becomes a significantly less competitive jurisdiction. Andorra offers what the Cypriot model cannot: a universal, permanent tax regime capped at 10% on income—with no exceptions or time limits. This guide compares the two systems in detail and explains how to successfully make this transition.
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Cyprus vs. Andorra: Two Opposing Tax Philosophies
Comparing Cyprus and Andorra from an expatriation perspective means contrasting two structurally different approaches to residential taxation. One is based on a time-limited special regime, while the other is based on a universal and stable system. Before considering a change of residence, it is essential to understand the fundamental differences between these two environments.
The Cypriot Model: Conditional and Temporary Benefits
Cyprus offers an attractive framework centered primarily on the non-domiciled (non-dom) status and a minimum presence requirement of 60 days per year. This status exempts dividends and interest from taxation and is accompanied by no taxation on capital gains from securities. The corporate income tax rate is 12.5%, while the VAT rate is 19%. However, Cyprus’s appeal lies in targeted exemptions, not in a structurally low tax rate. Most importantly, the non-dom status is limited to 17 years, which requires planning an exit strategy well before it expires.
The Andorran Model: A Universal and Sustainable Tax System
Andorra offers a structurally low tax regime, available to all residents without any special status or time restrictions. The flat rate for personal income tax (IRPF) is 10% (Art. 43 of Law 5/2014), with a personal exemption of €24,000 (Art. 35). Dividends paid by Andorran resident companies subject to corporate income tax (IS) are exempt from IRPF (Art. 5j of the same law). The local value-added tax (IGI) is 4.5%, the corporate income tax rate is 10%, and there is no tax on wealth or inheritance. This system is not based on any exceptional provisions that could be challenged.
| Tax parameter | Cyprus (non-dom) | Cyprus (after non-dom) | ★ Andorra |
|---|---|---|---|
| Individual Income Tax | 0% on passive income | 20 to 35% (progressive scale) | 10% flat rate (€24,000 deduction) |
| Dividends | Exempt (non-dom) | SDC 17% (projected at 5% in 2026) | Exempt if the company is an Andorran corporation subject to corporate income tax |
| Capital Gains on Securities | 0% | 0% | Exempt (≤25% of capital, or held for ≥ 10 years) |
| Corporate tax | 12.5% | 12.5% | 10% |
| VAT / Indirect Taxation | 19% (VAT) | 19% (VAT) | 4.5% (IGI) |
| Wealth tax | None | None | None |
| Inheritance tax | None | None | None (tax-exempt transfers in the direct line of descent) |
| Duration of the program | 17 years old or younger | Permanent Reduced Power Mode | Permanent, unlimited |
| Minimum attendance | 60 days/year (simplified rule) | 60 days/year | 90 days per year (passive residence) |
| Tax Treaty (France) | Yes | Yes | Yes — the 2013 agreement has been in effect since 2016 |
| Special status required | Yes (cumulative conditions) | No (unfavorable general rules) | No — universal taxation based on residency |
| Initial Investment | None required | None required | 1 M€ (passive house) or 400 k€ through Fons d'Habitatge |
Sources: Law 5/2014 (Andorran personal income tax), Law 9/2012, Art. 96 (passive residential investment), Cypriot Income Tax Law 118(I)/2002. Data as of May 2026.
Why the Cypriot non-dom status Is Reaching Its Limits
Non-dom status is often cited as the main reason for moving to Cyprus. However, it comes with practical and legal constraints that are prompting a growing number of expatriates to consider relocating to a more stable destination.
The 17-Year Horizon: A Major Strategic Constraint
Non-dom status is not permanent. After 17 years of residence in Cyprus, the resident is reclassified as a domiciled person and loses tax exemptions on dividends and interest. This deadline makes it necessary to plan an exit strategy in advance. The practical implications are significant: the application of the Special Defense Contribution (SDC) to dividends and interest, the need to leave Cyprus or completely restructure assets, and instability in long-term estate planning. For an expatriate who moves to Cyprus at age 40, non-dom status ends at age 57—right in the middle of the wealth accumulation or succession phase.
