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Finance
May 27, 2026
The passive residency program in Andorra allows foreign nationals to settle in the Principality without engaging in any professional activity, to benefit from a flat tax rate of 10% on income, and to maintain their freedom of movement while managing their assets from a stable and recognized jurisdiction.
In practical terms: a maximum income tax rate of 10%, no wealth tax, no inheritance tax for direct descendants, and a minimum residency requirement of just 90 days per year in Andorra. This status is intended for retirees, annuitants, investors, and business owners in the process of selling their businesses, provided they meet the financial and administrative requirements set forth by Andorran law.
This guide outlines all the legal requirements set forth in the current legislation: Law 9/2012 in its consolidated version, Decree 407/2025, which governs the procedure, and Decree 74/2026, which establishes the quotas available this year. It details the financial obligations, the duration of authorizations, applicable taxes, pitfalls to avoid, and the specific steps to successfully complete your project.
Passive residency in Andorra: what exactly is it?
Legal terminology: "residence without gainful employment"
The term “passive residence” is commonly used, including in this article for the sake of clarity, but it no longer appears in current Andorran legislation. Since the enactment of Law 9/2012, the official designation is “residence permit without gainful employment” (autorització de residència sense activitat lucrativa). The former Law 17/2006 on passive residence permits has been incorporated into this law, which consolidates the entire body of Andorran immigration law.
In practice, for applicants seeking Andorran residency, the economic and tax situation remains the same: moving to Andorra, establishing residency there, and benefiting from one of the most competitive tax regimes in Europe, without engaging in salaried employment or professional activities within the country.
Passive housing vs. active housing: What are the differences?
There are several types of residency status in Andorra. The most common distinction is between passive residency and active residency.
Passive residency is more flexible in terms of residency requirements but more costly, with a minimum investment of one million euros in Andorran assets.
There are also other types of Andorran residency programs: residency for professionals with an international focus (85% of income generated outside Andorra, with a refundable deposit of €47,500) and residency for scientific, cultural, or sporting reasons (with a refundable deposit of €47,500). These options are worth exploring depending on your profile.
Administrative residence and Andorran tax residence: don’t confuse the two
This is one of the most common and costly mistakes. Obtaining an Andorran residence permit is not enough to automatically terminate your tax residency in your home country.
Administrative residency, issued by the Immigration Service, and tax residency, determined by each country’s domestic rules and international tax treaties, are two distinct concepts. A French national who obtains passive residency in Andorra without severing their tax ties with France may retain their French tax residency.
The double taxation treaty signed between France and Andorra applies, but it does not exempt taxpayers from a rigorous preliminary tax audit, particularly regarding criteria such as permanent residence, center of vital interests, primary residence, etc. We discuss this in detail in the taxation section.
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Who is eligible for passive residency in Andorra?
Eligible profiles
To obtain residency in Andorra under the passive residency program, several cumulative conditions must be met. Passive residency is intended for any non-Andorran individual who wishes to establish their primary and actual residence in the Principality without working there. In practice, four main categories of people take advantage of this program.
Retirees and annuitants. With a steady income (retirement pensions, annuities, bank interest, dividends), they represent the traditional profile of Andorran passive residents. For those considering living in Andorra in retirement, this is often the starting point for their planning. The freedom to stay for only 90 days a year allows them to maintain a partial presence in other countries while benefiting, under certain conditions, from Andorran tax laws.
Business owners planning to sell their companies. Before a major sale, moving to Andorra allows the capital gains to be taxed under the Andorran tax system rather than the French system (a flat tax of 30%, or even higher when social security contributions are included). The difference on a sale of €5,000,000 can amount to more than €1 million in tax savings.
Investors and wealth managers. Passive residents of Andorra can easily manage their assets from within Andorra: financial investments, equity interests in foreign companies, and international real estate portfolios. The law also allows them to serve as unpaid directors in entities incorporated under Andorran law in which they hold at least 50% of the capital.
Wealthy families. The absence of inheritance tax on direct descendants makes Andorra a particularly attractive jurisdiction for planning the transfer of accumulated wealth. Adult children under the age of 25 who are still in school may be included in the application as dependents.
Requirements for obtaining Andorran passive residency
Article 90 of Law 9/2012, as clarified by Decree 407/2025 of November 12, 2025, sets forth all the required conditions.
