Transferring your tax residency to Andorra: the technical elements that truly matter

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🏁 Changing country is not a formality: it is a high-impact legal and fiscal operation

Transferring tax residency to Andorra has become an increasingly common option among entrepreneurs, digital professionals, self-employed workers and senior executives from Spain. However, a frequent mistake remains: treating this change as an administrative procedure, when in reality it is a complex legal operation with international implications and significant risks if not handled correctly.

This article does not repeat the classic messages (“183 days”, “deposit”, “setting up a company in Andorra”). It goes further.

Here you will find expert judgement, a risk-focused approach, and the complete perspective required when changing jurisdiction: taxation, international standards, transfer pricing, place of effective management, personal ties, banking, and documentary coherence.

➤ If you are still familiarising yourself with the basic steps, or if you prefer an overall view before getting into the more complex legal aspects, you may consult the complementary article Relocating your tax residence from any country (UK, Germany, Belgium, etc.) to Andorra: how to do it properly and without risks

🧩 What “changing your tax residency” really means (beyond the 183-day rule)

Most jurisdictions do not determine tax residency solely based on the number of days spent in the country. The “183-day rule” is only one element within a much broader analysis.

Tax authorities typically assess, among other factors:

• where key management and decision-making take place (place of effective management);
• where you habitually reside or spend most of your time;
• where your immediate family lives;
• your spending and consumption patterns;
• which country presents the most coherent narrative of your life;
• the actual use of any available dwelling in different jurisdictions;
• the real operational location of your economic activity.

In practice, “tax residency” is attributed to the jurisdiction that can demonstrate you are genuinely resident there through your life, decisions, activities and economic ties.

➤ To explore this topic further, we recommend Place of effective management: a key element for determining a company’s tax residency.

For individuals, residency criteria are defined in each jurisdiction’s personal income tax legislation. You can review them in detail in our article Tax residency in Andorra: requirements and real advantages.

⚖️ Double Tax Treaties: the mechanism that prevents conflicts… if your case is solid

A Double Tax Treaty (DTT) does not “authorise” a change of tax residency.
However, it sets out clear tie-breaker rules when two jurisdictions claim the same person as a tax resident.

These rules determine, in order of priority:

• permanent home available;
• centre of vital interests;
• centre of economic interests;
• place of habitual residence;
• nationality (if relevant);
• mutual agreement procedures when necessary.

These criteria are essential whenever a tax authority challenges a residency transfer.

For an overview of all treaties currently in force, you may consult Double Tax Treaties our Double Taxation Agreements (DTA/DTTs) in Andorra.

🧱 Business structure: where 80% of mistakes occur

Many residency transfers fail because the company in the original country continues to operate exactly as before.

Tax authorities often conclude that:

• you have not genuinely changed your tax residency,
• because your place of effective management remains abroad.

Critical elements commonly analysed by tax administrations:

• Who makes key business decisions.
• Where contracts, agreements and strategic commitments are signed.
• Where governing bodies meet (board, shareholders, management).
• Where the team responsible for the activity is based.
• The true origin of revenues and value creation.
• Coherence between invoicing, available resources and actual operations.

Common mistakes:

• Keeping the company in the country of origin active without adapting its structure.
• Issuing invoices from Andorra for services physically performed elsewhere.
• Creating “empty” Andorran companies without real economic substance.
• Transferring funds between companies without contracts or arm’s-length pricing.
• Directors signing documentation from the original jurisdiction.

➤ To understand how to relocate your activity correctly, we recommend Incorporating a company in Andorra: steps, requirements and advantages
as well as Key aspects to consider before incorporating a company.

🏠 Housing and real presence: the strongest proof… and the most overlooked

The Andorran real estate market is limited, competitive and often slow. However, it is a central element because:

• your home is a direct indicator of personal ties;
• it demonstrates true availability of residence;
• it determines where you sleep most of the year;
• it serves as objective evidence in any tax audit.

A “decorative” home or one you do not use in practice does not make you a tax resident, and may entail significant risks.

➤ For an overview of the market, we recommend The Andorran real estate market.

🏦 Banking and source of funds: the new key filter after Law 5/2025

Andorran banking is often where applications become blocked or delayed.

Banks must verify:

• lawful origin of funds;
• full financial traceability;
• coherence between declared activity and deposits;
• corporate structure and governance documents;
• expected income and its sources;
• real activity within Andorra.

If your structure is not well designed, the bank will identify the issues before immigration does.

➤ To understand the system, see The Andorran banking system.

Additionally, a poorly consolidated residency may expose you to undesired information exchange. Learn more in Common Reporting Standard (CRS): the global standard for tax transparency and FATCA: the U.S. model that transformed international tax transparency.