The 60-day rule: more demanding than it seems
The simplified 60-day presence rule in Cyprus allows individuals to obtain Cypriot tax residency without staying in another country for more than 183 days, provided they engage in economic activity in Cyprus, rent or own a residence there, and manage or own a local entity there. The substantive nature of the establishment must be demonstrable, documented, and consistent over time. This is not a simplified residency rule in the strict sense—it is a rule that requires a genuine local economic presence.
Cyprus's conventional network: an asset for organizations, but not for individuals
Cyprus has an extensive network of more than 65 tax treaties, making it a recognized hub for holding companies. This advantage primarily benefits corporations, not individual residents. For an expatriate whose income is primarily personal—such as dividends, capital gains, and rental income—the relevance of this network is limited. Andorra, with treaties covering the two countries most relevant to internationally mobile individuals (France and Spain), meets most of the needs of individual residents.
| Decision criterion | Cyprus (non-dom) | ★ Andorra |
|---|---|---|
| Planning Horizon | 17 years old or younger — must plan ahead for departure | Unlimited — same tax treatment starting in the first year |
| Administrative Complexity | High — cumulative conditions, substance to be documented | Moderate — 90 days per year, real estate investment |
| Regulatory stability | Correct — but SDC reform is expected in 2026 | Very high — no reforms since the introduction of the personal income tax in 2014 |
| Attractiveness After the Special Regime | Very low — IR up to 35%, SDC on dividends | Same — 10% unchanged |
| Proximity to Continental Europe | Far away — flights from Larnaca or Paphos | Immediate — 3 hours from Barcelona, access to Toulouse |
| Real Estate Market | Accessible — Limassol, Nicosia | Tense in some parishes—but the investment is valued |
Andorran Taxation in Detail: What the Law Says
Before taking any action, it is essential to understand exactly what Andorran law stipulates—and not what widespread misconceptions might lead one to believe. The figures below are taken from the legislative texts currently in force, as verified in the Andorran legal corpus.
Andorran Income Tax: Flat Rate of 10% and Personal Exemption
Personal income tax is governed by Law 5/2014. It has a flat rate of 10% (Article 43). This means that there are no progressive tax brackets in Andorra: every taxable euro is taxed at the same rate. However, the law provides for a personal exemption of €24,000 (Article 35), which increases to €30,000 in the event of disability, and to €40,000 when the spouse has no income. In practical terms, a resident with €150,000 in taxable income pays: (150,000 − 24,000) × 10% = €12,600 in personal income tax (IRPF), representing an effective tax rate of 8.4%.
Major Personal Income Tax Exemptions
Article 5 of Law 5/2014 lists the types of income that are exempt. Among the most significant for wealth management purposes are: dividends paid by Andorran resident companies subject to corporate income tax (Article 5j); capital gains on the transfer of securities when the ownership interest is less than 25% or when the securities have been held for at least 10 years (Article 5k); and transfers of assets upon death (Article 5l), which correspond to the absence of inheritance tax. These exemptions are not special regimes—they are part of Andorran general law.
Passive housing: mandatory investment of 1,000,000 €
Residency without gainful employment (commonly referred to as “passive residency”) is governed by Article 96 of Law 9/2012. The holder must make a permanent and effective investmentof at least €1,000,000 in Andorran assets (real estate, equity interests in resident companies, debt instruments, life insurance products, and deposits with the AFA). This amount is reduced to €400,000 when the investment is made in the Fons d’Habitatge. A non-refundable deposit of €50,000 with the Autoritat Financera Andorrana (AFA) is also required, plus €12,000 per dependent. The investment must be made within 6 months of obtaining authorization (extendable by an additional 6 months in cases of force majeure).
Important correction: Some sources indicate a threshold of €600,000 for passive residency in Andorra. This figure is incorrect. Article 96 of Llei 9/2012 (consolidated text currently in force) sets the threshold at €1,000,000 as a general rule, or €400,000 only within the framework of the Fons d'Habitatge. Any asset analysis must be based on these official figures.
