Andorra has become one of the most attractive destinations in Europe for changing tax residency. However, before making the move, it is essential to understand a key decision: active residence or passive residence.
This is not just an administrative matter—it determines how you will live, how much tax you may pay, and the level of flexibility you will have.
2026 Update: Current Requirements
In practical terms, Andorra’s Immigration framework continues to offer two main pathways:
1. Active Residence (Employment and Economic Activity)
This includes:
- Employment contract with an Andorran company, or
- Self-employment (freelancer/business owner operating through an Andorran company)
Typical requirements in 2026:
- Immigration authorization linked to employment or business activity
- Registered address in Andorra
- Contributions to the CASS (Andorran Social Security System)
- Genuine and operational economic activity
- Company incorporation in many cases
- Effective physical presence in the country (tax residency criterion)
2. Passive Residence (Without Local Employment Activity)
Designed for individuals who reside in Andorra without working there.
Common categories include:
- Residence without gainful activity
- International professionals / economic-interest residents
- Individuals with foreign-source income
Typical requirements in 2026:
- Sufficient investment or assets (Immigration criteria)
- Comprehensive health insurance
- No direct employment activity in Andorra
- Proof of sufficient external financial resources
Important: Minimum amounts and variable thresholds (CPI adjustments, minimum salaries, etc.) may change over time. It is always advisable to consult the latest information published in the BOPA (Official Gazette of the Principality of Andorra).
The following table summarizes the main differences between active and passive residence:
Factor | Active residence | Passive residence |
|---|---|---|
Work permit | Yes | No |
Economic activity in Andorra | Mandatory | Prohibited or very limited |
Taxation | Personal income tax + business activity | Personal income tax based on residence (where applicable) |
CASS (social security) | Mandatory | Not mandatory (depending on the case) |
Initial investment | Medium | High |
International flexibility | Medium | High |
Typical objective | Work or entrepreneurship | Living without local activity |
Types of Bank Accounts and Common Cases: Self-Employed Individuals, Retirees, and Digital Nomads
Before going into detail, it is important to note that Andorra offers two types of bank accounts: resident accounts and non-resident accounts. A distinction must also be made between individuals and legal entities (companies).
Accounts for Individuals
Resident individual accounts in Andorra (regardless of nationality) are personal accounts used to manage expenses, income, savings, and personal assets.
Accounts for Legal Entities
Resident corporate accounts are used by companies legally incorporated in the Principality to manage business operations, including payments, collections, taxes, and other corporate activities.
Accounts for Non-Residents
A special note should be made regarding accounts for non-residents in Andorra.
The feasibility of opening such an account depends on the specific circumstances and intended use by the individual or entity. The first step is to provide all documentation and information required by the bank to comply with international compliance standards, anti-money laundering regulations, and counter-terrorist financing requirements. For this reason, it is essential to provide all documentation requested by the financial institution, including personal information, asset information, corporate documentation and the source of funds documentation. Based on the documentation provided and the mandatory interview process, the bank will determine whether opening the account is feasible.
Temporary Workers and Other Special Cases
A separate category applies to non-resident accounts opened by individuals working temporarily in Andorra (commonly known as seasonal workers) and cross-border workers. For these groups, opening an account is generally easier when they hold the appropriate temporary work authorization or cross-border work permit. For all non-resident accounts, account holders must ensure that such accounts are properly declared to the tax authorities in their country of tax residence. It should be remembered that the Principality has signed several international tax information exchange agreements with other countries.
Furthermore, anti-money laundering and anti-terrorist financing regulations continue to become increasingly strict, creating additional compliance obligations for Andorran banks.
Taking all of the above into consideration, the most common situations are analyzed below.
Self-Employed Individuals and Entrepreneurs
They typically opt for active residence.
- Incorporation of an Andorran company
- Self-employed activity
- Potential holding company structures
Retirees
They often choose passive residence.
- Foreign pension income
- Accumulated wealth
- Objective: quality of life and stable taxation
Digital Nomads
The appropriate structure depends on the actual business model.
- If invoicing through an international company → often passive residence
- If creating a business structure in Andorra → active residence
A common misconception is that “working online from Andorra” has no tax implications. In many cases, an active structure may be required.
Tax Risks and Common Mistakes
Mistake 1: Confusing Legal Residence with Tax Residence. Holding a residence permit does not automatically change tax residency in the country of origin.
Mistake 2: Passive Residence with Undisclosed Economic Activity. Continuous remote work may be considered economic activity.
Mistake 3: Poor Corporate Structuring. Particularly relevant for holding companies and international service businesses.
Mistake 4: Improperly Declared Bank Accounts
As discussed above, banking practice in Andorra generally distinguishes between:
- Resident accounts (individuals and legal entities)
- Non-resident accounts subject to strict compliance requirements
Banks typically require:
- Proof of source of funds
- Asset and tax documentation
- Mandatory interviews in many cases
Special case: Seasonal and cross-border workers may find it easier to open accounts if they hold valid work authorization.
It is also essential to consider:
- Proper declaration of foreign bank accounts in the country of tax residence
- International tax information exchange obligations
FAQs
- Can I switch from passive residence to active residence?
Yes, but this generally involves:
- A new immigration authorization
- Potential company incorporation
- Registration with the CASS
- Which type of residence pays less tax?
It depends.
- Active residence: taxation linked to business activity
- Passive residence: depends on worldwide income and asset structure
- Do I need to invest to obtain passive residence?
Yes, typically through:
- Real estate or financial investments
- Deposits or assets located in Andorra (depending on the specific case)
- Can I work online with passive residence?
It depends, because ongoing economic activity may require active residence status.
- Which type of residence is easier to obtain?
On the one hand, active residence involves more administrative procedures but is generally straightforward when there is genuine employment or business activity.
Passive residence, on the other hand, usually involves stricter financial and documentary requirements.
Conclusion
Active residence is ideal for those who wish to work, operate a business, or develop economic activities in Andorra, whereas passive residence is best suited for individuals who wish to live in Andorra without local economic activity and who have income from external sources.
The right choice depends on three key factors:
- Where your income is generated
- How you wish to structure your activities
- The level of genuine physical presence you intend to maintain in Andorra
If you require personalized information, please contact us and one of our professionals will assist you as soon as possible.
