Tax haven in Andorra: myth, reality and what the current tax system really says

Reading time: 8 minutes

Understanding why people still talk about a “tax haven”

For many years, Andorra was associated with banking secrecy, the absence of direct taxes and an opaque financial system. This image — deeply rooted in public opinion — is still present today, especially in Spain and France.
However, the current reality is completely different: Andorra applies personal and corporate income taxes, cooperates with more than one hundred countries through automatic exchange of information, and no longer appears on any official list of non-cooperative jurisdictions.

➤ If you want to understand how Andorra’s regulatory framework evolved, you may find the article Evolution of the Andorran tax framework useful.

This article explains, with technical criteria and historical context, whether Andorra can be considered a tax haven today or whether, instead, it should be understood as a compliant jurisdiction with moderate taxation.

What “tax haven” really means

Although the term is often used casually, international organisations define it quite precisely. A territory is considered a tax haven when it meets some of these elements:

• Non-existent or merely nominal taxes. You can understand the country’s actual tax system in the article Taxation in Andorra
• Regulatory opacity and lack of information exchange. To understand how global transparency works today, especially in financial matters, see Common Reporting Standard (CRS) and also FATCA.
• Lack of real economic substance. You can explore this further in the article Place of effective management
• Extreme protection of financial confidentiality. Discover how banking privacy in Andorra works today.
• Schemes designed to attract foreign capital without adequate controls. Learn more in Foreign investment authorisation in Andorra.

The OECD applies three key criteria:

• non-existent or merely nominal taxation,
• opaque protection of financial information,
• lack of cooperation with tax administrations.

As we will analyse, Andorra meets none of these criteria and therefore cannot be considered a tax haven.

International lists and Andorra’s current position

Organisations such as the OECD, the EU and the FATF publish lists of jurisdictions that do not meet international standards. Being included in these lists has reputational, fiscal and diplomatic consequences.

➤ You can read more about the FATF and MONEYVAL grey list in our dedicated article.

Andorra was under scrutiny for years, but the country undertook a profound transformation:

• introduction of corporate income tax. You can learn more in the article Corporate income tax in Andorra
• creation of the personal income tax (IRPF). For more details, see Personal income tax (IRPF) in Andorra
• accession to automatic financial information exchange (CRS). Read Common Reporting Standard (CRS) and FATCA
• signing double taxation treaties with numerous countries,
• elimination of traditional banking secrecy.

Since 2012, the country has been removed from the OECD grey lists and is now considered a fully cooperative jurisdiction by the European Union.

➤ To understand how tax treaties work, the article Double taxation treaties (DTT) in Andorra may be useful.

From opacity to transparency: how the banking system changed

The historic perception of Andorra as a financial refuge came mainly from its former banking secrecy and the existence of numbered accounts. That system has been abolished.

Today, Andorran banks:

• automatically report to more than 100 jurisdictions,
• verify the origin of funds using international standards,
• report transactions under FATCA rules for U.S. citizens,
• work closely with the AFA (Andorran Financial Authority).

This represents a structural shift: Andorra is no longer an opaque refuge, but a fully compliant and internationally aligned financial centre.

➤ For a full picture of the sector, we recommend the article Andorran banking system: banks, regulation and international presence.

Current taxes: a competitive but compliant system

Not being a tax haven does not mean Andorra is no longer fiscally attractive. Its strength lies in the combination of international compliance and moderate taxation.

🔸Corporate income tax (CIT)

• General rate of 10 %.
• Competitive regime for holding companies and asset-management structures, always within legal boundaries.

➤ You can read more in Corporate income tax in Andorra.

🔸Personal income tax (IRPF)

• Maximum rate of 10 %, with broad exemptions and a very moderate approach for middle incomes.
• No wealth tax.

➤ More information in Personal income tax (IRPF) in Andorra.

🔸IGI (VAT equivalent)

• General rate of 4.5 %, one of the lowest in Europe.

➤ More information in VAT in Andorra: how IGI works

🔸Other relevant advantages

• Broad exemptions on Andorran-source dividends.
• Very favourable taxation of financial income. See How financial income is taxed in Andorra.
• No inheritance or gift tax.
• No wealth tax. See Wealth tax in Europe: countries that have it and why Andorra is an exception.
• Moderate property taxation. To learn how real-estate gains are taxed, see How real-estate capital gains are taxed in Andorra.

In practice, for an entrepreneur or professional who relocates legally and meets residency requirements, the effective tax burden rarely exceeds 10%.

🔍 Why many people still believe Andorra is a tax haven

Despite its transformation, public perception remains anchored in the past. The main reasons are:

• Comparison with much heavier tax systems (Spain and France).
• Persistence of the old banking secrecy narrative.
• Lack of knowledge about CRS and international cooperation.
• Confusion between “low taxes” and “tax haven”, which are not synonyms.
• Media interest in portraying Andorra as an extreme fiscal outlier.

➤ If you are considering relocating to the country, the article Types of residency in Andorra: active, passive and fiscal may be helpful.

If you want to understand how fiscal residency works, see Tax residency in Andorra: requirements and real advantages (2025).

Andorra today: low taxation, full cooperation

Using the legal definition, the answer is clear: Andorra is not a tax haven. The country:

• cooperates internationally,
• applies modern taxes within a complete fiscal system,
• exchanges information transparently,
• meets OECD and EU standards,
• maintains strict financial supervision.

Using the informal definition — “any place where you pay less than in your home country” — Andorra will continue to be seen as a “paradise” by many foreign taxpayers.

What truly matters is what the country offers:

• a stable and moderate tax framework,
• legal certainty,
• full regulatory compliance,
• efficiency for international corporate and wealth structures.

Conclusion

Andorra has moved from an opaque financial centre to a modern, transparent and internationally aligned jurisdiction.
Its tax system is low, yes, but completely legal and compliant.

Thanks to a strong tourism-based economy, the country remains financially solid despite having one of the lowest VAT rates in Europe (IGI). Andorra does not need to increase taxes to remain viable.

For any entrepreneur, investor or professional, the question should not be whether Andorra is a tax haven, but whether its model fits your personal and financial situation.

Although some jurisdictions may still label it a tax haven out of unfamiliarity or due to the absence of a double-tax treaty, globally this definition no longer applies.

📞 Do you want a personalised assessment?

If you need to analyse your specific situation and determine whether relocating to Andorra is right for you, you can book a personalised meeting or contact us through our form.

Last review: November 2025