Is Andorra Still Worth It in 2026?

Every now and than we hear that Andorra has "changed" — that the golden years are over, that the rules tightened, that it's not what it used to be. The way I see it - it depends what you're comparing it to, and what you're actually trying to achieve.

What Actually Changed in 2026

In January 2026, the Andorran Parliament approved Law 2/2026 — known informally as the Omnibus 2 Law. It's the most significant overhaul of residency and foreign investment rules in recent years. Here's what it means in practice.

Passive residency: the threshold went up

The minimum investment for passive residency (residency without working in Andorra) increased from €600,000 to €1,000,000. If you're going the real estate route, each property must now be worth at least €800,000.

Additionally, the €50,000 payment to the Andorran Financial Authority (AFA) — previously treated as a refundable bond — is now explicitly non-refundable. Think of it as a one-time state contribution. There's also a €12,000 per dependent charge on the same basis.

Property taxes for foreign buyers doubled

Non-residents purchasing property in Andorra now pay a foreign investment tax (IIEI) of 6% on the first property and 10% on a second property — both rates doubled by the Omnibus 2 Law from 3% and 5% respectively. This is charged on top of the standard 4% property transfer tax (ITP) paid by all buyers, bringing the total purchase tax to 10% on a first property and 14% on a second. This is a significant increase and should be factored into any real estate budget from the outset.

Active residency: stricter substance requirements

For entrepreneurs setting up an Andorran company, the rules around genuine economic activity have tightened. Majority participation in the company is now required, along with clearer evidence of real management and operations based in the country.

What Did Not Change

Here's the part most articles miss: the tax framework is untouched.

• Personal income tax: 0–10%, with the first €24,000 of income fully exempt

• Corporate tax: flat 10%

• VAT (IGI): 4.5% — the lowest in Europe

• Wealth tax: none

• Inheritance tax: none

• Gift tax: none

• Dividends from Andorran companies to Andorran tax residents: fully exempt

• Capital gains on stocks and ETFs/funds: exempt if the stake is 25% or less, and excluding companies whose assets are predominantly Andorran real estate; exempt on any stake held 10+ years; otherwise 10%

• Capital gains on bonds: taxed as savings income at 10%, with the first €3,000 of total savings income per year exempt — no holding period exemption applies

• Capital gains on Andorran real estate: 10% (or 15% if sold within 2 years), declining with holding period and reaching 0% after long holding; exempt on a principal residence if proceeds are reinvested in another Andorran primary residence within 2 years

The 90-day minimum physical presence requirement for passive residents also remains unchanged — one of the lowest residency thresholds in Europe.

Andorra is still not an EU or Schengen member (although changes are under way), which means no EU passport rights, but also no EU regulatory obligations and no automatic CRS reporting to EU member states in the same way.

So Is It Still Worth It?

For the right profile, absolutely — and in some ways more so than before.

The higher investment threshold has effectively filtered out the lower end of the market. The people enquiring now tend to be serious: entrepreneurs with established businesses, investors with real assets, families who have done their research. This makes for a healthier, more stable community and a government that has the resources to continue investing in infrastructure, healthcare, and the overall quality of life.

The core case for Andorra has not changed:

Taxes. A 10% cap on personal income tax with significant exemptions is still one of the best structures available to any European resident, legally and sustainably. Compare it to 45% in the UK, 47% in Spain, 55%+ in France.

Safety and lifestyle. Andorra consistently ranks among the safest places in Europe. The country has excellent healthcare, strong international schools, and world-class skiing literally accessible from most residential areas. For families, this matters.

Proximity to major European cities. Two hours to Barcelona. Three to Toulouse. Easy access to the rest of Europe without actually living there.

No EU bureaucracy. This is underrated. For business owners and investors with international structures, operating from outside the EU removes a meaningful layer of compliance complexity.

Who Is Andorra Not Right For?

Honesty requires saying this clearly.

If your income is below €500,000 per year, the combination of investment threshold, non-refundable AFA payment, property costs, and relocation logistics may mean the maths don't work in your favour — at least not on passive residency. Active residency (setting up a genuine business here) is a different calculation and can be accessed at lower initial cost.

If you need EU residency or an EU passport, Andorra does not provide this. Countries like Malta or Portugal (despite the NHR changes) remain more relevant for that specific goal.

If you have no intention of spending 90 days a year here, any residency structure becomes difficult to defend. Substance is taken seriously.

The Bottom Line

The Omnibus 2 Law made Andorra more selective, not less valuable. The tax advantages are intact. The lifestyle is unchanged. The bar to entry is higher, which means the people who get here are more committed — and the government has more resources to maintain what makes Andorra worth moving to.

If you were on the fence before because the entry cost seemed manageable but the commitment felt uncertain, that uncertainty is now resolved for you. Andorra in 2026 is for people who are serious about it.

If that's you, the next step is a conversation to understand which route — passive or active — actually fits your situation. There is no universal answer, and the right structure at your income level and asset profile is worth mapping out carefully before you commit anything.

Initial consultations on Andorra company formation, residency, and relocation are free. Contact via info@rankre.net.