Andorra or Cyprus: comparing two attractive jurisdictions

Andorra and Cyprus both offer competitive tax frameworks, but their advantages don't necessarily suit the same profiles.

Andorra applies relatively low general rates and a territorial approach that's simple to understand. Cyprus offers an English-speaking international environment, a residency regime that can work under certain conditions from as little as 60 days, and a non-dom status covering certain passive income.

Cyprus's 2026 tax reform needs to be factored into any up-to-date comparison. To access the guide to taxes in Andorra, our dedicated page covers the whole regime.

Since 2026, the Cypriot tax scale provides for, among other things, an exemption up to €22,000, followed by rates of 20%, 25%, 30% and 35% depending on income.

Cyprus's corporate tax rate rose to 15% in 2026.

The standard VAT rate is 19%. To review the rules for investor residency, see our dedicated guide.

Cyprus provides a route allowing certain individuals to be recognised as tax residents without reaching 183 days.

This rule isn't simply a lighter presence requirement. It involves meeting conditions relating to:

• the number of days spent in Cyprus;
• carrying out an activity, employment, or role;
• having permanent accommodation available;
• any other tax residencies held;
• economic ties to the country.

These conditions have changed as part of the 2026 reform. They need to be checked for the relevant year before building a residency strategy.

What does non-dom status mean?

Cyprus's non-domiciled status can allow someone, under conditions and for a limited period, to avoid the Special Defence Contribution on certain passive income, particularly dividends and interest.

It doesn't mean the person will pay no tax at all in Cyprus.

The following can, in particular, remain affected:

• income tax;
• applicable contributions;
• VAT;
• professional income;
• rental income;
• certain capital gains;
• taxes owed in the source country.

Non-dom status should therefore be presented as a targeted regime, not a general tax exemption.

A Cypriot company or an Andorran company?

A Cypriot company can suit an activity aimed at international markets, with local partners, employees, effective management, and a genuine presence on the island.

An Andorran company can be more suitable where the director wants to live in the Principality, work with France, Spain, or other European countries, and directly manage a moderately sized structure.

In both cases, registration alone isn't enough. It's necessary to examine:

• where directors are resident;
• where contracts are signed;
• where employees are based;
• offices;
• intellectual property;
• clients;
• bank accounts;
• transfer pricing;
• beneficial owners.

Cyprus applies a specific tax on certain capital gains linked to property located in its territory, as well as on certain shareholdings whose value derives from such property.

Cyprus's tax rate on the relevant real estate capital gains is 20%, subject to applicable exemptions and calculation rules.

The former national annual property tax has been abolished, but local fees, transfer duties, or other levies can remain.

A tax treaty is in force between the two countries.

It can apply to allocate the right to tax dividends, interest, royalties, rental income, and business profits. Its application, however, depends on actual tax residency and the status of the income's beneficiary.

ProGestió looks at your passive income, activity, physical presence, and ties to other countries before comparing the two regimes. Would you like your Cyprus-Andorra project compared?

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