The tiny principality of Andorra has long been associated with favourable tax rules and banking secrecy. But is it still a tax haven? In this article, we explore andorra tax haven status, present facts about andorra, and separate myth from reality.
What does “tax haven” really mean?
Before diving in, it’s important to define what counts as a tax haven. Typical characteristics include:
Very low or zero taxes
Lack of transparency in financial information exchange
Minimal regulatory oversight
Encouragement of non-resident companies or banks with little local substance
If a jurisdiction stops meeting these criteria, its “tax-haven” label may become outdated.
The evolution of Andorra’s tax and financial system
Key Facts
Andorra signed a tax information exchange agreement with Spain in 2010, removing itself from Spain’s tax-haven list by year’s end.
Andorra was removed from the Organisation for Economic Co‑operation and Development (OECD) “uncooperative tax havens” list in 2009/2010 and subsequently adopted international transparency standards.
The principality introduced personal income tax, corporate tax, and other reforms to align with international norms.
Fun Fact: Andorra’s personal income tax starts at 0% for income up to €24,000, then 5% up to €40,000, and above that, a rate of 10%.
So, is Andorra still a tax haven? (Myths vs Facts)
Myth: Andorra is still a classic tax haven where you pay almost nothing and hide your money.
Fact: According to modern international criteria, Andorra is no longer classified as a non-cooperative tax jurisdiction.
Table: Myth vs Reality
Claim
Reality
“Andorra has zero taxes.”
No—it has low but meaningful taxes (0-10% personal income tax, ~10% corporate tax)
“Banking secrecy means you can hide funds.”
No—Andorra now exchanges tax information with other countries and cooperates internationally.
“Andorra is on major tax-haven blacklists.”
No—it was removed from many lists (OECD, Spain) once it met transparency standards.
In short, Andorra provides a low-tax environment, but it does not fit the traditional hidden-tax-haven model anymore.
Why people still ask about andorra tax haven
Despite reforms, several facts about Andorra keep the question alive:
Low tax rates—With maximum personal income tax rates around 10% and corporate tax around 10%, Andorra is still much lower than many European countries.
Small size + banking history—Its banking sector and past reputation add to the perception of a haven.
Thus, while Andorra may be legally compliant, from a layperson’s perspective, it may still resemble a “tax haven.”
What are the key facts about Andorra regarding tax and residence?
Residents pay income tax: 0% on income up to €24,000, then 5% up to €40,000, then 10% above that.
Corporate tax is around 10%.
Capital gains tax rules: shares with less than 25% ownership could be exempt in certain conditions.
Andorra has signed information exchange agreements and is not listed on major tax haven blacklists.
Despite the low tax burden, substance rules (actual economic activity, residency) still apply—you can’t simply “move” without fulfilling conditions.
Why “transactional” consideration matters if you’re relocating or investing
If you are considering Andorra for tax, residence, or business purposes, here’s what to keep in mind:
Understand residency criteria: how many days you must live in Andorra and how much of your business/activities must be there.
Review substance requirements: simply having an address may not be enough.
Factor in living costs: although taxes are low, the cost of living and compliance may offset benefits.
Know the international implications: even if Andorra is compliant, your home country’s tax rules (residency, exit taxes) could still apply.
Seek professional advice: especially on cross-border tax rules, reporting obligations, and Double Taxation Agreements.
Summary: The bottom line
Andorra is no longer categorized as a classic tax haven by international bodies.
It still offers low tax rates and favorable conditions—hence ongoing interest and the label “low-tax jurisdiction.”
The correct description: Andorra is a transparent, compliant, low-tax country, rather than a secretive tax haven.
If you’re exploring relocation, tax planning, or investment, Andorra may offer benefits—but it requires careful planning and adherence to substance/residency rules.
FAQs (People Also Ask)
Q: Is Andorra still a tax haven? A: No—it has reformed its system, meets global transparency standards, and is not listed on major tax haven blacklists.
Q: What is the personal income tax rate in Andorra? A: 0% up to €24,000 of income, then 5% up to €40,000, and 10% for income above that.
Q: Does Andorra have corporate tax? A: Yes—typically around 10% for resident companies.
Q: Can non-residents hide money in Andorra? A: No—Andorra participates in tax-information exchange agreements and maintains regulatory oversight.
