Everything you need to know about moving to Andorra from the USA

Written by Marc Cantavella, AndorraInc Co-Founder & Andorran Tax Expert

For various reasons, we are seeing more and more Americans interested in moving their residence to Andorra.

Whether you are a digital entrepreneur, an investor, or a retiree, understanding Andorra’s benefits can help you make an informed decision about relocating from the USA.

This guide explains what our small but lovely country offers, the unique advantages of its lifestyle, its attractive taxation system, and the various residency options available to Americans.

New report

The report “The definitive guide to living in Andorra” is now available, with detailed information on Andorra’s tax framework, residence and society.

Click here to download it for free.

But what is Andorra?

Andorra is a small principality nestled in the Pyrenees between Spain and France. Despite its modest size, it has a rich blend of modern amenities, a secure environment, and natural beauty. The country is particularly renowned for its ski resorts and mountain sports, making it a paradise for outdoor enthusiasts.

Life in Andorra is marked by a peaceful pace and a strong sense of community. Our country is proud to offer a high standard of living with excellent healthcare and education systems.

And although you may think that so many benefits must be inaccessible, the truth is that real estate prices and the cost of living are very competitive compared to the ones in the United States.

Advantages

Low criminality creates a safe and secure living environment.
The country is a paradise for snow and mountain sports enthusiasts, with world-class ski resorts and outdoor activities available year-round.
Stunning landscapes and breathtaking natural scenery provide a high quality of life.
Andorra is well connected to Spain and France; major airports well connected to the United States are only a few hours away, making international travel convenient.
Non-EU citizens benefit from the right to move freely in Spain, France, and Portugal once residency is obtained.
A good healthcare and education system ensures that families have access to essential services.
The cost of living and real estate is much lower than in richer countries, yet comparable to Spanish capitals.
Andorra’s attractive taxation system (detailed below) provides significant fiscal benefits.

Disadvantages

For those who crave a vibrant cultural and nightlife scene, Andorra may feel too quiet; however, the bustling city life of Barcelona is just a short drive away.
Obtaining residency in Andorra can be challenging due to its strict requirements and limited quota.

Taxation benefits

One of the main attractions of Andorra is its highly favorable taxation regime. The principality offers a personal income tax rate that peaks at only 10%, with generous exceptions for those earning less than €40,000 (aprox. USD 42,000) per year.

Corporate tax is also topped at 10%, and even the general indirect tax (similar to VAT) is 4.5%, significantly lower than in many neighboring countries.

Another great advantage is that dividends and capital gains are not taxed in many cases: for example, if you own an Andorran company and you pay out dividends after paying the 10% corporate tax, you do not have to pay tax again.

For more information, read our articles on dividend tax in Andorra and on capital gains.

These tax benefits make Andorra an appealing option for those who can work remotely.

Understanding US nationality-based taxation

Although Andorra’s tax regime is very advantageous, United States citizens must remember that the US taxes based on citizenship, not just residency. This means that if you hold a US passport, you are generally required to file an annual tax return with the Internal Revenue Service (IRS), regardless of where you live.

Even if you become a tax resident in Andorra, you must still fulfill US tax obligations, which may include:

Filing an annual tax return (Form 1040) and reporting worldwide income.
Paying US taxes unless you qualify for certain exemptions or credits, such as the Foreign Earned Income Exclusion (FEIE) or the Foreign Tax Credit (FTC).
Reporting foreign bank accounts over certain thresholds under FBAR requirements.

While the US–Andorra tax landscape can be managed with proper planning, the absence of a specific US–Andorra double taxation treaty may pose additional challenges, especially for income types like dividends. However, many Americans still find that relocating to Andorra significantly reduces their overall global tax burden, thanks to the principality’s lower rates.

The problem of the double taxation treaties

Double Taxation Treaties (DTTs) are agreements between two countries intended to avoid or reduce double taxation on income, such as dividends. Under these treaties, dividends are usually not taxed at source or are taxed at a reduced rate, preventing punitive levels of taxation when you live in one country and invest in another.

