Administrative and tax residence in Andorra: key differences

Reading time: 6 minutes

1️⃣ 💡 Understanding the two concepts

In a global context, administrative residence and tax residence are essential notions for anyone planning to live, invest or relocate abroad.

Although often confused, they serve different purposes:

• Administrative residence concerns the right to reside in a country.
• Tax residence determines where and on which income one pays taxes.

In Andorra, both can exist simultaneously, but not necessarily overlap. Understanding them is crucial for a sound relocation strategy.

2️⃣ 🏠 Administrative residence in Andorra

Administrative residence is the legal authorisation to live in the country for a specific period. It falls under immigration law and does not automatically entail tax obligations.

There are two main types in Andorra:

🔹 2.1 🧩 Passive residence (without economic activity)

Designed for people not working in Andorra, such as retirees or investors.

Main requirements:

• Minimum investment in real estate or financial deposit in an Andorran institution.
• Health insurance valid in Andorra.
• Sufficient financial means.
• No criminal record.

Ideal for enjoying Andorra’s advantages without conducting a local business.

🔹 2.2 ⚙️ Active residence (with economic activity)

For those wishing to work or start a business in Andorra.
It can be obtained through:

• Employment contract with an Andorran company; or
• Incorporation of a local company.

Applicants must prove solvency, health insurance coverage and a clean record.

👉 To learn more, read the article Types of residence in Andorra: active, passive and tax for a detailed overview of each category.

3️⃣ ⚖️ Tax residence in Andorra

Tax residence defines the fiscal link between a person and a country — determining where and how taxation applies.

An individual is considered a tax resident in Andorra if they:

• Spend more than 183 days per year in the country;
• Have in Andorra the centre of their economic or professional interests;
• Are presumed resident if their spouse and minor children live habitually in Andorra.

Tax residents are taxed on their worldwide income, under a competitive and transparent regime aligned with international standards.

👉 For a better understanding of Andorra’s tax framework, see the article“Taxation in Andorra: structure, rates and real advantages.”

4️⃣ 🧩 Differences and relationship between both

The two statuses may coincide, but they are not mutually dependent.
Someone can hold administrative residence without being a tax resident, especially if spending much time abroad.

However, individuals who base their life and business in Andorra generally become tax residents as well.

This link directly impacts global taxation, double tax treaties, and international reporting obligations (CRS).

👉 If you’re interested in this topic, read the article“Double taxation treaties and their practical application.”

5️⃣ 💼 Practical considerations and planning

Before applying for residence, it is essential to evaluate:

• The actual time spent in the country.
• The location of family and economic interests.
• The tax impact in both jurisdictions.

Proper pre-relocation tax planning prevents conflicts and ensures full compliance.
Working with experienced advisors helps structure residence and taxation efficiently.

6️⃣ 🌍 Conclusion

Administrative residence grants the right to live in Andorra; tax residence determines where taxes are paid.
Both must be considered together for a secure and compliant relocation.

Andorra combines fiscal attractiveness, stability and international transparency, making it a preferred destination for entrepreneurs and expatriates.

📚 Related articles

• Living and working in Andorra: what to know before moving — Practical and legal insights for those planning to relocate and work in the Principality.
• Tax residence and new international trends — How global shifts in transparency and taxation affect those optimising their residency.
  URL: URL not found

Last updated: October 2025