Advantages and disadvantages of Andorra to live

Analysis of the benefits, pros and cons beyond tax advantages

The andorra advantages they make it a unique and commendable country are many and diverse. This micro state has some qualities that can make it the best for your situation, culture and context. For Europeans, especially French, Spanish and Portuguese, both the jurisdiction itself and the andorra lifestyle Together they can make this the preferred option when looking to change country of home.

However, living in the Principality also has its drawbacks and drawbacks: it has its pros and cons. That is why we wanted to outline the biggest advantages and disadvantages of Andorra in this article so that you can get an idea before taking the step and deciding whether to settle in Andorra by 2024.

Table of Contents

The benefit of Andorra to live par excellence, the most famous and recognized by all, is its low taxes. Since the Principality's international opening, taxation stands out for an approved tax framework with taxes similar to those of its European neighbors but with substantially lower rates. That is why we will address this question first: the andorra tax advantages

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Tax advantages of Andorra

To get a first basic idea, it is quite useful to comparer the general types of the most relevant taxes applied to Andorra and Spain. That is to say: broadly contrast what taxes or fiscal burden a certain legal entity would bear when acting in an equivalent way in both countries. So we can easily see the first advantage of Andorra. You can see it in more detail in this comparison of taxes between Andorra and Spain

Simple taxation comparison

Corporate tax10%25%
Work income tax (min bracket)0%19%
Work income tax (max bracket)10%50%
Capital income tax (min bracket)0%19%
Capital income tax (max bracket)10%26%
General indirect tax (on consumption)4.5%21%
Social contributions for companies15.5%28%

As we can see, the difference is very notable and the tax advantages are clear. We will then proceed to list the details and most important advantages of each Andorran tax and your tax situation. We go into more detail in our published page about taxes in Andorra.

Summary of the most important taxes

  • The general rate is 10%
  • In certain conditions it can be 2%
  • During the first three years and if the turnover is less than €100,000:
    • First €50.000 are taxed at 5%
    • The rest is taxed at 10% 
  • Some holding companies exempt from corporate tax liability
  • The general rate is 4.5%
  • There are reduced and super-reduced rates of 0% and 1% for necessity products
  • A special rate of 2.5% applies to certain services, essentially cultural
  • Tax rate increased by 9.5% for banking and financial services
  • The maximum rate is 10%
  • It is a tax with brackets, resulting:
    • From €0 to €24.000 it applies 0%
    • From €24.000 to €40.000 the rate is 5%
    • The income from the first €40,000 is taxed at 10%
  •  The dividends from Andorran companies are not taxed never (0%)
  • Working for others, 22% of the salary is paid:
    •  15.5% in charge of the company
    • 6.5% in charge of the worker
  •  Working on your own, 22% is also applied based on the contribution, BUT:
    • The minimum contribution base is €2,041, resulting in a minimum contribution of €450
    • There are CASS reductions under certain requirements

Regarding parish and municipal taxes in Andorra, they are usually applied to individuals and legal entities, and do not usually exceed €800-1,000 per year for companies and €75 for individuals. The advantages of paying taxes in Andorra like this are clear.

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Other advantages of living in Andorra

advantages of Andorra, why settle in the Principality

Physical security

Andorra is a country with great security and this is accredited by international organizations. Among its causes we can highlight its demography with multiple nationalities and spoken languages and its peculiar orography. For example one of the advantages is the low incidence of crime in the Principality. In fact, people like Rubius already listed this as a great advantage of living in Andorra.

The United Nations Office on Drugs and Crime publishes annually The United Nations Crime Trend Survey, a statistic on global crime and places the Principality in 153.9 people convicted of crimes per 100,000 inhabitants, one of the lowest in the world. It is also low compared to neighboring countries, which are usually between 500-1,000 crimes or another micro-state, Monaco, which is close to 2,000. Thus, residing in Andorra offers security.

This also makes sense with World Bank data, in which the Principality of Andorra occupies the 5th place in the world ranking as one of the safest countries according to the political stability and low crime. To give us an idea, Spain is in 31st place, with Barcelona considered one of the most insecure cities in Europe. This advantage is even more relevant if we take into account that through this country pass 8 million tourists a year.

