Andorra-UK Double Taxation Agreement Officially Enters Force

Historic Agreement Takes Effect

The Double Taxation Agreement (DTA) between Andorra and the United Kingdom officially entered into force on December 22, 2025. The significant development was formally announced by Andorra's Official Gazette on December 31, 2025, marking a new chapter in the financial relationship between the two countries.

The agreement, which was signed in London on February 20, 2025, aims to eliminate the double taxation of income and capital, prevent tax evasion and avoidance, and enhance cooperation between the two jurisdictions.

Key Provisions and Benefits

The DTA is designed to provide greater legal certainty and transparency for individuals and businesses operating across Andorra and the UK. It covers a range of taxes in both nations:

• In Andorra, the agreement applies to Corporate income tax, Personal income tax, Tax on Income for fiscal non-residents, and Capital gains tax on real estate transfers.
• In the United Kingdom, it encompasses Income tax, Corporation tax, and Capital gains tax.

A primary objective of the DTA is to prevent income from being taxed twice, thereby promoting mobility, investment, and the influx of high-level residents. For instance, double taxation is typically avoided through the 'tax credit method' in both countries.

Strengthening Economic Ties

The signing of the DTA was a collaborative effort, with Noëlia Souque, Andorra's Secretary of State for International Financial Affairs, and James Murray, Exchequer Secretary to the UK Treasury, formalizing the agreement. This treaty is particularly important for Andorra, given the potential volume of business and the global significance of the United Kingdom.

The agreement reinforces Andorra's image as a transparent and competitive jurisdiction, aligning with OECD standards and further integrating it into the global economic framework. It is expected to be especially impactful following the cessation of the UK's non-domicile tax regime, positioning Andorra as an attractive destination for British professionals and companies seeking a European presence.

Future Implications

The entry into force of this DTA is anticipated to foster increased cross-border investment and economic activity. By establishing clear rules for taxing various income streams and defining residency, the agreement reduces uncertainty for taxpayers and provides a stable environment for international commerce. This milestone underscores both countries' commitment to a more transparent and stable fiscal environment.