Taxation in Andorra: Tax Advantages for Residents and Investors

Taxation is one of the main reasons why an increasing number of people choose to live in Andorra. The Principality combines a very low tax burden with a fully internationally compliant legal framework. Here are the key points: what taxes you will pay as a resident, the entry fees established by law and how foreign real estate investment is taxed.
 

What taxes are paid in Andorra? Personal Income Tax and Wealth Planning

Personal Income Tax (IRPF): up to €24,000 (0%), from €24,000 to €40,000 (5%), and above €40,000 a maximum rate of 10%.

Inheritance and Gift Tax: 0% — there is no taxation on inheritances between direct family members.

Wealth Tax: 0% — Andorra does not tax the ownership of assets or capital.
 

Entry Fees for New Residents

Current legislation establishes non-refundable entry fees that contribute to the national housing fund.

Passive Residency: minimum investment of €800,000 in Andorran assets and a non-refundable entry fee of €50,000 (plus €10,000 per dependent family member).

Self-Employed Residency: non-refundable entry fee of €50,000.
 

Foreign Real Estate Investment Tax

Non-residents and residents who have lived in Andorra for less than three years and purchase property are subject to an additional tax on top of the Property Transfer Tax (ITP) of 4%.

First property unit: additional 6% (10% total).

Second property unit onwards or purchases made through companies: additional 10% (14% total).

This tax does not apply to residents who have been living in Andorra for more than three years.
 

Is Living in Andorra Tax-Efficient?

For most individuals with medium or high incomes, the difference can be substantial: a maximum personal income tax rate of 10% compared to 45–50% in neighbouring countries, combined with the complete absence of wealth and inheritance taxes.

In addition, Andorra's General Indirect Tax (IGI) is only 4.5%, one of the lowest VAT-equivalent rates in Europe.

The key is to plan your relocation properly and comply with the country's residency requirements.

→ Thinking about moving to Andorra? Explore the different residency options and contact us to find your ideal home. 
 

FAQs

How much personal income tax is paid in Andorra?

The maximum tax rate is 10% for income above €40,000. The first €24,000 are tax-free and income between €24,000 and €40,000 is taxed at 5%.
 

Is there a wealth tax or inheritance tax in Andorra?

No. Andorra does not tax the ownership of assets or capital, and there is no inheritance tax between direct family members.
 

What taxes do I pay if I buy a property in Andorra as a non-resident?

In addition to the 4% Property Transfer Tax (ITP), foreign buyers are subject to the Foreign Real Estate Investment Tax: an additional 6% on the first property (10% total) and an additional 10% from the second property onwards or for purchases made through companies (14% total).
 

Is Andorra a tax haven?

No. Andorra was removed from international tax haven lists years ago. The country has signed double taxation agreements with numerous jurisdictions, automatically exchanges tax information and complies with OECD standards. It is a low-tax country, but fully transparent and internationally recognised.