Andorran corporate income tax: 10% with no substantive costs
The corporate income tax rate in Andorra is 10% (Law 95/2010). It may be reduced to 2% under certain conditions (holding companies, qualified estate-planning structures). Unlike Cyprus, where companies in free zones or holding structures require documented and costly economic substance, the Andorran system does not impose similar substance requirements on ordinary resident companies. For a high-net-worth individual relocating from Cyprus with a holding company, this difference in operating costs is immediately noticeable.
| Example — €300,000 in annual income | Active non-dom in Cyprus | Cyprus After Non-Dom | ★ Andorra |
|---|---|---|---|
| Taxable base (capital income) | 300,000 € | 300,000 € | 300,000 € |
| Tax deduction / tax exemption | Tax-Exempt Dividends (Non-Dom) | None on dividends | €24,000 personal exemption |
| Income Tax / SDC | 0 € (tax-exempt dividends) | ~51,000 € (income tax + 17% social security contribution) | 27,600 € (276,000 × 10%) |
| Effective rate | 0% | ~17% | 9.2% |
| Duration of the program | 17 years old or younger | Permanent (unfavorable) | Permanent (favorable) |
Educational illustration. Capital income in Cyprus for non-residents includes a 17% withholding tax on dividends (a reform announcing a 5% rate for 2026 has not yet been definitively confirmed). Each situation requires an individualized analysis.
What kind of person would benefit most from moving to Andorra?
Non-dom residents aged 10–17
→ Andorra: PriorityPlanning ahead is key. The earlier the transition is prepared, the better structured the exit from non-dom status will be. Andorra offers the tax continuity that Cyprus can no longer guarantee after the deadline.
Investor / Wealth Manager
→ Ideal AndorraDividends from Andorran companies are exempt from personal income tax (IRPF); capital gains are largely exempt; and there is no wealth tax or inheritance tax. The combination of Andorran personal income tax (IRPF) and corporate income tax (IS) is ideal for individuals with passive income.
Entrepreneur with a Cypriot holding company
→ Restructuring to be consideredIt is possible to maintain the company in Cyprus if the actual management remains on the island. Otherwise, an Andorran SL can replace the Cypriot holding company, with a 10% corporate income tax rate and no substance costs.
Family with school-age children
→ Andorra for People with DisabilitiesTrilingual education (Andorran, French, Spanish), maximum safety, and a peaceful lifestyle. Both Cyprus and Andorra offer a high quality of family life—but Andorra remains close to continental Europe.
Retiree / Real Estate Assets
→ Andorra is recommendedNo estate tax, a 10% personal income tax rate with a €24,000 exemption, and an alpine lifestyle. Retirees with assets have no reason to remain under a declining non-dom status or to switch back to a progressive tax system.
EU holding company structure required
→ Additional Information on CyprusCyprus remains a viable option for entrepreneurs who need a business entity within the European Union. Andorran residency does not preclude maintaining a Cypriot company, provided that the company’s effective management is actually based on the island.
Fictional case study
Sofía, 48 — 14 years as a Cypriot non-dom, €2.8 million in assets
Sofía runs an international consulting firm from Limassol. She moved to Cyprus at age 34 and has held non-dom status since 2012. In 2025, with three years remaining before the program ends, she turned to Engage to plan her exit and secure her assets.
“I had waited too long. With three years ahead of me, we barely had enough time to plan for the restructuring of the holding company, the investment in Andorra, and the submission of the residency application. If I had started sooner, I would have had more flexibility in choosing the best investment asset.”
What the transition made possible: Sofía established an Andorran SL for her consulting activities, transferred her tax residence to Andorra (passive residence, with a €1 million investment in Andorran assets), and retained the Cypriot company for her EU clients, with effective management located in Cyprus. Her annual income tax: (320,000 − 24,000) × 10% = 29,600 €, representing an effective tax rate of 9.25%. Without this transition, she would have been subject to a progressive Cypriot income tax of up to 35% plus a 17% withholding tax on her dividends.
Moving to Andorra from Cyprus: The Real Conditions
The three relevant types of Andorran residency
Andorran residency is not a single category. It comes in several forms depending on the individual’s profile: passive residency (no local gainful employment, an investment of 1 M€ or 400 k€ through Fons d’Habitatge, and a minimum stay of 90 days per year); residency for self-employment (entrepreneurs conducting business in Andorra, 183 days per year); and residency for international projects (85% of income generated outside Andorra, 90 days per year). For individuals relocating from Cyprus with income derived primarily from assets or international sources, passive residency is generally the most suitable option.
