TL;DR. The UK non-domicile regime was abolished on 6 April 2025 and replaced with the four-year Foreign Income and Gains (FIG) regime, which is far less generous than the former remittance basis. Wealthy individuals who previously relied on non-dom status are relocating in significant numbers. Andorra offers a 0–10% personal income tax (IRPF), a 10% flat corporate tax (IS), 0% wealth, inheritance and gift taxes, 0% capital gains tax on assets held more than ten years, and an EU-adjacent passive residency that requires a EUR 1,000,000 qualifying investment under the 2026 framework set by Llei 2/2026 (Llei Òmnibus 2). Total first-year relocation costs typically range from EUR 1.06M to EUR 1.10M including the EUR 50,000 non-refundable state contribution, plus 90 days of physical presence per year.
Andorra Relocation Key Facts (2026)
| Item | Andorra (2026) | UK Post-Reform (from 6 April 2025) |
|---|---|---|
| Personal income tax | 0–10% (IRPF, Llei 5/2014) | Up to 45% on worldwide income after FIG period |
| First EUR 24,000 of income | Exempt | Taxed |
| Income EUR 24,001–40,000 | 5% | Taxed |
| Income above EUR 40,000 | 10% | Up to 45% |
| Corporate tax | 10% flat (IS, Llei 95/2010); 2% special regimes | 25% main rate |
| VAT / IGI | 4.5% (Llei 11/2012) | 20% |
| Wealth tax | 0% | None nationally |
| Inheritance tax | 0% | Up to 40% above nil-rate band |
| Gift tax | 0% | Potentially 40% (7-year rule) |
| Exit tax | 0% | Not currently general, but tightening |
| Capital gains tax on shares held 10+ years | 0% | Up to 24% |
| Passive residency investment | EUR 1,000,000 (Llei 2/2026) | N/A |
| State AFA non-refundable contribution | EUR 50,000 | N/A |
| Minimum physical presence | 90 days/year | 183 days = automatic UK residence |
| Double Tax Agreements in force | 22 (including UK) | 130+ |
| Currency | EUR | GBP |
What Changed for UK Non-Doms in April 2025?
The UK abolished the remittance basis of taxation on 6 April 2025 and introduced the four-year Foreign Income and Gains (FIG) regime in its place. The previous regime, which had existed in some form for over 200 years, allowed UK-resident non-domiciled individuals to keep foreign income and gains outside the UK tax net for up to 15 years. That is no longer possible.
Under the new FIG regime (HMRC guidance, March 2024 Spring Budget; legislated in Finance Act 2025), individuals who become UK resident after at least ten consecutive tax years of non-residence are exempt from UK tax on their foreign income and gains for only four tax years, and only if they make a formal claim. Claimants lose their personal allowance and annual capital gains exempt amount for the years they claim. From year five onwards, UK residents are taxed on worldwide income at marginal rates that reach 45%, and on worldwide capital gains at up to 24%.
For HNWIs whose pre-2025 plan was a long-horizon non-dom residency, the FIG regime is simply too short. Many are now relocating instead of restructuring around four years.
Why Are UK HNWIs Looking at Andorra Specifically?
Andorra combines three features that almost no other European jurisdiction offers together: low and certain tax rates, a credible regulated environment, and physical proximity to the UK. According to BOPA, the official gazette of the Principality, Andorra’s tax framework is set by parliamentary law and has remained stable in its essentials since the introduction of IRPF in 2014. Corporate tax (IS) is a 10% flat rate under Llei 95/2010, with a minimum effective rate of 3% in some scenarios. Personal income tax under Llei 5/2014 is a progressive 0–10% with the first EUR 24,000 of income exempt, 5% on the bracket EUR 24,001–40,000, and 10% above EUR 40,000.
Andorra has 22 double tax agreements in force in 2026, including with the United Kingdom (the Andorra–UK DTA entered into force in 2021 and is a standard OECD-model treaty). The UK DTA provides clear tie-breaker rules for residency, withholding tax caps on dividends, interest and royalties, and a mutual agreement procedure.