The requirement to invest in Andorran assets (€1,000,000)
This is the key financial requirement that distinguishes the passive residence status from other Andorran residence statuses. Article 96 of Law 9/2012 requires the holder to make a permanent and effective investment in Andorran assets in an amount specified in the following table:
The general threshold was raised from €600,000 to €1,000,000 as part of the legislative reform in early 2026. The reduced threshold of €400,000 applies only to investments in the Housing Fund, a program dedicated to financing Andorran real estate.
The €800,000 threshold per property is an important point to note: if you wish to meet the requirement throughAndorran real estate, each property purchased individually must exceed this amount. Purchasing multiple properties of lower value does not allow you to split the requirement.
Assets eligible for investment
The law lists six categories of assets whose aggregate value may satisfy the requirement:
Real estate located in Andorra, the most common option, combining investment and residential use.
Equity interests in the share capital or equity of companies resident in Andorra, allowing for structuring through an Andorran holding company. A capital contribution to a holding company valued at €1,000,000 or more satisfies the requirement without requiring the use of cash.
Debt or financial instruments issued by entities resident in Andorra, as well as collective investment funds governed by Andorran law, with a time limit of 36 months. At the end of this period, funds invested in this category must be reallocated to another eligible category. This is a critical point that is often overlooked.
Debt instruments issued by an Andorran public administration, i.e., the Principality’s sovereign debt.
Life insurance products purchased from entities resident in Andorra.
Non-interest-bearing deposits with the Andorran Financial Authority (AFA).
The investment timeline
The applicant agrees, at the time of application, to make the investment within a maximum of 6 months from the date of a favorable decision. This deadline may be extended by an additional 6 months in the event of force majeure or circumstances attributable to a third party, but only once.
Once this period has expired, the resident hasone month to provide the supporting documents. Failure to provide such documentation will result in the cancellation of the authorization. This requirement is ongoing: at the time of each renewal, the investment must still be in place and documented.
The non-refundable deposit to the AFA
In addition to the investment requirement, the account holder must make a deposit with the Andorran Financial Authority (AFA):
- €50,000 for the primary beneficiary, non-refundable
- €12,000 per dependent, non-refundable
These amounts are paid to the Andorran government once the authorization has been issued. These are not investments: they are administrative fees for joining the program, which are refunded only if the initial application is denied.
In addition, there are immigration fees: €3,000 for the principal applicant and €1,000 per dependent.
A concrete example for a family of four (the policyholder, spouse, and two minor children): AFA premiums and administrative fees represent a non-refundable cost of approximately €92,000 upon entering the program. This factor must be factored into the project’s overall financial planning.
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Minimum system requirements
The applicant must demonstrate sufficient income to reside in Andorra for the entire duration of the permit. Decree 407/2025 establishes the following income requirements:
- For the primary beneficiary: more than 300% of the annual minimum wage in Andorra, or €54,911.88 per year for 2026
- For each dependent: an additional 100%, or €18,303.96 per year per person
These resources must be documented by a retirement or disability pension statement, the previous year’s tax return from the last country of residence, or bank statements.
Housing in Andorra
The applicant must own or rent a residence in Andorra that meets the minimum habitability standards. A preliminary sales agreement is sufficient to file the application, with a one-year deadline to produce the final deed.
Free lodging is not permitted, except in cases where the individual is a direct relative up to the third degree of kinship with a resident who is not employed. Any change of residence must be reported to the Immigration Service withinone month.
Private health insurance
Andorran non-residents do not contribute to the Andorran public social security system (CASS). They must take out private insurance covering 100% of medical expenses in Andorra, as well as disability and old-age benefits, for the policyholder and each dependent. Minors and individuals over the age of 60 are exempt from disability and old-age coverage, but must have health insurance.
Other required documents
- Valid passport
- No criminal record for any intentional offense in any country of residence over the past five years
- Medical certificate issued by the Andorran Immigration Medical Service
- Signed commitment to establish one's primary and actual residence in Andorra
The Tax Benefits of Passive Residency in Andorra
Andorran Income Tax (IRPF): Tax Brackets and Calculations
Taking up residence in Andorra as a passive resident means you are subject tothe Impost sobre la Renda de les Persones Físiques (IRPF), Andorra’s personal income tax. Its tax schedule is remarkably simple:
Taxes that do not exist in Andorra
For an estate worth €5,000,000, the absence of the IFI tax results in annual savings of approximately €30,000 to €50,000. Depending on the structure of the estate, the absence of inheritance tax on direct descendants can result in savings of several hundred thousand euros at the time of transfer.
