Andorra Active Residency (Investor)

Andorra’s active residency permit is built around a simple premise: you live in Andorra because you work there, either by setting up and running your own company or by being employed by an Andorran one. Andorran immigration handles the business-owner route as the foreign-investment case of self-employed residency. Online, the pitch is often “invest in Andorra, get residency, pay almost no tax,” and that skips the part where the business has to be genuine. The permit expects real economic activity in Andorra, not a holding structure designed to produce a residency card.

The financial commitment is different from the passive route. There is no fixed investment amount; the €1,000,000 threshold applies to passive residency, not to this permit. Applicants obtain foreign investment authorisation to set up an Andorran company, hold more than 34% of it and take a position on its administrative body. Since Law 2/2026 took effect on 13 February 2026, applicants also pay €50,000 to the Andorran Financial Authority (AFA) when they file. It is non-refundable unless the initial application is refused. Digital-economy, innovation and high-tech projects are exempt. Within three months of filing, the company must also show that it owns a registered business that is operating in Andorra. The government caps new self-employed permits each year: the 2026 quota is 200, with 150 for general business owners and 50 for licensed professionals (30 liberal professionals and 20 doctors).

The profile that moves through cleanly is an entrepreneur of any nationality with real commercial intent: someone who has identified an opportunity in Andorra, or wants to headquarter an existing operation there for legitimate structural reasons, and is prepared to live in the country permanently. The profile that struggles is the remote worker who treats this as a tax vehicle and builds the business around an existing income structure after the fact. If you don’t intend to serve the local market and your income comes almost entirely from outside Andorra, passive residency may suit you better, though it carries a €1,000,000 investment requirement.

Active residency requires genuine presence. The permit requires you to live in Andorra permanently and effectively, and spending more than 183 days a year there is also what makes you a tax resident. Your business is expected to be run from Andorra. People who plan to spend a few months in Andorra while operating from elsewhere find that the residency and the business become two separate obligations instead of one coherent move.

The first permit is valid for one year and can be renewed three times for two-year periods. After seven years, renewals are granted for ten-year periods. Andorra has no separate permanent residency permit, so that ten-year renewal is the long-term status this route leads to. The government’s official application fee is €190.96, and the maximum decision time after filing is 60 business days.

When the business case is real, what this permit gets you is a company in a stable Western European jurisdiction, with a maximum 10% rate on both personal and corporate income and no wealth tax.

How Andorra taxes residents running a business there

Andorra taxes tax residents on worldwide income, so your salary from your Andorran company, foreign dividends, brokerage gains and rental income from property you still own in the US all fall in scope. You’re a tax resident if you spend more than 183 days in Andorra in a calendar year, or if the centre of your activities or economic interests is there. For someone running an Andorran company full time, both tests will usually be met.

Personal income tax (IRPF) is 0% on the first €24,000 of income, 5% from €24,001 to €40,000, and 10% above that, with no bracket higher than 10%. Corporate tax is 10%. Andorra has no wealth tax, inheritance tax or gift tax.

Investment income is more nuanced than a flat rate. Savings income, including interest, dividends and most capital gains, is taxed at 10% after a €3,000 annual exemption. Dividends paid by Andorran companies to resident shareholders are generally exempt, while dividends from foreign companies are taxed as savings income. Some share gains can qualify for exemption under specific conditions.

There is no special regime to elect into

Andorra has no NHR-style program and no flat-rate expat scheme. The 10% ceiling is simply the system every resident is under. For owners whose income flows through an Andorran company, the effective rate on salary depends on where it falls in the brackets, and dividends from your own resident company are generally exempt.

What the IRS still wants from you

Relocating to a 10% tax jurisdiction doesn’t close your US filing obligation. American citizens and green card holders file federal returns on worldwide income regardless of where they live or where their company is domiciled. The Foreign Earned Income Exclusion covers earned income only (salary drawn from your Andorran company, active freelance payments) up to $132,900 for 2026. It does not cover dividends, capital gains, rental income, or passive investment returns, so the portion of your income that doesn’t qualify as earned income remains fully exposed to US taxation at ordinary rates, offset only by whatever Foreign Tax Credit applies to Andorran tax already paid on the same income.

An Andorran company you own will generally be treated as a controlled foreign corporation for US purposes, which brings Form 5471 reporting and possible GILTI or Subpart F inclusions that the FEIE does not remove.

Once you open Andorran bank accounts, which running the company effectively requires, the FBAR (FinCEN Form 114) is mandatory if combined foreign account balances exceed $10,000 at any point during the year. A non-willful failure to file can carry a penalty of up to $16,536 per report.

What first-year advice prevents

For Americans setting up under the active residency category, the mistakes that happen without proper professional advice cluster in specific places. Choosing the wrong FEIE election method, Bona Fide Residence versus Physical Presence Test, can cost you the exclusion for a partial year you were entitled to claim. Structuring your income extraction from the Andorran company in a way that creates unexpected US passive income characterization, particularly under PFIC rules for certain investment structures, is a problem that surfaces on year-two or year-three returns and requires unwinding earlier decisions that were never reviewed. And FBAR non-filing for accounts opened as part of running the company is the penalty exposure that catches people who assumed the account didn’t qualify or didn’t realize it was their obligation to report.

A US expat CPA working with an Andorran tax advisor can cover the income extraction structure, FEIE election, FBAR compliance, and how the corporate layer interacts with your personal US return. Year one is when the structural decisions get made, and they’re significantly harder to correct later than to get right from the start.