🇦🇩 Andorra for Traders

Andorra is a microstate in the Pyrenees between Spain and France — a principality (Co-Principat) with around 80,000 inhabitants that was long regarded as a tax-free enclave and, since introducing an income tax (IRPF) in 2015, runs a modern but very low tax system. The top tax rate is 10 %, and private capital gains from minority (free-float) holdings are, under conditions, even tax-free. Andorra uses the euro under a currency agreement with the EU, but is neither an EU nor an EEA member — from the perspective of Germany, Austria or Switzerland, therefore a third country. This is the key difference from Cyprus, Malta or Portugal and has significant consequences for exit taxation (see the section Interaction with Germany, Austria and Switzerland).

Important update: With Llei 2/2026 ("Llei Òmnibus 2", in force since 13 February 2026), Andorra fundamentally tightened the requirements for passive residency (residència passiva): the minimum investment was raised to around €1 million, and the previously refundable AFA deposit was replaced by a non-refundable state levy of around €50,000. Older sources online (the €600,000 threshold, refundable deposit) are therefore outdated — this chapter reflects the situation after Llei 2/2026.

⚠️ Not tax advice. This chapter is a factual orientation, not a substitute for individual advice. Tax treatment depends on the specifics of each case (instruments used, trading intensity, size of shareholding, remaining ties to Germany, Austria or Switzerland). Because Andorra is a third country without a comprehensive tax-treaty network with Germany, Austria or Switzerland, obtaining a prior assessment from an advisor specialized in both Andorra and your country of origin is especially important here.

Andorran income tax (IRPF) has two separate tax bases, both taxed at a maximum of 10 %:

Capital Gains from Securities

For the private trader without a commercial classification, the key rule is the shareholding exemption: gains from the sale of shares and holdings are tax-free (0 %) if the seller has, at no point in the last 12 months, held more than 25 % of the company's capital. For a typical minority (free-float) portfolio (listed shares, ETFs, fund units far below a 25 % stake), this exemption therefore applies as a matter of course.

If the shareholding is above 25 %, taxation is staggered by holding period:

Exception since Llei 5/2023 (from 1 January 2024): holdings in companies whose assets consist of 50 % or more Andorran real estate are excluded from the 25 % exemption and are taxed under the real-estate rules. This is not relevant for a pure securities/options portfolio.

Special Case: "Commercial / Professional Trading"

The sore point for active traders: the favorable treatment — the 25 % exemption, the reduction coefficients and the 10-year exemption — applies in Andorran practice only to persons who do not carry on an economic activity (activitat econòmica). Anyone who, in substance, trades as a main occupation and with a business-like organization can be classified as carrying on an economic activity. In that case, the gains fall into the general base (base general) and are taxed there — still at a maximum of 10 %, but without the reduction coefficients and without the 10-year exemption — as ordinary income from an activity.

In practice this means: the top rate stays at 10 % in both cases — the difference is that the 0 % benefits for passive investors are lost as soon as the activity is classified as commercial. Exactly where the line runs between a private wealth holder and an economic activity is a case-by-case question (degree of organization, borrowed funds, frequency, whether it is the main source of livelihood) and should be clarified with a local advisor beforehand.

Andorra has two basic types of residence permit. For tax purposes, it is additionally decisive that one establishes genuine tax residency — which goes further than a mere residence permit.

⚠️ Residence permit ≠ tax residency. The passive residency permit requires only around 90 days of presence. However, to be considered resident in Andorra by the German/Austrian tax authorities and to no longer be fully taxable there, genuine tax residency is required — generally more than 183 days of physical presence or an actual center of life in Andorra. A 90-day paper residency does not terminate German full tax liability.

Before Llei 2/2026, the €50,000 levy was a refundable deposit with the financial supervisory authority (AFA), which was returned upon a clean departure. Since 2026 it is a non-refundable levy (refunded only if the initial permit application is rejected).

