Leaving France for Andorra: deferral of exit tax, Andorran residency and nationality clause

Andorra is not included in the list of countries automatically eligible for tax deferral in form 2074-ETD (transfers occurring on or after January 1, 2025); for a departure in 2027, the list in effect at that time applies. If exit tax applies to you, the deferral must be requested before departure, with a tax representative and security of 12.8% of the value of %. Changing your address is not sufficient to leave your French tax domicile: a single criterion in Article 4 B of the French General Tax Code (CGI) can maintain your tax residence there. Finally, the Franco-Andorran tax treaty contains a clause specific to French residents of Andorra, which this page reports without resolving.

Exit tax: Andorra is not on the list of countries automatically eligible for a deferment.

You are affected if you were a French tax resident for at least six of the ten years preceding the transfer, and if you hold either at least 50% of the profits of a company (direct or indirect shareholding), or securities with a total value of €800,000. The information sheet states "greater than," while the tax authorities' information sheet states "at least": we are not making a distinction between the thresholds. Income tax is 12.8%, with an option to use the progressive tax scale (box 2OP of form 2042). Social security contributions are 17.2% for a transfer in 2025 and 18.6% for a departure in 2026; the rate for a later departure is also applicable.

The automatic suspension of the notice applies to European Union member states and a list of non-EU states, from South Africa to Ukraine. Andorra does not appear on the list in the 2026 notice, which covers transfers occurring from January 1, 2025; for a departure in 2027, the list in force at that date applies. Furthermore, the annex to the 2027 draft budget law includes 11 states and territories on the French list of non-cooperative states, and Andorra is not among them. We draw no further conclusions from these two readings.

The request for a stay of execution is therefore expressly made:

Relief. The tax is waived, or refunded if it has been paid, after 2 years if the total value of the securities is less than 2.57 million euros on the date of the transfer, and after 5 years thereafter, provided that the securities are still held.

Statements. Form 2074-ETD is only available in paper format. In the case of automatic deferment or without a requested deferment, it is generally filed the year following the transfer, along with forms 2042 and 2042 C. For optional deferment, the instructions stipulate two filings: the first before the transfer, with the non-resident tax office (without form 2042), within the 90-day period mentioned above; the second the following year, with forms 2042 and 2042 C, with the tax office of the former residence. Subsequently, a 2074-ETS3 may be due each year, or a 2074-ETSL if nothing has changed. Without regularization within 30 days of a formal notice, the deferred tax becomes immediately payable. The instructions indicate that transferring tax residence outside of France terminates the tax deferral. For a deferral under Article 150-0 B ter, see our page on contribution-sale.

Becoming an Andorran resident: 183 days or center of economic interests

The Andorran government website defines a taxpayer subject to personal income tax (IRPF) as any person with their tax residence in Andorra, taxed on their worldwide income. A tax resident is someone who spends more than 183 days in the calendar year, or whose main center of economic activity or interests is in Andorra. The tax return must be filed between April 1st and September 30th of the following year, either online or by appointment at the Department of Taxes and Borders. The tax return is filed using form 001, known as the "censale declaration.".

Regarding entry requirements, the French Ministry of Foreign Affairs website indicates that Andorra is not part of the Schengen Area and that French citizens do not need a visa for tourist stays of up to 90 days. This page does not provide details on Andorran residency permits; these must be verified with the Andorran government's immigration services.

Ceasing to be a French resident: Article 4 B and the arbitration of the convention

The BOFiP (Official Bulletin of Public Finances) reminds us that only one of three criteria is required to be considered domiciled in France: main residence or home, main professional activity, and center of economic interests. A stay of more than six months is not an absolute criterion.

If you are a resident of both states, Article 4 of the convention establishes the following order of priority: permanent home, center of vital interests, habitual residence, nationality, and then amicable agreement. The protocol adds a specific provision for Andorra: an Andorran resident is defined as someone who resides in Andorra for more than 183 days in a calendar year, or whose center of economic interests or principal activity is in Andorra. It excludes presumptions based solely on Andorran nationality or a residence permit. If both states consider you a resident, the order of priority outlined in Article 4 applies.