Andorra has no wealth tax, no inheritance tax, no gift tax, and no exit tax. Capital gains on shares held more than ten years are taxed at 0%. Real estate gains by residents are taxed on a sliding scale that reaches 0% after twelve years of ownership.
How Does the Andorran Passive Residency Work in 2026?
Andorra’s “residència passiva” — formally a non-lucrative residence permit for investors — is the route most relevant to UK non-doms who do not need to work in Andorra. The requirements were updated by Llei 2/2026, known as the Llei Òmnibus 2, published in BOPA No. 15 on 12 February 2026 and in force from 13 February 2026.
The 2026 framework requires a qualifying investment of EUR 1,000,000 in Andorra. Acceptable investment categories include Andorran real estate at a minimum of EUR 800,000, public debt of the Principality, shares or units in Andorran companies, life insurance with Andorran insurers, or — alternatively — EUR 400,000 to a dedicated alternative housing fund created to address Andorra’s housing pressure. In addition to the EUR 1,000,000 investment, the applicant must pay a EUR 50,000 non-refundable contribution to the Andorran state and EUR 12,000 per dependent. Applicants must spend a minimum of 90 days per year physically in Andorra and maintain valid private health insurance.
The permit is initially granted for two years, then renewed for three years, then renewed for two further successive three-year periods. After ten years of continuous residence, permanent residence may be requested.
How Much Does It Cost a UK Family of Four to Relocate in Year One?
A representative all-in budget for a UK family of four (two adults, two dependent children) using the real-estate route is approximately:
EUR 1,000,000 in qualifying investment (e.g., a EUR 800,000 home plus EUR 200,000 in Andorran assets), EUR 50,000 in non-refundable state AFA contribution, EUR 24,000 in dependent contributions (EUR 12,000 × 2), Property Investment Tax (IEI) at 6% on the first property purchased by a non-resident (EUR 48,000 on a EUR 800,000 home; the rate rises to 10% on additional properties), professional and legal fees in the EUR 12,000–18,000 range, and translation, apostille and notarial fees typically EUR 3,000–6,000. The total comes to approximately EUR 1.14M, of which roughly EUR 800,000 is the home (an asset, not an expense), EUR 200,000 is liquid investment, and EUR 137,000–143,000 is true cost (state fee, IEI, professional fees and dependents).
Recurring annual costs include private health insurance (EUR 1,200–3,000 per person depending on age), cost of living for a family of four typically EUR 60,000–120,000 depending on lifestyle, and annual tax advisory of EUR 3,000–8,000.
What Is the Step-by-Step Process from London?
The process typically takes between three and six months from engagement to permit issuance. The sequence is: initial eligibility and tax-residency analysis (week 1); document gathering, apostille and sworn translation of birth, marriage and police certificates (weeks 2–6); opening an Andorran bank account and depositing the qualifying funds (weeks 4–8); signing the property purchase or making the alternative qualifying investment (weeks 6–10); filing the residency application with the Immigration Service and AFA (week 8–10); biometric appointment in Andorra la Vella (week 10–14); and permit issuance (week 14–24).
UK tax residency must be ended cleanly using HMRC’s Statutory Residence Test. The “split-year treatment” is the typical mechanism for HNWIs leaving the UK mid-tax-year, and requires a clear cessation of UK ties and a permanent home outside the UK from a defined date.
Where Does the Andorra–UK DTA Help?
The 2021 Andorra–UK Double Tax Agreement applies once the individual is resident in Andorra under Andorran domestic law and is no longer UK resident. The treaty’s tie-breaker article (typically Article 4) resolves dual-residence conflicts in favour of the state of permanent home, then centre of vital interests, then habitual abode, then nationality. UK dividends paid to an Andorran resident face a withholding tax cap of 15%, and interest and royalties typically 5%. The treaty contains an OECD-standard exchange of information article and a principal purpose test.
What Are the Common Mistakes UK Non-Doms Make?