Legal certainty

Another advantage, especially for create a company and residing in Andorra, is legal certainty, which is guaranteed by its legal system and its institutions. Legal certainty is a principle recognized and protected by the Andorran Constitution (1993), being a fundamental advantage in its democratic structure. This has allowed the great development of the Principality from 1950 to the present day, and has facilitated the investment in Andorra both Andorran and international ones.

With new reforms, legal certainty has been reinforced of international investments in the Principality of Andorra with the adoption of a new tax framework, the liberalization of foreign investment and the negotiation of no double taxation agreements. In the Principality begging is prohibited, let alone squatting homes without consent. Of course, if we compare it with Spain, Andorra also has an advantage in this field.

Stability and location

Finally, in this block it is worth mentioning as a last advantage of residence in Andorra the stability of the country, which has historically maintained its neutrality in the face of the various armed conflicts that neighboring countries have suffered. Being an international state recognized as such, it has a seat at the UN and representation in numerous international organizations and behaves like Switzerland: with its clear Western values but keeping a certain distance to defend its interests.

A very advantageous health system

Health in Andorra or CASS

Due to the high per capital income, the low overcrowding in the country, and the large participation of workers who contribute to social security, CASS is a very efficient system and one of the main advantages of living in Andorra. This is a sophisticated and competent system. Although there are specialties to which there is no access in the country itself, the CASS has established agreements with the social security services of Spain and France for this purpose.

Charles Álvarez-Marfany, ex Health Minister.​

“The three basic elements of our health system are co-responsibility, because citizens directly pay a part of the treatments; solidarity, because people who cannot cope with the co-payment are not excluded from the system, and the free choice of doctor, because patients can choose which doctor will treat them.”

The enormous advantages of Andorra with respect to the sanitary system, that they have been worth the first place in the world ranking of a report from the medical journal The Lancet, as the best system in the world. But how does this system work?

The Andorran system is integrated into the Andorran social security or Caixa Andorrana de la Seguretat Social (CASS). All professionals who offer services subsidized by CASS can join this system as agreed, in a a kind of check system in which the State is obliged to finance health services, but it is the user who chooses who, where and how he obtains them. 

This obviously gives freedom for CHOOSING to doctor to the citizen and allows there to be competition in services, promoting quality and merit.

The second principle is that of co payment. The operation of this co payment is as follows:

  • First, the registered user pays the full cost of the services agreed by the CASS
  • After a period (hours or days) the CASS returns the corresponding co-payment percentage to the citizen
  • There are private compensation insurance to cover the percentage of co payment supported

The subsidized amounts (which the CASS returns) are the following:

  • 75% of the expenses derived from consultations to specialists or medications.
  • 90% when expenses correspond to hospital admissions or surgeries.
Finally, CASS also deals with financing 100% of the treatment for those who demonstrate that they cannot cope with the debt, such as people without resources or in a situation of social exclusion, thus linking with the third principle: solidarity. There are also very affordable complementary private insurances that cover the unsubsidized amount of the CASS, avoiding the copayment. For more information, such as agreements on specialties, the referring doctor, etc. visit our article on Andorran healthcare system.

Health indicators

One way to assess the health of a country is to take a look at its indicators for this purpose. In life expectancy, for example, Andorra has been in the top ten for many years, down and up positions according to rankings, years and methodology. So we have, for example, that in 2017 according to the WHO occupied the fifth place, above Spain, that according to the United States Census Bureau is the best in the world or the cessation of support by WHO for having less than 250,000 inhabitants. Anyway, the life expectancy in Andorra it has always far exceeded 80 years, reaching almost 84 sometimes.

Another interesting identifier is the Human Development Index (HDI), prepared by UNDP (United Nations Development Program). According to the UN itself, in 2016 Andorra obtained a rating of 0.858, one of the highest in the world.


About the environment we could highlight many things, as we have in our article dedicated to the environment in Andorra. Nature is another of Andorra's advantages and the country and the Government know it and preserve it. From the Escuela Verde project, international agreements and greenways to waste management, wildlife recovery or the cogeneration plant. But let us keep some data from the Environment Indicators of 2018 that the Ministry of Environment and Sustainability prepares each year:

  • More than 84% of surface water is of excellent or good quality
  • 20% of the electricity demanded by Andorra is generated only at the Engolasters hydroelectric plant
  • The air quality was excellent or good 91% of the time of the year
  • The acoustic quality was excellent or good 84% of the time
  • Recycling results obtained from 50.4% thanks to selective collection
  • More than 90% of Andorra area is forest land
  • In addition, it is always in the top ten in the WHO ranking on air pollution in Europe 

A solvent and sustainable economy

To describe the economy of Andorra we will rely on a publication of the Chamber of Commerce called Andorra en Xifres (Andorra with numbers) published by the Chamber of Commerce and carried out by the country's Department of Statistics. Specifically the one from 2018 (last). Being quick on the basics, Andorra has a population of about 75.000-80.000 people and a population density of 160 inhabitants / km2. There are 9.000 companies and establishments registered and more than 200 tourist accommodation.

The country has a per capita income of around €36,000 per year and 36,000 wage earners with a average salary of €2,100-2,200 per month. One of the clearest economic advantages is that unemployment is only 1.5-2.5% of the active population. The public debt it is less than 40% with respect to GDP and the rating is reduced and improved every year. What does this mean?

Well, as before, an easy way to understand this data is to compare with Spain, the neighboring country. Spain has a per capital income of about €26,000 per year, an average salary also of about €2,200 per month, a 15-20% unemployment and a public debt of 100% of GDP, progressively worsening each year. Andorra has a great advantage.

Andorra, a services country

The characteristics of the Andorran climate and geography, together with the fact that it does not have raw materials or energy sources, have driven Andorra specialization towards tertiary activities, concretely the service sector. Within this, it is worth mentioning the trade (27.4% of the workers in the sector and i 28.6% of the businesses), and the hotel industry with 14.7% and 12.4%, respectively. Others are Public Administration (13.5%) and real estate, rental and business services (14.3%).

This is clearly in line with the data of the tourism of the country, which is their main source of income and benefits. Andorra usually receives around 8 million people every year. Of them about three million or 35% are tourists (spend at least one night in the country and about five or 65% are visitors (do not stay in the country). The vast majority of them are Spanish or French.

The biggest tourist activity in the country is obviously ski. Andorra has three companies dedicated to snow sports: Grandvalira, Vallnord and Naturlandia, which cover all activities, with 318 km of slopes and more than 3,075 hectares of skiable areas, holding the record for the most mechanical chair lifts per square meter in the world, with a capacity of 160,000 people per hour.

Outside of winter sports, Andorra has many more service offers:

  • Caldea with its unique spas, gym, etc
  • The Paley de Gel for ice skating
  • Ecotematic park in Naturlandia
  • Three natural parks, of which one being UNESCO world heritage
  • Lots of sporting events (La Delta, world MTB, etc), artistic events (Cirque Du Solar) and much more
And why is this an advantage for Andorra? Well, it's very easy: in a country full of events, services and activities to do there is no room for boredom. From camping in the high mountains, hiking or skiing to taking a break at Caldea or other spas or trying exquisite gastronomy delicacies in restaurants, there is always something to do in Andorra.

Advantages of buying in Andorra and trade

Andorra's commercial tradition is well known throughout the world. Commerce is the main activity, and it is mainly concentrated in the capitals (Andorra la Vella and Escaldes). Its nearly 1,400 stores and shops, the quality of its products and competitive prices leave no one indifferent. Especially because another of Andorra's advantages is that shopping is cheaper.

This is due to not carrying so much extra cost for indirect taxes (VAT and special). Nor does it miss the hourly flexibility of the establishments and the very wide range of products and services sold. And what does this imply? Well, what the cost of living in Andorra is lower than its neighboring countries. Although in some products it is quite similar, in others (especially the most expensive) the difference is very clear. This is the case of tobacco, gasoline, appliances and technology, perfumes and jewelry, furniture, sports equipment, etc.

A connected country

The Principality of Andorra is located in the south-west of Europe, in the Pyrenees between Spain and France. It is relatively close to the international airports of El Prat (Barcelona, about 200km), Blagnac (Toulouse, about 200km) and Lleida-Alguaire (about 160km). And if that was not enough, La Seu airport recently came into operation with its Madrid line every Friday and Sunday. The aerodrome of La Seo de Urgel (Spain), located 7 km from the border between Andorra and Spain, can accommodate private jets.

There is also a project to build a heliport in Andorra with an international vocation, which will connect the Principality of Andorra with Barcelona and Tolosa. But the most remarkable thing about this country, the best of its advantages regarding connectivity, is undoubtedly the total fiber optic coverage for all homes. Andorra has always been an advanced country in telecommunications systems, both in terms of telephony and Internet services.

Since 2007 the entire Principality has had digital terrestrial television, since the country was a pioneer in the analog blackout. Parallel, from 2006 to 2013 Andorra decided strongly on connectivity with the national development of the fiber optic with 100 Maps access speed to all homes in the territory. This fiber optic deployment has led to further milestones: in 2014 the disconnection of the ADSL was carried out and in December 2016 all copper telephone services were completely eliminated.

Continuous service improvement: Andorra Telecom renewed the active network in 2017 so that all households and companies in the Principated they had Internet access of up to 300 Mbps, and finally in 2018 at 700 Mbps. Currently you can have up to 1GB symmetrical and at a fairly affordable price, which is a great advantage for those who need fast and advanced internet to work or sell their services. On the other hand, the telecommunications company updates its plans every year by providing more services (more Gigas) at a lower price.

Disadvantages of Andorra

Until now, the advantages have remained beyond the tax benefits of Andorra. However, we have said that also has its drawbacks, so we will name them in this section so that they are also taken into account. On our article on moving to Andorra We also mention who Andorra is not for.

  • The rental of housing it is quite expensive. Obviously if it is compared with a city like Barcelona, Madrid or Valencia, Paris, London or Lisbon it is not quite affordable, but not if we do it with a lost town in Extremadura. The average rent of a flat or a home in Andorra will be equivalent to that of a secondary city in Spain such as Zaragoza or Seville. In our article dedicated to housingIn any case, they have more information about it.
  • Another drawback is social security contributions. Although the social security in Andorra It is much better than that of countries like Spain because it is more solvent, efficient and effective and has a greater coverage of services, its contributions are quite expensive. On the one hand, the share of autonomous or self-employed workers is from €450-500 per month, and although there are bonuses for certain people, it becomes a heavy slab. On the other hand, in salaries, many times they do not have a maximum limit, which is very detrimental to high salaries.
  • It is a very quiet country there is not much party or social contact. The difference with Levante areas like Barcelona and even with Madrid can be quite large. Although there are events very frequently, the day-to-day pubs and clubs are quite mediocre and could be improved. If you are a party person you may not like it.
  • It's a small country. This can be an advantage for some people but a disadvantage for many others. There are people who feel overwhelmed after being in the country for a long time even though they can leave it. It really is not such a small country in terms of terrain, but since the 98% of the territory is forested and mountainous, subjectively it is.
  • Andorra is pure mountain. If you regularly wear the mountains, consider that the Principality may not be for you. Here the slope is brutal in practically all parts of the country, much more than in Switzerland where the valleys are quite flat.
  • The Andorran banking system it's pretty outdated. Andorra recently entered the SEPA zone and banks base their business model on commissions for financial services. Although progress is being made, as the first banking application with free international transfers and bizum included has already been released.

Conclusion of the advantages and disadvantages

As the old saying goes, “there is no free lunch”: everything has a price. Although settling in Andorra is very advantageous, especially in terms of taxation and the economic and legal situation, it also has certain disadvantages., especially with regard to the costs of renting a home and the social security contribution if you want to be an entrepreneur or if you have a very high salary. On the other hand, the particularities of the country can effect pros or cons to live according to the person.