The France-Andorra Double Taxation Treaty
France and Andorra have signed a tax treaty to prevent double taxation. It governs the allocation of taxing rights between the two countries for income received by an Andorran resident from French sources (real estate income, dividends, capital gains, etc.). The treaty applies once Andorran tax residency is effectively established, and this is precisely where the central issue of the expatriation plan lies.
Leaving France: Exit Tax and Termination of French Tax Residency
Establishing a secondary residence in Andorra does not automatically terminate your French tax residency. If you continue to meet the French criteria (household, primary residence, main occupation, center of economic interests), you may remain tax-resident in France even though you have moved to Andorra.
The tax break must be effective, documented, and planned in advance. It is often accompanied by the application ofthe Frenchexit tax, which is levied on unrealized capital gains on certain assets (particularly equity securities) when transferring tax residency outside of France. Managing this tax exit, its timeline, the nature of the assets involved, and the legal structures at play are among the first issues to address with your advisors before filing your application for Andorran residency.
Andorra, the Pyrenees, and its proximity to France and Spain
Residing in Andorra offers a geographical advantage that is often underestimated: the Principality is nestled in the Pyrenees, less than a two-hour drive from Perpignan on the French side and Barcelona on the Spanish side. It is accessible from France via Route 22 through the Puymorens Pass, or via the Cadí Tunnel from Spain.
For a passive Andorran resident of French origin, this proximity is a key factor in daily life: quick access to the international airports in Perpignan, Toulouse, and Barcelona; the ability to maintain family and professional ties with France without the need for long trips; and access to a high-quality living environment in the Pyrenees all year round.
Andorra is no ordinary tourist destination. It is a sovereign principality with a population of over 80,000, featuring stable institutions, a trilingual education system (Catalan, French, and Spanish), high-quality medical facilities, and an exceptional natural environment. It is home to significant French, Spanish, and Portuguese communities, and the French and Spanish embassies are very active in supporting their citizens there.
For those wishing to leave France or Spain without moving too far away culturally or geographically, Andorra offers a natural transition—without a language barrier, without being separated from loved ones, and without losing touch with the European economic landscape.
Duration of authorizations, 2026 quotas, and residency requirement
Duration by nationality
Andorran law distinguishes between two time-limit regimes depending on the applicant’s nationality.
French, Spanish, and Portuguese nationals (bilateral treaties):
The previous quota, which included 490 passive residency slots out of a total of 600, has been exhausted. This new quota, reduced to 163 slots, reflects the growing selectivity of Andorra’s program. Allocations are made strictly on a first-come, first-served basis based on the date complete applications are submitted, with priority given to nationals of countries that have signed an agreement with Andorra, followed by EU/EEA nationals.
An application submitted late in the year may be rejected due to the quota being exhausted. This is an urgent matter that you should factor into your project schedule right away.
The requirement for 90 days of actual residence per year
The law requires a minimum presence of 90 days per year in Andorra. In practice, checks are conducted, particularly at the time of renewal. It is recommended that you keep tangible proof of your actual presence, such as Andorran bank statements, medical appointments, housing-related bills, and records of community or sports activities.
The law recognizes legitimate absences that do not violate the residency requirement: vacations, medical treatment abroad, training, and business trips lasting less than 12 months.
The 6 steps to obtaining permanent residency in Andorra
Step 1 - The Preliminary Audit
First and foremost, take stock of your situation: current and projected income, asset composition, family circumstances, and tax ties to your country of origin. This is the stage at which you identify potential risks (French exit tax, residual tax residency, ineligible assets) and determine the optimal timeline. Do not submit any application without first completing this assessment.
Step 2 - Finding a place to live in Andorra
Whether you own or rent, your Andorran residence must be identified before submitting your application. Purchasing a property is often recommended, as it allows you to fulfill both the residency requirement and part of the Andorran real estate investment requirement at the same time. The market is dynamic: allow 3 to 6 months to find, negotiate, and sign a contract.
Step 3 - Compiling the application
The application package includes the standard form, a valid passport, criminal records from all countries of residence over the past five years, proof of financial means (tax returns, bank statements), a valid insurance policy for Andorra, proof of housing, and a signed residence commitment. For dependents, the same documents are required for each individual.
Step 4 - Submitting the Application and the Medical Examination
The application is filed with the Immigration Office (part of the Police Department). A medical examination is arranged by the Immigration Medical Office. Once the application has been verified as complete, the Immigration Office notifies the applicant of the amount of the deposit to be paid to the AFA. The issuance of the permit is contingent upon payment of this deposit.
