Wealth and succession in Andorra: taxation, IFI (Formerly ISF) and estate planning

Moving to Andorra can significantly change the taxation of personal wealth, but simply becoming an Andorran resident is not enough to eliminate all French or foreign taxation. This is particularly true when a family retains an apartment in France, shares in a French company, or children who remain tax residents in France.

This distinction is essential. Andorra has a tax framework that is often lighter than France’s for substantial private wealth, but an international succession must be assessed based on several criteria: the deceased’s tax residence, the heirs’ tax residence, the location of the assets, how they are held, and the applicable civil law. For a French-Andorran family, it is precisely this comprehensive approach that helps avoid unpleasant surprises.

Wealth taxation in Andorra: what about the ISF?

The term “ISF” is still frequently used when comparing France and Andorra. In France, however, the former wealth tax, known as the Impôt de Solidarité sur la Fortune, has been replaced by the Impôt sur la Fortune Immobilière, or IFI. In 2026, the IFI applies to households whose net taxable real estate assets exceed €1.3 million. Non-residents may also remain liable for French IFI on certain French real estate assets.

Andorra does not have a general annual wealth tax on individuals comparable to the French IFI. Its tax system includes, among other things, personal income tax and various taxes associated with certain transactions or categories of assets, but not a general annual tax calculated on an individual’s entire wealth.

This does not mean that an Andorran resident who owns real estate in France is automatically exempt from the IFI. The French tax authorities specify that a person domiciled outside France may be liable for IFI on taxable real estate assets located in France.

Consider a simple example. A person genuinely leaves France to settle in Andorra but retains several rental properties in France. Their change of tax residence may significantly alter their overall tax situation without eliminating the French taxation associated with those properties. This is why expatriation should never be viewed as an isolated tax mechanism. It must be considered in relation to the actual composition of the individual’s assets.

Tax residence in Andorra

Administrative residence in Andorra and tax residence are two concepts that must be distinguished. From an Andorran tax perspective, an individual may notably be considered a resident when they spend more than 183 days during the calendar year in the country. The legislation also takes into account the location of the main center or basis of their activities and economic interests. In practice, therefore, counting days should never be the only step in a wealth-related expatriation.

A person who has a home in Andorra but retains most of their professional activities, economic interests, or other decisive ties in their former country may face a much more complex residence analysis than they expected. For a family coming from France, the French criteria for tax residence must also be taken into account and, where two countries could claim that the same person is resident, the relevant treaty rules must be examined. In other words, becoming an Andorran resident must correspond to a genuine and coherent situation. A purely formal relocation provides a fragile basis for a long-term wealth planning strategy.

Succession in Andorra: attractive taxation, but not worldwide exemption

The Andorran regime is particularly interesting when it comes to wealth transfers. For individuals, there is no general inheritance and gift tax comparable to the French transfer taxes. This does not, however, mean that an international succession automatically becomes exempt from all taxation. Certain transactions may have other tax consequences depending on the nature of the asset or transaction.

This is where many analyses become overly simplistic.

Imagine a parent who is genuinely resident in Andorra while one of their children has been living in France for several years. Even though Andorra does not levy inheritance taxes comparable to the French regime, France may still have its own taxing rights over the transfer.

Article 750 ter of the French General Tax Code notably takes into account the tax residence of the deceased or donor, the location of the assets, and, in certain circumstances, the beneficiary’s tax residence. When an heir or donee is resident in France at the time of the transfer and has been so for at least six of the previous ten years, the scope of French taxation may notably extend to assets located outside France, subject to the applicable international rules.

This is a fundamental consideration for families whose parents live in Andorra while their children have remained in France. The parent’s Andorran residence should therefore never be assessed without also considering the residence of the future beneficiaries.

France and Andorra: pay attention to the actual scope of the tax treaty

France and Andorra have indeed entered into a tax treaty. However, its scope must be understood precisely: the treaty concluded between the two countries concerns the avoidance of double taxation with respect to income taxes. Therefore, it should not be assumed that it automatically resolves all French-Andorran inheritance or gift tax issues.

When it comes to wealth transfers, French domestic rules remain decisive whenever they apply. This completely changes the way an estate should be planned.

A person may have properly organized their Andorran tax residence and nevertheless leave their heirs with an inheritance that is partially taxable in France because a property is located there or because the heir’s tax situation creates a connection with France.

The role of a professional specializing in international taxation is precisely to map out these connecting factors before the transfer takes place, rather than after the death.

How does Andorran succession law work?

Taxation is only one part of the issue. It is also necessary to determine which civil law rules will govern the succession. Andorran succession law is notably governed by Law 46/2014 on succession upon death, the consolidated version of which was updated again in 2026. Succession may result from a succession agreement, a will, or, in the absence of sufficient provisions, from the law.