The €1 million investment: an investment, not an expense
The one million euros required for passive residency is not an entry fee—it is an investment in Andorran assets that generates a return. Residential or commercial real estate, equity interests in local companies, debt instruments, life insurance products from Andorran banks (Andbank, MoraBanc, Creand): residents choose the form of their investment from among the categories listed in Article 96. By comparison, remaining in Cyprus as a non-dom and then being subject to the post-expiration regime results in cumulative additional tax costs well in excess of €50,000 over 10 years.
The Franco-Andorran Agreement and Legal Certainty
The France-Andorra tax treaty, signed in 2013 and in effect since January 1, 2016, precisely defines the criteria for tax residency and the rules for allocating taxing rights by income category. For individuals with ties to France—such as real estate income, dividends from French companies, and equity interests—this treaty provides an essential framework of certainty that does not exist between France and Cyprus with the same practical scope. Andorran residency is now fully recognized by the French tax authorities for nationals establishing their permanent residence in the Principality.
How to Successfully Make the Transition from Cyprus to Andorra in 6 Steps
Non-dom Status Audit and Risk Mapping
Analyze the number of remaining years of non-dom status, the nature of the income (dividends, capital gains, business income), existing corporate structures in Cyprus, and their links to other jurisdictions. Identify the risks of an exit tax or reclassification before taking any action.
Choosing the Appropriate Andorran Residency Status
Passive residency (90 days/year, investment of 1 M€ or 400 k€ through Fons d'Habitatge), residency for international projects (90 days/year, 85% of income earned outside Andorra), or self-employment residency (183 days/year, local business activity). The appropriate status depends on your income profile and residency requirements.
Restructuring of Cypriot Companies
Decide on the future of the holding company or the Cypriot operating company: maintain it with effective management based in Cyprus, convert it into a pure holding entity, or establish an Andorran SL for future operations. A change in the executive’s residence may result in a shift of the place of effective management if decisions are made from Andorra.
Identification and Acquisition of the Andorran Asset
Selection of investment assets that meet the requirements of Article 96: real estate (threshold of €800,000 per unit for real estate), financial instruments held with Andorran banks, or life insurance products. The investment must be made within 6 months of receiving the residence permit.
Submission of the residency application and bank due diligence
Compilation of the complete application package: criminal record, private health insurance covering Andorra, proof of sufficient funds, and a commitment to invest. Open an Andorran bank account at the same time—KYC due diligence is rigorous regarding the origin of funds transferred from Cyprus, so be sure to have the necessary documentation ready in advance.
Formal Termination of Cypriot Residency
Formal notification to the Cypriot tax authorities, termination or suspension of non-dom status, and exit declarations. For residents with ties to France, formalize the termination of French tax residency using Form 2042 and document actual presence in Andorra. Total duration of the Andorran procedure: 2 to 4 months.
Backward Planning: When Should You Start the Transition?
Mistakes to Avoid During This Transition
Mistake #1 — Waiting until the end of the non-dom period to take action
The most common mistake is to wait until the final year of non-dom status to begin planning the exit. The transition from Cyprus to Andorra requires between 12 and 18 months of active preparation. Waiting too long creates a period of tax uncertainty and limits the available structuring options.
Mistake No. 2 — Confusing the process of obtaining a license with actual tax residency
An Andorran residence permit does not automatically confer Andorran tax residency. The requirement to be physically present in Andorra for 90 days per year must be strictly adhered to and documented. Diaries, airline tickets, credit card statements, and documents related to local activities are the types of evidence that tax authorities request in the event of an audit.
Mistake No. 3 — Replacing the CEO without reorganizing the actual management of the companies
If the executive takes up residence in Andorra but continues to manage his Cypriot company from Andorra—holding meetings via videoconference and making decisions from the Principality—the company may be reclassified as having its effective management in Andorra. This creates the potential for double taxation and calls the entire structure into question. The actual location where decisions are made must be consistent with the registered office.
Mistake No. 4 — Underestimating Andorran banking due diligence
Andorran banks (Andbank, MoraBanc, Creand) enforce rigorous KYC procedures, particularly for funds originating from Cyprus, a jurisdiction sometimes viewed as sensitive by compliance teams. Documentation regarding the source of funds must be prepared in advance: account history, proof of professional activity, and Cypriot tax returns from recent years. An incomplete application significantly delays the account opening process.
