Investing in Andorra: A Strategic Opportunity

Introduction

In recent years, Andorra has emerged as one of the most attractive destinations in Europe for both investment and residency. Its political stability, competitive tax system, privileged natural environment and high quality of life have captured the interest of entrepreneurs, athletes, independent professionals and high net worth individuals from around the world.

The country has undergone a profound legal and economic transformation, positioning itself as a modern, transparent jurisdiction that is fully integrated within the international context.

This article aims to outline the main reasons behind the growing interest in investing and residing in Andorra, providing a clear overview of business establishment procedures, the existing types of residency, the country’s tax framework and the competitive advantages offered by the Principality.

Advantages of residing in Andorra

Living in Andorra means access to a safe, dynamic environment with an exceptional quality of life. The Principality boasts one of the lowest crime rates in the world, a highly regarded healthcare system and a unique natural setting in the heart of the Pyrenees. Coupled with a distinctive tax regime and a responsive administration, Andorra offers an ideal ecosystem for both families and entrepreneurs.

Legal certainty, institutional stability and international openness have enabled Andorra to evolve from a traditionally tourist destination into a hub for global talent. The country has identified an opportunity – and embraced it. Its digital infrastructure, commitment to innovation and integration into international tax co-operation frameworks reinforce this new reality.

Establishing a company in Andorra

Setting up a company in Andorra is a regulated yet streamlined process, designed to facilitate business establishment while upholding high standards of compliance and transparency.

The key stages include, among others:

• application for company name reservation before the Companies Register;
• foreign investment authorisation, required when the shareholders are non-residents;
• drafting of the articles of association and execution of the public deed before a notary;
• registration in the Commercial Registry and issuance of the Tax Registration Number (NRT); and
• activation of the business licence and compliance with any sector-specific requirements.

The most common corporate structure is the societat limitada (SL), although societats anònimes (SA) are also available for larger projects.

Types of residency in Andorra

Andorra offers several residency options tailored to different personal and economic circumstances:

• passive residency (non-lucrative) – for individuals wishing to reside in the country without pursuing economic activity, subject to minimum investment and proof of financial means;
• active residency (employed or self-employed) – for those carrying out professional or business activities in Andorra; and
• residency for “internationally projected” professionals and athletes – designed for entrepreneurs and self-employed individuals whose economic activity takes place predominantly outside Andorra, as well as professional athletes.

Taxation and main taxes

Andorra’s tax regime is one of the country’s greatest attractions. Far from being a tax haven, Andorra has evolved towards a system aligned with international standards, with information exchange agreements and a modern, competitive tax framework. Its tax rates are among the lowest in Europe.

The principal taxes include:

• corporate income tax (impost de societats; IS) – general rate of 10%, with potential reductions for new activities or strategic sectors;
• personal income tax (impost sobre la renda de les persones físiques; IRPF) – maximum rate of 10%, with exemptions on dividends and allowances on employment income; and
• general indirect tax (impost general indirecte; IGI) – Andorra’s equivalent to VAT, with a general rate of 4.5%.

Why invest and reside in Andorra?

Several factors explain the increasing appeal of Andorra:

• legal and political stability in a secure environment;
• competitive taxation, with some of the lowest rates in Europe;
• high quality of life within a privileged natural setting;
• strong digital infrastructure and commitment to innovation, including initiatives in blockchain, esports and the digital economy; and
• a strategic location between France and Spain, with direct access to the European market.

Andorra is no longer a destination limited to traditional profiles; it has become a global talent hub, attracting entrepreneurs, elite athletes, digital creators and international business leaders.

Current requirements to obtain residency in Andorra

Andorra offers different residency categories, each with specific requirements. Broadly, these fall into two main types: active residency (linked to employment or business) and passive residency (no local economic activity). An overview of the key requirements is set out below.

Active residency (employed or self-employed)

This is designed for those who intend to work or undertake entrepreneurial activity in Andorra, and requires the following:

• an employment contract with an Andorran company (employed), or incorporation of a company in Andorra and assumption of management or administrative functions (self-employed);
• effective residence in the country for at least 183 days per year;
• a financial guarantee deposited with the AFA (Andorran Financial Authority; Autoritat Financera Andorrana), which is currently EUR50,000 plus EUR10,000 per dependent (for self-employed residency only);
• registration with the Andorran Social Security Fund (CASS; Caixa Andorrana de Seguretat Social);
• proof of accommodation (rental or property acquisition); and
• a clean criminal record and health insurance.

Passive residency (non-lucrative)

This is for individuals who do not engage in economic activity within Andorra, such as investors, retirees and international professionals. Key requirements include the following.

• Minimum stay of 90 days per year in the country.
• Minimum investment of EUR600,000 in Andorra, which may be allocated to:
1. real estate;
2. equity in Andorran companies; or
3. financial instruments deposited with the AFA.
• Mandatory deposit of EUR47,500 with the AFA (non-remunerated), plus EUR9,500 per dependent.
• Proof of sufficient financial means.
• Health, life and disability insurance.
• A clean criminal record.

Residency for international professionals

This is for self-employed individuals whose business derives at least 85% of its revenue from outside Andorra. The requirements are similar to passive residency, with an obligation to establish domicile and conduct activity from within the country.

Conclusion

Andorra stands at a pivotal moment in its history, opening to the world while preserving its identity. For those seeking a stable, fiscally competitive environment with exceptional quality of life, the Principality represents a strategic opportunity. It is not merely a question of reducing taxation, but of building a future in a country designed for sustainable growth.

In this setting, expert guidance is essential. Becoming a resident or investor in Andorra presents significant opportunities, but also critical decisions. The difference lies not only in planning a relocation, but in constructing a long-term life project – and that is where the right legal counsel becomes indispensable.