The three recurring mistakes we see in our practice are: (1) treating Andorra as a “passive parking” jurisdiction without actually meeting the 90-day physical presence and centre-of-vital-interests test, which exposes them to a successful HMRC challenge under the Statutory Residence Test; (2) underestimating the cost of leaving the UK cleanly — pensions, ongoing UK property, UK employment income and UK situs assets all have specific treatments under the DTA and under Inheritance Tax rules; and (3) confusing Andorran passive residency with tax residency. Passive residency is an immigration status. Tax residency requires either 183 days in Andorra in a calendar year or the centre of economic interests in Andorra. The two must be aligned for the full tax benefits to apply.
Frequently Asked Questions
Is the EUR 1,000,000 investment refundable?
The EUR 1,000,000 qualifying investment is yours — it stays in your name as Andorran real estate, securities, public debt or insurance. The separate EUR 50,000 contribution to the Andorran state is non-refundable. Per-dependent contributions of EUR 12,000 are also non-refundable.
Can I keep my UK property after relocating?
Yes, but the property remains subject to UK tax. Rental income is taxed in the UK as UK-source income, and a future sale is subject to UK Capital Gains Tax for non-residents on UK residential property. The Andorra–UK DTA generally allocates taxing rights on immovable property to the situs state.
Does my UK pension still get taxed in the UK?
UK state pension and most private pensions are typically taxable in the country of residence under the DTA, with relief mechanisms to avoid double taxation. Government-service pensions are generally taxed only in the UK. Personal advice is required.
How does Andorra treat trust income?
Andorra does not have a domestic trust law. Trust distributions to Andorran tax residents are typically treated as ordinary income or capital gain depending on the underlying asset, with specific look-through rules for transparent structures. Trust restructuring before relocation is often part of the engagement.
Do I need to learn Catalan?
Catalan is the only official language and is required on government forms, but professional and commercial life is conducted fluidly in Spanish, French and English. The residency interview does not require Catalan proficiency.
How long until I qualify for Andorran nationality?
Andorran nationality has a long residency requirement (typically 20 years) and is rarely pursued by HNWIs. Most relocations target permanent residence after ten years of continuous status.
Sources
- BOPA — Butlletí Oficial del Principat d’Andorra: https://www.bopa.ad
- Llei 2/2026 (Llei Òmnibus 2), BOPA No. 15, 12 February 2026
- Llei 5/2014, de l’impost sobre la renda de les persones físiques (IRPF): https://www.portaljuridic.ad
- Llei 95/2010, de l’impost sobre societats (IS): https://www.portaljuridic.ad
- Llei 11/2012, de l’impost general indirecte (IGI): https://www.portaljuridic.ad
- HMRC guidance — Check if you can claim the 4-year foreign income and gains regime: https://www.gov.uk/guidance/check-if-you-can-claim-the-4-year-foreign-income-and-gains-regime
- HMRC Statutory Residence Test: https://www.gov.uk/government/publications/statutory-residence-test-srt
- Andorra–UK Double Tax Agreement (in force since 2021): https://www.gov.uk/government/publications/andorra-tax-treaties
- Govern d’Andorra — Immigration Service: https://www.govern.ad
- Autoritat Financera Andorrana (AFA): https://www.afa.ad
Next Steps
If you are exiting the UK because the four-year FIG regime is too short for your plan, two practical next steps usually pay for themselves several times over.
[Calculate Your Tax Savings →] Use our Andorra Tax Savings Calculator to compare your current UK liability against an Andorran residency scenario across five and ten-year horizons.
[Book a Free 30-Minute Consultation →] Speak directly with Josep Fusté Badana, ICLG-contributing author on Andorran Private Client law, about whether passive residency, active residency or a company-formation route fits your specific facts.
Author: Josep Fusté Badana — Senior Tax & Residency Advisor, Axior Global, SLU. ICLG Contributing Author — Private Client Laws and Regulations (Andorra). Licensed Tax Advisor — Principality of Andorra. 15+ years advising HNWIs on Andorran residency and cross-border taxation.
This article is for general information only and does not constitute tax or legal advice. Tax outcomes depend on individual facts and may change with subsequent legislation.