Andorra offers a maximum 10% income tax, 0% capital gains tax, and a straightforward residency process. Here is everything European entrepreneurs need to know in 2026.
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Spanish and French entrepreneurs who want to reduce their tax burden without leaving Europe often overlook Andorra. At just 90 minutes from Barcelona and 3 hours from Paris, it offers a maximum 10% income tax — and most entrepreneurs qualify for far less.
FIXE GROUP handles Andorra residency applications from documentation through registration, and advises on the 90-day minimum presence requirement and corporate structure options for business activity.
Andorra is a micro-state between Spain and France that operates one of Europe's lowest income tax regimes: a maximum rate of 10% on personal income above €40,000, with the first €24,000 entirely exempt. Capital gains, dividends, and interest income are not taxed at all. Residency requires a minimum of 90 days per year in Andorra and a financial deposit or real estate investment to demonstrate economic ties. Andorra is not an EU member state, which means it is outside EU VAT and single-market rules — an important consideration for some business models.
Andorra introduced its personal income tax (IRPF) in 2015 (Llei 5/2014 del 24 d'abril). The structure is: 0% on the first €24,000 of income; 5% on income between €24,000 and €40,000; and 10% on income above €40,000. There is no wealth tax, inheritance tax between direct relatives, capital gains tax on securities, or tax on dividends and interest. This profile is particularly attractive for investors, stock traders, and entrepreneurs whose income comes from company distributions rather than employment.
Andorra does not have an EU-standard free movement of people. To obtain residency, you must apply for one of three visa types: Passive Residency (no active business in Andorra, minimum deposit of €50,000 at the Andorran government plus a €400,000 real estate investment or additional €300,000 deposit), Active Residency for self-employed (requires registering a business or professional activity in Andorra, creating at least local employment or demonstrating significant local economic activity), or Active Residency for employees (requires a contract with an Andorran employer). Minimum physical presence: 90 days per year.
Andorra's banking system is small but functional — major banks include Andbank, MoraBanc, and Creand. The official currency is the Euro (through an agreement with the EU), but Andorra is not in the Schengen Area (though it operates open borders with Spain and France). Healthcare is available but not at EU public healthcare costs. Spanish and Catalan-speaking applicants will navigate the process most easily.
Legal basis
Andorra: Llei 5/2014 del 24 d'abril de l'impost sobre la renda de les persones físiques
Llei 7/2019 de 29 de novembre (residència passiva)
Andorra-Spain Double Tax Convention (signed 2015)
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