Andorra sounds like a low-tax idyll — the decisive hurdles lie in entry costs, substance and third-country status:

• High entry costs. Under Llei 2/2026, passive residency costs around €1 million in investment plus a €50,000 non-refundable levy (+ €12,000 per dependent). This effectively closes Andorra off to smaller fortunes — it is a destination for wealthy traders, not the average brokerage-account holder.
• Substance and presence. The tax advantage only holds up with genuine residency. Terminating German/Austrian full tax liability generally requires actual physical presence > 183 days or a real center of life — commuter or paper arrangements do not hold up either with Andorra or with the tax authorities of the country of origin.
• No EU membership — no EU freedoms. Andorra is a third country: no EU freedom of movement, no automatic right of residence for EU citizens, a customs border, limited financial "passporting" rights. Market access is narrower than in an EU destination country.
• Banking & CRS. Opening an account in Andorra requires documentation; Andorra participates in the automatic exchange of information (CRS) — capital income and accounts are reported to the state of residence. Lack of transparency is no longer a locational advantage.
• Commercial-activity risk. Anyone who trades at high frequency and as a main occupation loses the 0 % benefits (classification as an economic activity → general base, see the Capital Gains section).
• Exit-tax tail from Germany, Austria or Switzerland — particularly sharp here. Because Andorra is both a third country and a low-tax country, both § 6 AStG (exit taxation) and § 2 AStG (extended limited tax liability) are less favorable here than for EU destinations — see the next section.

🌍 Andorra is a third country. All EU exit-taxation benefits (the former unlimited interest-free deferral for EU/EEA departures, the Austrian non-assessment concept) do not apply. This shapes the whole Germany/Austria/Switzerland picture.

🇩🇪 Germany

Germany–Andorra tax treaty: No treaty in force. Negotiations between Germany and Andorra are ongoing (as of 2026); no signed treaty exists. Without a treaty, there is no treaty-based protection against double taxation; Germany applies its domestic rules (including § 2 and § 6 AStG) unmitigated. An information-exchange agreement / CRS, however, does exist.

§ 6 AStG (exit taxation): On emigration, a deemed disposal is triggered if a shareholding of 1 % or more in a corporation (§ 17 EStG) is held; since 2025, a provision modeled on § 6 AStG in § 19 InvStG additionally covers investment fund/ETF units (from a 1 % share or acquisition costs above €500,000 per fund). For the typical trader with a minority holding of listed shares below these thresholds, § 6 does not apply. Important on the current legal situation: the previously unlimited interest-free deferral (old § 6 AStG) was abolished in 2022 for all departures — for both EU and third-country departures, the same now applies: the tax is assessed upon emigration; on request, it can be paid in seven equal annual installments (§ 6(4) AStG, generally against security). Interest-free deferral until the actual sale no longer exists for anyone — regardless of the destination country.

§ 2 AStG (extended limited tax liability): Here, Andorra is a textbook case. With a top rate of around 10 %, it is a classic candidate for a low-tax country within the meaning of § 2 AStG. The provision can subject certain German-source income to continued taxation for up to 10 years after emigration — the requirements are German citizenship in the last ten years before emigration, moving to a low-tax jurisdiction, and continuing substantial economic interests in Germany. Unlike Cyprus/Malta (where the low-tax classification is disputed), the low-tax threshold for Andorra is practically clearly met. Anyone emigrating without continuing substantial domestic interests (business, shareholding, substantial domestic income) will still frequently not be caught — but the 10-year follow-up test is real and should be taken seriously here, not merely theoretical.

🇦🇹 Austria

Austria–Andorra tax treaty: signed in May 2026; entry into force (ratification) still needs to be verified as of this chapter's snapshot date. Until it enters into force, no treaty-based protection applies. Austrian exit taxation under § 27(6) EStG on capital assets has a non-assessment concept only for departures within the EU/EEA. For the third country Andorra, it does not apply — the exit tax is assessed and due immediately upon emigration (no deferral as with an EU move).

🇨🇭 Switzerland

Switzerland–Andorra tax treaty: currently no treaty in force (at most under negotiation). Switzerland, however, has no general exit taxation on private securities gains — private capital gains are tax-free in any case. For the typical private trader, emigrating from Switzerland to Andorra is largely tax-neutral (special cases: professional securities trading, real-estate gains); without a treaty, however, protection against potential double taxation of ongoing income is lacking.