Mistake No. 5 — Believing that the €1 million investment is money down the drain
The investment required for passive residency generates a return—it is an investment in Andorran assets, not an entry fee. The Andorran real estate market has shown steady growth in recent years. Financial instruments offered by banks in the Principality provide diversification across currencies and sectors. Only the non-refundable deposit of €50,000 to the AFA constitutes a one-time expense with no direct return.
We regularly assist clients from Cyprus, Malta, or other jurisdictions with limited-term residency status. In every case, the process begins with the same assessment: understanding the reality of your non-dom status, mapping out your structures, and planning for the transition before the deadline forces you to act. Our team has in-depth knowledge of the specifics of Andorran law and the applicable tax treaties, and works with you to develop the strategy best suited to your long-term financial goals.
Is your Cypriot non-dom status about to expire?
Every wealth profile is unique. Our experts analyze your situation—existing structures, income, and timeline for becoming a non-dom—and work with you to develop the optimal transition strategy toward Andorran residency.
Schedule an appointment with an expertFAQ — Moving from Cyprus to Andorra in 2026
What is the minimum investment required to obtain passive residency in Andorra?
Article 96 of Law 9/2012 (consolidated text) sets the threshold at €1,000,000 in Andorran assets (real estate, equity interests, financial instruments, life insurance, and deposits with the AFA). This amount is reduced to €400,000 only when the investment is made in the Fons d'Habitatge. A non-refundable deposit of €50,000 with the Autoritat Financera Andorrana is required in all cases, plus €12,000 per dependent.
Is it possible to keep a Cypriot company while residing in Andorra?
Yes, on one essential condition: the company’s effective management must remain based in Cyprus. If the executive makes all decisions from Andorra (board meetings, signing contracts, approving budgets), the Cypriot—or Andorran—tax authorities may reclassify the company’s effective management as being in Andorra, with significant tax consequences. In practice, maintaining genuine effective management in Cyprus requires a regular presence on the island and documented delegations of authority.
What is the practical difference between Andorran personal income tax and Cypriot personal income tax after becoming a non-dom?
In Andorra, the flat personal income tax rate is 10% (Art. 43 of Law 5/2014) with a personal exemption of €24,000, and dividends from Andorran resident companies are exempt. In Cyprus, after the non-dom status expires, dividends are subject to the Special Defense Contribution (SDC, currently at 17%; a reform planned for 2026 to reduce it to 5% has not been definitively confirmed), and earned income is taxed at progressive rates up to 35%. On €300,000 in investment income, the difference can amount to tens of thousands of euros per year.
How many days do you need to spend in Andorra to maintain your tax residency?
Passive residency requires a minimum stay of 90 days per year in Andorra. This presence must be genuine and verifiable (through travel tickets, bank statements, and local activities). Unlike Cyprus’s 60-day rule, no local economic activity is required for passive residency—but the 90 days of actual presence are non-negotiable.
Does the Franco-Andorran tax treaty protect French real estate income earned by an Andorran resident?
The 2013 Franco-Andorran tax treaty, in effect since January 1, 2016, generally assigns the right to tax real estate income to the country where the property is located—that is, to France for properties in France. This means that an Andorran resident receiving rent from properties located in France remains subject to taxation in France on that specific income. The treaty provides mechanisms to eliminate double taxation to prevent this income from being taxed twice, but it is not exempt from French taxation.
Is Andorra part of the European Union?
No. Andorra is an independent sovereign state that maintains preferential relations with the EU (customs agreement, movement of goods) without being a member. This situation has practical implications: Andorran residents do not enjoy freedom of movement as residents of a member state (although they can travel freely as citizens of Andorra), and Andorran companies do not have access to the single market under the same conditions as a Cypriot entity. For entities requiring access to the EU, establishing a complementary structure in a member state may still be relevant.
How long does the entire Cyprus-Andorra transition take?
The entire process, from the initial audit to the issuance of the Andorran NIA and the formal termination of Cypriot residency, takes between 12 and 18 months. The Andorran residency process itself takes 2 to 4 months. Most of the time is spent restructuring existing entities, selecting and acquiring Andorran investment assets, and conducting banking due diligence. It is strongly recommended to plan 18 months in advance to ensure all strategic options are available.