🛂 The real types of Andorran residency: how to choose the one that suits you

Each category of residency carries different fiscal, administrative and personal-tie implications.

⭐ Active residency for self-employment

• Requires an Andorran company.
• Implies effective management within Andorra.
• Administrative deposit (according to current regulations).
• Requires real substance and operational capacity.

See Self-employment residency in Andorra: requirements, advantages and real taxation.

👨‍🦳 Passive residency (investment)

• Requires a minimum investment of €600,000.
• Administrative deposit with the AFA.
• Does not allow local employment.
• Ideal for asset holders, rentiers and international investors.

See Passive residency in Andorra: evolution, requirements and legislative changes.

👔 Residency as an employee

• Requires a real employment contract with an Andorran company.
• Allows avoiding the deposit in specific cases.
• Useful for executives, managers and specific projects.

If you are considering any of these options and still have questions, you may contact us without obligation.

You may also review ➤ Types of residency in Andorra: all administrative categories and Types of residency in Andorra: active, passive and tax residency.

If you are wondering whether it is possible to avoid the deposit while being a tax resident in Andorra, the answer is yes—although not in every case. Book your confidential meeting to learn more.

🚪 How to leave your country correctly (what will determine your success in 5 years)

Most difficulties do not arise in Andorra, but rather in how the country of origin is left, both administratively and fiscally.

Key elements:

🕒 1. Tax calendar

There must be full coherence between:

• the actual date you start residing in Andorra;
• deregistration from your previous tax authority;
• beginning of your activity;
• bank account opening;
• acquisition or rental of your home in Andorra (dwelling available for use).

🧾 2. Final income tax return in the country of origin

It is essential to manage the year of transfer with precision.

If you remained a tax resident in your previous country for part of the year, you must file that final personal income tax return, consistent with your future status.

After the transfer, you will generally be taxed as a non-resident only on income sourced in that country, according to the applicable rules for non-residents.

📑 3. Coherent documentation

All documentation must tell one single, consistent story:

• contracts, invoices and proof of funds;
• evidence of physical presence;
• proof that decisions are taken in Andorra;
• service agreements between companies;
• housing contracts and active utilities.

We can help you do this correctly, as we handle such structures regularly.

🏢 4. Company in the country of origin

You must decide whether the company:

• is maintained;
• is liquidated;
• remains active for specific operations;
• is kept as a holding or asset vehicle;
• is restructured.

Whatever the choice, it must be done properly and with economic and legal coherence.

Remember that all related-party transactions must comply with applicable transfer-pricing rules.

➤ Learn more in Related-party transactions: concept, scope and how to record them correctly.

⚠️ Critical mistakes that can ruin the transfer

Even when everything appears correct, risks may persist — particularly during the first years:

• Living in Andorra while maintaining a frequently used home abroad.
• Making a “quick move” without structure or documentation.
• Invoicing from Andorra without real operational presence.
• Keeping companies active abroad without redesigning the structure.
• Lack of objective evidence of presence.
• Banking non-compliance or insufficient traceability.

The risk is not in Andorra.
The risk is that another jurisdiction may demonstrate that you have not sufficiently transferred your life.

🧭 Strategic roadmap for transferring your tax residency

A comprehensive, international-standard plan usually includes:

• analysis of your starting fiscal and asset position;
• assessment of risk in the country of origin;
• choice of the appropriate Andorran residency type;
• design of the corporate and banking structure;
• exit and entry calendar;
• exhaustive documentary preparation;
• continuous review during the first 24 months;
• analysis of potential related-party transactions;
• best strategies for optimisation and risk mitigation;
• countries of activity and your global ties.

Conclusion: transferring your residency is feasible, safe and optimisable… if done with sound judgement

Andorra offers:

• a clear and competitive tax system — see Taxation in Andorra: structure, tax rates and real advantages;
• real legal certainty;
• limited tax burden;
• very low crime rates;
• an advanced and complete healthcare system — see Healthcare in Andorra: how it works and what it really covers;
• an environment that favours business and high-performance lifestyles — see Climate in Andorra: pure air, four seasons and quality of life.

But the success of the transfer does not depend on Andorra:
it depends on the legal solidity of the process and on how the exit from Spain is structured.

A change of tax residency is not “leaving a country”: it is building a new centre of life, activity, decision-making and documentation, capable of withstanding any future administrative review.

Peace of mind is far too important to be taken lightly.

If you wish to analyse your case and obtain a secure, personalised roadmap—with qualified and experienced professionals—you may book your confidential meeting or contact us through the provided form.

We aim to be your support and guidance, ensuring that every decision benefits you now and in the future.

Last revision: November 2025