Step 5 - Making the Required Investment
Within six months of the favorable decision, an investment of at least €1,000,000 in Andorran assets must be made. An additional month is granted to submit the supporting documentation. The investment strategy must be prepared in advance: real estate, equity investments, Andorran financial instruments, or a combination thereof.
Step 6 - Registering with the Comú and maintaining residency
Within 3 months of the permit being issued, you must register with the parish council. Then, for the duration of the permit: maintain 90 days of actual presence, keep your insurance valid, maintain your investment, and prepare the renewal application in advance.
Moving to Andorra: A Plan in the Making
Passive residency in Andorra is one of the most attractive residency options in Europe for individuals with substantial assets. It offers a flat direct tax rate capped at 10%, no wealth tax or inheritance tax, a solid legal framework that complies with international standards, and an exceptional quality of life just two hours from major French and Spanish cities. Living in Andorra is thus much more than a tax choice: it is a way of life in its own right.
But it is also a demanding process: a minimum investment of €1,000,000 in Andorran assets, a non-refundable deposit to the AFA, and requirements regarding residency, financial resources, insurance, and housing that must be maintained over the long term. Above all, this is a project that cannot be undertaken without rigorous tax planning regarding your departure from your country of origin.
In 2026, with the quota reduced to 163 available permits, timing is of the essence. The sooner you submit your application, the better your chances of securing a spot in that year’s quota.
Case Study: Isabelle, 58, a business owner in the process of selling her company
Isabelle, 58, heads a regional retail group that she has built up over the past twenty-five years. The sale of the company is well underway: its valuation stands at around €8,000,000. She has two adult sons living abroad. For several years now, she has spent part of her summers in the Pyrenees and discovered Andorra before realizing that the Principality could be much more than just a vacation destination.
The initial situation. The sale, while maintaining French tax residency, would have triggered a capital gains tax of approximately €2,400,000 (a 30% flat tax), not including social security contributions. Isabelle felt that working for twenty-five years only to hand over nearly a third of her earnings to the government on the day of the sale was not inevitable.
The proposed strategy. In several steps: planning for departure from France, including management of the exit tax on company securities; filing an application for residency without gainful employment; purchasing an apartment in Andorra la Vella for €950,000, which meets the dual requirement of housing and investment in Andorran assets; opening an Andorran bank account; and restructuring post-sale liquidity into eligible Andorran financial instruments.
The results. The sale, which took place while Isabelle was already a tax resident of Andorra, resulted in a significantly lower tax burden compared to the French scenario. On her current income from wealth management, the effective personal income tax rate is less than 9%. The absence of the IFI (property wealth tax) represents an annual savings of approximately €45,000.
Frequently Asked Questions About Passive Housing in Andorra
Can retirees obtain passive residency in Andorra?
Yes. Retirees are the traditional target group for this status. A retirement pension of more than €54,911.88 per year is sufficient to demonstrate adequate resources for a single person, provided that the requirement to invest €1,000,000 in Andorran assets is also met.
Do you have to sell your primary residence in France to obtain Andorran passive residency?
No, Andorran law does not require you to sell real estate in France. However, if you wish to terminate your French tax residency, maintaining a residence in France may pose issues under French tax law. This matter must be assessed on a case-by-case basis.
Does Andorran passive residency provide access to Andorran social security?
No. Non-working residents do not contribute to the CASS (Andorran social security) and are required to purchase private health insurance that covers 100% of medical expenses in Andorra.
Can adult children who are still in school be included in the application?
Yes. Adult children under the age of 25 whose primary activity is pursuing their studies may be included as dependents, subject to an AFA deposit of €12,000 and an increase in the required income threshold.
How many spots will be available in 2026 for the Andorran passive residence program?
Decree 74/2026 sets the quota at 163 spots for residence without gainful employment in 2026. These spots are allocated on a first-come, first-served basis based on the date the complete applications are submitted. The quota may be filled before the end of the year.
Is it possible to switch from passive residence to active residence?
Yes, a change of status is possible, subject to the availability of quotas and compliance with the requirements for active residency, including the formation of an Andorran company.
Is Andorra a tax haven?
No. Andorra is a jurisdiction that fully complies with international OECD standards, is a signatory to the CRS and FATCA agreements, and applies BEPS standards. It does not appear on any international blacklist. Its tax system is simply low-tax and transparent, and it is precisely this compliance that gives Andorran residency its lasting value.
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30 minutes to discuss your project in Andorra: tax matters, compliance, and setting up your business. Confidential and with no obligation.