Unfortunately, Andorra has a limited network of DTTs. At the moment, it has signed agreements with countries such as France, Spain, Portugal, and a handful of others—but not with the United States. As a result, if you receive dividends from a US company while living in Andorra, you may face:

A withholding tax at source by the US (often 30% for non-resident aliens).
Additional Andorran taxation of up to 10% for foreign dividends, although Andorra typically allows certain credits to avoid double taxation.

In many scenarios, without a formal tax treaty between the US and Andorra, you cannot reduce the 30% US withholding on dividends to Andorra’s usual 10% rate. This means you might end up paying a higher total tax on those dividends. Nonetheless, Andorra’s broad tax benefits (like 0% local dividend tax and no wealth or inheritance tax) often still make it a very appealing destination for many Americans.

Is Andorra a tax haven?

Main article: Andorra Tax Haven

Despite its low tax rates, Andorra is not considered a traditional tax haven.

Over the years, the principality has made significant efforts to improve transparency and adhere to international tax standards. Reforms have been introduced to eliminate banking secrecy, and Andorra has been working closely with global institutions to ensure compliance with international regulations.

These measures have helped Andorra shed much of the negative image associated with tax havens. Today, Andorra is recognized for its commitment to transparency and its modern, well-regulated fiscal framework, making it a legitimate choice for those seeking to optimize their tax situation.

Getting the residency

Relocating to Andorra from the USA requires obtaining the appropriate residency permit. And the residency process is designed to ensure that only those who meet specific financial and personal requirements are granted access.

There are several types of residency permits available in Andorra. The main options include:

Active residency: for individuals who intend to work in Andorra, either as employees or as self-employed entrepreneurs. This type of residency requires a commitment to spend at least 183 days per year in the country and involves certain economic activity requirements.
Passive residency: often compared to a “Golden Visa,” this permit is ideal for retirees, investors, and high net worth individuals who live on passive income or income generated abroad. While it requires a lower minimum physical presence (typically around 90 days per year), it comes with investment requirements and a deposit that serves as a financial guarantee.
Digital nomad visa: a newer option for those who work remotely for companies or clients outside of Andorra. This permit is designed for modern professionals who do not need to engage with the local labor market directly.
Family reunification: if a family member already resides in Andorra, it is possible to apply for residency under the family reunification category. This option facilitates the process for spouses, children, or dependent relatives.
Residency for health reasons: in cases where individuals need to relocate for medical or health-related support, this special permit can be obtained. It is designed to help those who require access to Andorra’s high-quality healthcare services.

The active and passive residency permits are the most commonly used for those interested in benefiting from Andorra’s low taxation: while active residency requires individuals to invest in the local economy and often involves setting up or being employed by an Andorran company, passive residency requires a significant financial commitment.

Broadly speaking, active residence is for those who work for others or themselves, while passive residence is designed for rentiers with a certain purchasing power.

Keeping the tax residency

Once you obtain an administrative residency permit in Andorra, maintaining tax residency is essential to continue enjoying the favorable tax rates. Tax residency in Andorra is determined by several factors, including the number of days you spend in the country and the location of your economic and personal interests.

Although some permits, like passive residency, may have a minimum stay requirement of 90 days, it is important to note that to secure tax resident status, you must ensure that your main economic interests remain in Andorra. This means that if you are spending significant time abroad, you risk losing your status as an Andorran tax resident.

To preserve your tax residency, it is advisable to avoid spending more than 183 days per year in any other country. Keeping your center of economic and personal interests in Andorra is key. Regular visits, maintaining a local bank account, and having strong family and social ties within the principality will help reinforce your tax residency status.

New report

The report “The definitive guide to living in Andorra” is now available, with detailed information on Andorra’s tax framework, residence and society.

Click here to download it for free.

Thinking of moving to Andorra from the USA?

If you are considering a move to a country where fiscal pressure is lower and your quality of life can improve dramatically, Andorra might be the ideal choice for you. With its combination of stunning natural beauty, a safe environment, competitive living costs, and one of the most attractive taxation systems in Europe, many Americans are finding it an appealing option.

However, relocating to Andorra involves careful planning and a thorough understanding of residency requirements, tax regulations, and US-specific obligations. We recommend consulting with a local expert who can guide you through the process and ensure that all legal and financial criteria are met, while also helping you navigate your US tax filings.

If you have any questions or need personalized advice, do not hesitate to contact us.

You can contact us without obligation in the following ways: