ProGestió
Andorra
Underestimated timelines, housing, residency status, banking, rushed holding: the real pitfalls of settling in Andorra.
Content reviewed by the legal and tax team of ProGestió Andorra — Last updated:
Every year, entrepreneurs, freelancers and families begin their relocation to Andorra believing they’ve anticipated everything. Then the bank file drags on, the promised housing falls through, or the chosen residency status doesn’t match the actual activity. These mistakes when settling in Andorra aren’t about the complexity of Andorran law, but about a chain of steps taken in the wrong order. Here are the six most common pitfalls observed in practice, and how to avoid them.
Andorra isn’t a jurisdiction where you “settle in” overnight. Residency, housing, company and bank account form a chain: each step depends on the previous one, and one poorly prepared link blocks everything else. Regulations were also tightened in 2026, with Llei 2/2026, of 22 January 2026, known as the law on continuity and consolidation of measures for sustainable growth, published in BOPA no. 15 of 12 February 2026 and in force since 13 February 2026. This text toughened several aspects of immigration, foreign investment and real estate taxation. Anyone who ignores these changes exposes themselves to relocation pitfalls in Andorra far more costly than a simple scheduling delay.
The first mistake is believing that residency and self-employment work permits can be obtained within a few weeks. In reality, Andorra operates on annual quotas for residency and self-employed work permits. For 2026, the Govern d’Andorra approved a new regulation setting a general quota of 250 self-employed residency and work permits for the year, part of which is reserved for liberal professions and the rest for other situations. This quota can run out very quickly: one week after the 2026 general immigration quota opened, half of the 900 planned permits had already been committed, according to local press reports.
Once a quota reservation is secured, a deadline opens to finalize the file: three months for qualified professions and six months for foreign investment or business creation processes. Once this deadline passes, the reservation lapses and the process must start over. Many project holders discover this constraint too late, after already incurring housing or company costs. Anticipating these regulatory deadlines is one of the most frequently overlooked pieces of advice for settling in Andorra.
The Andorran rental market is tight, particularly in the most sought-after parishes. Many prospective residents start their residency or company formation procedures before securing housing, even though most immigration procedures require presenting a rental agreement or a property title in Andorra to complete the file. Searching for housing urgently, once the administrative file is already underway, puts the applicant in a weak position with landlords and can cause the loss of a quota or a deadline already underway. The right order is the opposite: first secure a housing solution, even a temporary one through a coworking space or short-term rental during the scouting phase, then start the residency procedures.
Andorra distinguishes several pathways to residency, and confusing the eligibility criteria is one of the most costly mistakes to fix after the fact when settling in Andorra.
Active residency is for those who genuinely carry out an activity on site, whether employed or self-employed, with CASS affiliation and effective presence. Passive residency, on the other hand, targets people living off their income without an Andorran professional activity. Since Llei 2/2026, its conditions have changed significantly: the minimum investment amount in Andorran assets for passive residents rises from 600,000 to 1,000,000 euros, with, in the case of real estate investment, a minimum per unit (apartment or house) that must now exceed 800,000 euros. An alternative remains: the required investment amount can be reduced to 400,000 euros if the capital is allocated, directly or indirectly and permanently, to the Fons d’Habitatge (Andorran housing fund).
On top of this comes a deposit with the Andorran Financial Authority (AFA), whose regime changed in 2026: for self-employed residency and work permits as well as for residency without gainful activity, the amount of 50,000 euros stops being a simple refundable deposit and becomes a final, non-refundable payment to the State, transferred to the Ministry of Finance. The same rule applies to the amount of 12,000 euros per dependent, under passive residency. An exception nevertheless exists for business founders: the exemption from the 50,000-euro payment remains for applicants for self-employed residency and work permits, for companies formed around digital economy, entrepreneurship or innovation projects.
Finally, the minimum physical presence requirement differs by status: 90 days per year for passive residency, 183 days per year for active residency. Confusing these two regimes, or choosing passive residency while thinking one can carry out an Andorran professional activity under it, leads to refusal or forced regularization. The choice must be based on the actual project, not on whichever amount is most accessible in the short term.
Setting up an Andorran company without comparing the available legal forms is another classic mistake. The two most common commercial forms are the limited liability company (SL) and the public limited company (SA). The minimum share capital for an SL is 3,000 euros and for an SA 60,000 euros, according to information from the Govern d’Andorra. An SLU (sole-shareholder SL) and an SAU (sole-shareholder SA) also exist, with the same capital thresholds but a single shareholder.
The choice between these forms depends on the nature of the activity, the number of partners, and the prospects for fundraising or transfer. An SL chosen reflexively for its lower capital requirement may prove unsuitable if the project is expected to quickly involve several investors or more sophisticated wealth structuring. Conversely, setting up an SA when the activity remains modest unnecessarily ties up 60,000 euros of capital. This choice must be made before incorporation, not corrected afterward through a company conversion, which is often longer and more costly than proper upfront analysis.
Opening a professional or personal bank account in Andorra is a step that blocks many applications, not because it’s impossible, but because it’s poorly prepared. Andorran banks apply strict compliance procedures, with detailed justification of the origin of funds, the professional activity and the connection to Andorra. Furthermore, all banks require an in-person interview for the first account opening of a non-resident, which requires a trip that cannot be improvised at the last minute.
An incomplete bank file, whether missing proof of income, proof of the origin of funds, or a translated document, can delay the opening by several weeks, which in turn delays the deposit of a company’s share capital or the payment of the investment required for residency. Preparing this file in advance, with the help of a professional who knows the precise expectations of each institution, avoids a bottleneck that affects nearly every profile, entrepreneurs and families alike.
The last mistake, more discreet but just as costly, is setting up a holding or a complex asset structure before even stabilizing one’s residency and activity in Andorra. Some prospective residents, drawn by Andorran tax advantages, create a corporate architecture within the first few months, without real substance or effective activity on site. This haste exposes them to two risks: a requalification by the tax authorities of the home country, which may consider that the tax residency hasn’t genuinely shifted, and an Andorran structure oversized relative to the project’s actual needs.
The right sequence is to first stabilize residency and operational activity, then consider asset structuring or a holding once actual cash flows, transfer needs and home-country taxation are clearly identified. A rushed structure is hard to fix afterward: dissolving or restructuring a poorly calibrated company carries an administrative and tax cost often higher than that of a few months’ delay for reflection.
| Criterion | Active residency (self-employed) | Passive residency (no gainful activity) |
|---|---|---|
| Activity required | Yes, genuine activity in Andorra | No |
| Minimum presence | 183 days per year | 90 days per year |
| Minimum investment | Linked to the company formed (SL/SA capital) | 1,000,000 € in Andorran assets, or 800,000 €/real estate unit, or 400,000 € via the Fons d’Habitatge |
| AFA deposit | 50,000 €, non-refundable, with possible exemption for tech projects | 50,000 € (+ 12,000 €/dependent), non-refundable |
| 2026 quota | 250 permits (including 50 reserved for liberal professions) | Subject to a separate quota |
Before starting any procedure, it’s worth checking, in order: the status of the current quota and the deadlines it imposes, the residency status truly suited to the project (active or passive), the availability of housing or a temporary solution, the relevant company type if an activity is planned, the full preparation of the bank file, and finally whether asset structuring is needed at this stage. Addressing these six points out of order is the most frequent cause of delay or failure in a relocation project.
One last point deserves attention: coordination between the various parties involved. Gestoria, notary, bank and, where applicable, the home country’s tax advisor must work to a shared timeline. An investment file approved by the bank but arriving too late to meet the quota reservation deadline, or a company formed before its associated bank account is operational, produce the same outcome: a project running late for purely logistical reasons, even though each step taken in isolation went well. It’s often this lack of coordination, more than the complexity of any single procedure, that turns a relocation into an obstacle course.
How much time should be planned for a complete relocation to Andorra? The timeline depends on the status sought and the availability of annual quotas. Once a quota is obtained, the applicant has three months for qualified professions and six months for foreign investment or business creation processes to finalize their file.
Can one combine a company with passive residency? No. Passive residency is reserved for people who don’t carry out an Andorran professional activity. Carrying out genuine activity requires switching to active residency, with CASS affiliation.
Is the 50,000-euro deposit with the AFA refundable? Since Llei 2/2026, no, in the general case: this amount stops being a refundable deposit and becomes a final payment to the State, except if the initial authorization is refused.
Do you need to travel to Andorra to open a bank account? Yes. All banks require an in-person interview for a non-resident’s first account opening, which requires scheduling this appointment well in advance.
What’s the capital difference between an SL and an SA? The minimum share capital is 3,000 euros for an SL and 60,000 euros for an SA. The choice depends on the nature of the activity and the project’s growth prospects.
Why wait before setting up a holding? An asset structure put in place before residency and activity are stabilized often lacks real substance, which exposes it to a risk of requalification by the home country’s tax authorities.
What happens if the residency quota runs out before the file is submitted? The application must wait for a new quota to open, which can push the project back by several months. This is why it’s recommended to check the status of the current quota before incurring housing or company formation costs.
Figures and thresholds based on regulations in force as of the publication date (15 October 2026), subject to legal changes. Please verify with your advisor before making any decision.
To go further: Residency in Andorra, Active or passive residency in Andorra, how to choose, Bank account in Andorra for non-residents, Company types in Andorra, Holding in Andorra, when is it really useful.
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