Contrary to an idea sometimes associated with Andorra, testamentary freedom is not absolute. Andorran law does recognize a “reserved portion” (legítima). The deceased’s children are notably protected heirs under this mechanism, and the law sets the reserved portion at one quarter of the calculation base provided for by the legislation. The possibility of disinheriting a protected heir exists only in the cases and under the conditions defined by law.

This point is worth emphasizing, because stating that an Andorran resident can freely exclude their children from their inheritance would be inaccurate.

When a person dies without having designated an heir for all of their assets, the rules of intestate succession apply. Descendants have priority, while the surviving spouse or partner also has specific rights. Where there are descendants, the law notably grants the surviving spouse or partner a usufruct over 50% of the estate under the conditions provided by the legislation.

For an international family, it is also necessary to determine which law actually applies. Andorran law provides rules of private international law and notably uses, as a general principle, the deceased’s personal law as determined by their nationality at the time of death, subject to certain nuances. A French national living in Andorra should therefore not assume that their entire estate will automatically be governed by Andorran law simply because they reside there.

Why does a will become essential in an international succession?

When assets are spread across several countries, a well-designed will does more than simply state who will receive what. It can also reduce uncertainty, organize the heirs’ rights and powers, provide for the transfer of specific assets, and coordinate the testator’s wishes with any mandatory rules that may apply.

For example, an entrepreneur may wish for one child to take over the business while another receives a larger share of financial assets. A blended family may want to protect the surviving spouse while preserving the rights of children from a previous relationship. A family owning assets in Andorra, France, and Spain will also need to take several legal systems and tax regimes into account.

In this type of situation, simply copying a standard will is rarely a good solution. The objective is to have a document that is compatible with the actual structure of the estate and the family situation at the time it takes effect. It is also advisable to review the will after a change of tax residence, marriage, divorce, birth of a child, sale of a business, or acquisition of a significant asset in another country.

Gifting in Andorra: attractive, but must be analyzed on both sides of the border

A gift makes it possible to organize the transfer of wealth during the owner’s lifetime. In an Andorran context, the absence of a general gift tax comparable to the French system can make this option attractive. Nevertheless, a gift made from Andorra does not override the tax rules of the country to which the donor, beneficiary, or asset remains connected.

This is particularly important when a beneficiary lives in France. Article 750 ter of the French General Tax Code may result in France taxing certain international gifts depending on the donor’s residence, the donee’s residence, and the location of the assets.

Suppose a parent living in Andorra wishes to transfer an investment portfolio to their child residing in France. Before the gift is executed, it is necessary to determine how long the child has been a French tax resident, verify the nature and legal location of the assets, and analyze all applicable rules.

The location of the bank account is not necessarily sufficient to determine the tax treatment of an asset. Its legal and tax classification is what matters. A gift should therefore be decided upon after a detailed tax simulation, rather than simply because the donor’s country has a favorable tax regime.

French real estate: a major point of attention for many Andorran residents

For a French national moving to Andorra while retaining real estate in France, property often represents the main tax connection with France. With regard to the IFI, a person who is tax resident outside France may remain liable for tax on taxable real estate assets located in France when the applicable conditions are met. In 2026, the threshold for net taxable real estate assets remains €1.3 million.

Holding real estate through a company does not necessarily eliminate this exposure. The French tax authorities indicate that the IFI may also take into account the value attributable to real estate assets held indirectly through companies or other entities. In other words, replacing direct ownership with a company is not, by itself, a strategy for eliminating IFI liability.

The same caution should be exercised in the context of an inheritance. French assets can give rise to French taxation even when the deceased was living abroad. Before moving abroad, it is useful to carry out a precise inventory of the real estate retained in France and assess its future impact on IFI, income, capital gains, and inheritance taxation.

Holding companies and wealth structuring: a management tool, not a tax magic wand

For an entrepreneur or family with several investments, a holding company can have genuine advantages. It can facilitate group governance, centralize certain investments, organize the gradual transfer of shares to children, or separate certain assets from operating activities.

However, setting up a company in Andorra does not automatically change the tax nature of the assets it holds. A wealth structure should first serve an identifiable legal, economic, or family objective. Its tax treatment in Andorra must then be analyzed, along with the tax rules of the countries where the assets, companies, or beneficiaries are located.

This caution is all the more important in today’s international tax transparency environment. The image of Andorra as a jurisdiction based on banking secrecy belongs to another era. The Andorran Government itself highlights the developments in tax information exchange and the end of banking secrecy under international standards. Effective wealth structuring therefore relies on compliance and transparency, not opacity.