The nationality clause of Article 25

Article 25, paragraph 1(d) of the convention stipulates that France may tax French nationals residing in Andorra as if the convention did not exist, but only when French tax law permits the application of this provision; the competent authorities of both states then agree on its implementation. This provision is included in Article 25, along with the anti-abuse clauses. The Senate report of February 2015 describes it as a derogation from domestic law and other French conventions. It reports that the Government considers the mention of possible taxation of French nationals residing in Andorra to be "without legal effect." The National Assembly report notes that French residents in Andorra "benefit from the Andorran tax regime," according to the committee rapporteur.

This page does not rely on any recent administrative guidance regarding the application of this clause. Before leaving, verify its effect against the legislation and guidelines in force on the date of the transfer.

Living in France and working in Andorra

A cross-border worker commuting daily from France, employed by a company with tax residency in Andorra, is not considered an Andorran tax resident according to the Andorran government portal: they are subject to non-resident tax, with a special regime for cross-border workers (form 740). The tax treaty (Article 14) stipulates that wages earned in Andorra are taxable there. France, the country of residence, applies the tax credit method of Article 21: for wages, the credit is equal to the French tax corresponding to this income (Article 21 § 1 a) i)), provided that the resident is subject to Andorran tax, and not to the Andorran tax paid.

Statements from the year of departure

Notify your last tax office of your new address. For the year of departure, form 2042 will include your income from January 1st to the departure date (foreign-source income is reported on form 2047), and form 2042-NR will include only your taxable French-source income from departure to December 31st. The Non-Resident Tax Office will manage your tax return if you still have taxable income in France, and it will manage your French wealth tax (IFI) from the outset. The tax authorities also advise you to contact the tax administration in your country of residence for further information.

What France still imposes

Non-residents are taxed in France only on their French-source income, subject to tax treaties. The minimum rate is 20% of income up to €29,579 and 30% of income above that amount for income received in 2025. For capital gains on securities, the French tax authorities (BOFiP) apply to the sale of shares in a company subject to corporate income tax and headquartered in France, when you and your family group have held more than 25% of profit rights in the five preceding years: the levy is 12.8%. For the French wealth tax (IFI), non-residents are only taxed on their real estate located in France, beyond a net taxable estate of €1,300,000.

Moving to Andorra with €1,400,000 in unrealized capital gains: a numerical example (fictitious profile)

Situation. A female executive, a fictitious profile, holds €3,100,000 worth of shares in her company, with an unrealized capital gain of €1,400,000. She meets the exit tax requirements and leaves on June 30, 2027.

Issue. Example scenario: the list in effect in 2027 is that of the 2026 tax notice, which does not include Andorra; for a departure in 2027, the list in effect at that date applies. In this scenario, without a request for deferment, the tax is due upon departure.

Strategy. She appoints a tax representative and offers guarantees to non-resident SIPs. She counts 90 days before June 30, 2027: April 1, 2027. According to the information sheet, this is the deadline; she has the wording of the notice confirmed.

Result. Income tax at the flat rate is 12.8% (% × €1,400,000 = €179,200), and the collateral is the same amount. Her securities exceed €2,570,000 by €530,000: the tax relief period is 5 years, i.e., until June 30, 2032, if she still holds them. The calculation does not include social security contributions, the rate of which for a retirement in 2027 is not confirmed.

What changes depending on your situation

• Your status: executive with shares, cross-border worker, retired or inactive.
• The value of your securities and a possible contribution-sale.
• Your ties to France: housing, family, work, economic interests.
• Your nationality, for the clause in article 25.
• The number of days spent in Andorra and France.

No result is guaranteed in advance: each point must be read in light of the documents in your file.