✅ Suits wealthy investors and calmer traders who can bear the high entry threshold (around €1 million plus a €50,000 levy), genuinely relocate their center of life to Andorra (real presence > 183 days) and act predominantly as passive investors with minority (free-float) holdings (shareholdings below 25 %) — for them, capital gains are tax-free and the top rate on other income is 10 %. An alpine setting, euro usage and a lean 10 % system round out the picture. Anyone bringing only minority holdings below the § 6 thresholds from Germany, Austria or Switzerland and retaining no substantial domestic interests generally crosses the border without an exit tax.

❌ Less suited to traders with smaller fortunes (entry costs out of reach); to high-frequency active traders who, in substance, trade as a main occupation (classification as an economic activity → loss of the 0 % benefits); to holders of shareholdings of 1 % or more or large ETF/fund positions that trigger German exit taxation — for the third country Andorra without EU deferral, only with a 7-year installment plan against security; to Germans with continuing substantial domestic interests (§ 2 AStG applies to Andorra as a clear low-tax country in real terms for up to 10 years); as well as to anyone seeking EU freedom of movement, a dense tax-treaty network or a paper residency.

Snapshot of all figures: July 2026. Figures and rules reflect the Andorran IRPF system, the capital gains exemptions and the residency reform under Llei 2/2026 (in force since 13 February 2026). Not tax advice — obtain a professional assessment of your individual case before emigrating.

• Andorra Insiders — Capital Gains Taxes in Andorra (2026): https://www.andorrainc.com/en/capital-gains-andorra/
• Andorra Insiders — Passive Residency Andorra Requirements 2026: https://www.andorrainc.com/en/passive-residency-andorra/
• Andorra Insiders — Full Guide to All Andorran Taxes (2026): https://www.andorrainc.com/en/andorra-taxes/
• IMI Daily — Andorra Parliament Approves Bill Reshaping Passive Residency Investment Thresholds (Llei 2/2026): https://www.imidaily.com/europe/andorra-parliament-approves-bill-reshaping-passive-residency-investment-thresholds/
• Alexander Thornbury — Andorran passive residency after the 2026 reforms (EUR 1 Mio. threshold): https://alexanderthornbury.com/insights/andorra-residency-post-2026-reform/
• Andorra Tax Calculator — Omnibus 2 Law: 600K→1M Residency Change (2026): https://andorrataxcalculator.com/blog/andorra-omnibus-2-law-2026/
• IR Global — The IRPF in Andorra: essential guide (general vs. savings base): https://irglobal.com/article/the-irpf-in-andorra-esential-guide-for-tax-residents/
• PSF Andorra — Trading taxes in Andorra: what you need to know: https://psf.ad/en/news/trading-taxes-in-andorra-what-you-need-to-know-if-you-invest-from-the-principality
• Immigrant Invest — Andorra Tax Rates 2026 (IRPF, savings base, CASS): https://immigrantinvest.com/blog/andorra-taxes/
• Andorra Solutions — Double Taxation Treaties Andorra (treaty status, Germany/Austria/Switzerland): https://www.andorra-solutions.com/de/doppelbesteuerungsabkommen-andorra/
• Gesetze im Internet — § 2 AStG (extended limited tax liability): https://www.gesetze-im-internet.de/astg/__2.html
• Gesetze im Internet — § 6 AStG (exit taxation, 7-year installment plan under (4)): https://www.gesetze-im-internet.de/astg/__6.html
• Rödl & Partner — Low-Tax Country / Burden Comparison (§ 2 AStG): https://www.roedl.de/themen/wegzug-aus-deutschland-besteuerung/beschraenkte-steuerpflicht-niedrigsteuerland-niedrigsteuergebiet-belastungsvergleich
• Grant Thornton — Exit Tax Topic Hub (§ 6 AStG): https://www.grantthornton.de/en/insights/exit-tax-topic-hub/
• Wohnsitz-Ausland — Exit Taxation Austria (§ 27 EStG, immediate due date for third countries): https://www.wohnsitz-ausland.com/wegzugsbesteuerung-oesterreich/