Relocating Tax Residency to Andorra: Requirements, 2015 DTT and Exit Tax Art. 95 bis

Regulatory Framework in Andorra

This page summarises the applicable regulatory context and the services BMC provides from our local office. For specific situations, we recommend an individual assessment: each case depends on tax residency status, the nature of the assets, cross-border ties and the applicable administrative timelines.

BMC Services in Andorra

The following services are available from our local office by appointment or coordinated from Madrid:

• International tax
• Exit tax
• Beckham law
• Tax planning

Typical Cases in Andorra

• Types of Andorran residency: active (with professional activity) vs passive (without activity)
• Effective residency requirements (minimum presence, housing, ties)
• Spain-Andorra DTT 2015: residency rules, information exchange
• Exit tax (Art. 95 bis LIRPF): thresholds, valuation, deferral
• Taxation of Spanish-source income after relocation (IRNR, dividends)
• AEAT inquiries and documentary defence

Standard Documentation

To open a file we typically request: identity document, certificate of tax residency (where applicable), documentation of the assets or transaction, relevant administrative certificates and, in cross-border transactions, equivalent certificates from the foreign jurisdiction. The exact requirements depend on the type of file.

Languages of Service

• Spanish
• English
• French

How to Schedule a Meeting

In-person meetings at the BMC Andorra office by appointment, Monday to Friday. Remote coordination available by video conference. To open a file, contact us via the office enquiry form or the general consultation form.

Tax Residency in Andorra: Why 2026 Demands More Planning Than Ever

Andorra offers a maximum personal income tax rate of 10% and a corporate tax (Impuesto de Sociedades, IS) rate of 10%, compared with 47% and 25% respectively on the Spanish mainland. The Spain-Andorra DTT 2015 was the turning point that formalised the framework and requires effective residency to access its benefits. Since 2015 the AEAT (Agencia Estatal de Administracion Tributaria, Spain’s Tax Agency) has intensified its scrutiny of relocations to Andorra, particularly where the taxpayer retains economic, family or corporate ties in Spain. A poorly documented relocation is not a tax saving: it is a deferred regularisation.

In 2026 the key risk areas are three: proof of effective residency (the 183-day test), management of exit tax under Art. 95 bis LIRPF (Ley del Impuesto sobre la Renta de las Personas Fisicas, Personal Income Tax Act) for holders of significant participations, and the treatment of Spanish-source income that continues to be taxed in Spain even after relocation.

Active vs Passive Residency: Making the Right Choice from the Outset

Andorra distinguishes two residency routes with radically different implications:

Active residency: requires genuine professional or business activity with real substance in the Principality — Andorran employees, an office, activity generating local income. This is the natural route for business owners who genuinely relocate their business to Andorra.

Passive residency: designed for investors, high-performance athletes and business owners who keep their income abroad without Andorran activity. It requires a deposit with the Autoritat Financera Andorrana (AFA, Andorran Financial Authority), investment in Andorran assets, permanent housing and minimum presence (typically 90 days).

The choice between the two routes affects both the procedural requirements and the DTT 2015 position when the AEAT challenges the residency. An active resident with substantive Andorran corporate structure is more defensible than a passive resident with no real ties to the Principality.

The Andorra Relocation Process: Four Phases of a Well-Planned Departure

Phase 1: Feasibility Analysis and Preliminary Tax Diagnosis

Before initiating any procedures, the first phase is to understand the true cost of the relocation:

1. Exit tax calculation: if the business owner has been a tax resident in Spain for 10 of the last 15 years AND holds participations with a market value exceeding 4 million euros (or >=25% of an entity), Art. 95 bis LIRPF triggers exit tax. The latent gain in those participations is taxed as if it had been realised the day before the change of residency. Without prior planning, the tax liability can be prohibitive.

2. DTT 2015 analysis: determination of whether the tie-breaker clause may apply (permanent home, centre of vital interests, habitual abode, nationality). The DTT establishes which of the two States has taxing rights in the event of a residency conflict.

3. Spanish-source income: identification of all income that continues to be taxed in Spain as a non-resident after relocation: dividends from Spanish companies (IRNR withholding at 19%/15% depending on DTT), rental income from Spanish property (IRNR 19%), gains on sale of Spanish property, etc.

Phase 2: Pre-Relocation Planning

The objective of this phase is to reduce the cost of the relocation before it takes place:

• Threshold reduction: if the participation is close to the 25% threshold, a corporate restructuring that brings it below that level may exclude exit tax
• Valuation of participations: if exit tax is unavoidable, a rigorous, documented valuation at market value — generally lower when the business is going through a lower-value phase — reduces the taxable base
• Beckham carve-out: business owners who accessed the inpatriate regime (Art. 93 LIRPF) on arriving in Spain do not count those years towards the 10-year calculation under Art. 95 bis. A Beckham resident of 6 years who leaves at the end of the regime typically does not trigger exit tax
• Restructuring of Spanish assets: transferring assets to structures outside the scope of Art. 95 bis or with lower latent gains

Phase 3: Application for Andorran Residency

The application process with the Servei d’Immigracio del Govern d’Andorra (Andorran Government Immigration Service) includes:

• Application for the appropriate permit (active or passive residency)
• Constitution of the deposit with the AFA (for passive residency)
• Evidence of investment in Andorran assets
• Lease agreement or purchase deed for permanent housing
• Andorran health and civil liability insurance
• Evidence of the lawful origin of funds

BMC coordinates with Andorran law firms for the local aspects of the file.

Costs, Timelines and Residual Taxation in Spain

Exit tax: if applicable, it is settled in the personal income tax return for the year of departure (Modelo 100 referencing Art. 95 bis). The effective rate on latent gains is the savings tax rate (up to 28% in 2026 for bases exceeding 300,000 euros). The five-year deferral under Art. 95 bis.4 does not apply directly to Andorra as it is not an EU/EEA member state, although conditional deferral options with guarantees are available.

Andorran application process: the process from submission to receipt of the permit typically takes between 2 and 6 months, depending on the workload of the Servei d’Immigracio and the completeness of the documentation.

IRNR in Spain after relocation: Spanish-source income continues to be taxed. The 2015 DTT limits withholding on dividends to 5% (parent-subsidiary) and 15% in other cases, and reserves to Spain the right to tax gains on the sale of property located in Spain. Modelo 210 (IRNR) must be filed for each item of Spanish-source income not subject to withholding.

Risks and Most Common Errors in Relocating to Andorra

Formal residency without substance. The classic error: obtaining Andorran passive residency but continuing to live in practice in Spain (family in Madrid, meetings, expenditure, connections). The AEAT verifies the 183 days through tax authority data, cross-border traffic records, credit card transactions and children’s school attendance. A regularisation may cover all years in which the residency was fictitious.

Failing to notify the change of residence correctly. Modelo 030 (notification of change of address) does not replace deregistration from the consular register, notification to financial institutions and update of civil registry entries. Incomplete notification maintains formal ties with Spain that the AEAT uses as evidence of non-genuine residence.

Ignoring Spanish-source income. After relocation, Spanish income does not disappear: it continues to be subject to IRNR. Business owners who stop filing Modelo 210 on the assumption they have no further obligations in Spain accumulate tax debt with interest and penalties.