The escalation of military conflict in the Middle East has reshuffled the priorities of international investors. Some wealthy families based in the UAE have begun seeking a fallback position in Europe. Andorra has emerged as one of the jurisdictions best prepared to play that role.
What changed in march 2026
Over the past decade, Dubai has methodically built a reputation as the most secure neutral jurisdiction in the region. Zero personal income tax, world-class infrastructure, bilateral agreements with Western countries, and its status as a global transit hub turned the emirate into the first choice for wealthy families leaving Europe, Russia, India, and China. According to Henley & Partners, Dubai attracted around 9,800 millionaire relocations in 2025 – more than any other jurisdiction in the world.
The rise in tensions across the Middle East in early 2026 intensified debate about regional security risks and became an additional factor prompting international investors to reassess their residency strategies. The Dubai Financial Market real estate index lost around 20% over several trading sessions, fully erasing the gains of 2025. Enquiries to firms specialising in international relocation and asset protection increased substantially.
This is not a story about Dubai collapsing as a business hub: the DIFC financial zone continues to operate, the tax regime remains unchanged, and the authorities are actively signalling systemic resilience. Fitch analysts and banks broadly maintain a cautiously positive outlook on the emirate’s long-term prospects. However, one key asset has come into question: the region’s perception as a zone shielded from direct military threats.
A structural shift: Jurisdictional diversification as the New Normal
The current investor reaction fits within a broader trend that predates the latest escalation. According to Swiss bank UBS, 36% of surveyed ultra-high-net-worth clients changed their country of residence at least once in 2025. Among billionaires under 54, the figure reaches 44%. Researchers describe what is happening as the largest movement of private capital in modern history.
Asset managers are increasingly noting a fundamental shift in client logic: clients have stopped looking for a single “best” jurisdiction and have moved toward deliberate diversification. A typical structure today comprises an operational hub in a global financial centre, a family residence in a stable European country, and a distributed investment portfolio across several jurisdictions. Neither Dubai, nor Singapore, nor London disappears from this picture – but none of them any longer bears sole responsibility for protecting capital and family.
In this context, investors face a practical question: which European jurisdiction is suited to the role of a quiet primary or secondary home, with a transparent tax regime, genuine political stability, and a minimal threat environment?
Andorra: why this small state
Andorra is a parliamentary co-principality in the Pyrenees, with the President of France and the Bishop of Urgell in neighbouring Catalonia as its formal co-princes. This constitutional model, dating back to the thirteenth century, provides political stability unmatched among small European states: the country has no geopolitical ambitions of its own and no role in wars. Andorra is neither a member of the EU nor of NATO. It is neither a target nor a party to any of the active conflicts of our time.
Andorra’s tax system, reformed in the 2010s in line with OECD standards, combines competitive rates with full participation in international tax information exchange mechanisms. The maximum personal income tax rate is 10%, with a tax-free allowance of €24,000. Corporate income tax is also capped at 10%. Dividends received by Andorran tax residents from local companies are fully exempt from personal income tax. There is no inheritance tax and no wealth tax.
Particular attention should be drawn to the instrument of so-called passive residency (residència passiva). To obtain it, an applicant must invest at least €1,000,000 in Andorran assets. Alternative thresholds are €800,000 for the purchase of real estate or €400,000 through the Andorran Housing Fund. In addition to the investment, the applicant pays a non-refundable government fee of €50,000 for the primary applicant and €12,000 per dependant. The minimum physical presence in the country is 90 days per year. It is important to distinguish between administrative and tax residency: Andorran tax resident status – which grants full access to tax benefits – requires residence for at least 183 days per year and/or relocation of the taxpayer’s centre of vital interests to the principality. Passive residency is well suited to entrepreneurs who maintain business activity outside Andorra: the country imposes no requirements on the source of income and does not require operational activities to be transferred inside its borders.
Andorra in the International Legal Framework
Although Andorra is not an EU member, its legal and financial integration into the international system is substantial. This is of fundamental importance to investors who evaluate a jurisdiction not only on tax attractiveness but also on the level of legal predictability.
Monetary Agreement with the EU. Andorra officially uses the euro under a bilateral monetary agreement with the European Union, which ensures a stable settlement environment and eliminates currency risk for European assets.
Participation in the CRS (Common Reporting Standard). Andorra signed the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (CRS MCAA) in 2015. This means the jurisdiction operates within the generally accepted standards of tax transparency and is not classified as an offshore territory in the sense used by FATF or the EU.
OECD compliance. The country meets OECD requirements in the field of tax policy and has signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI), which entered into force for Andorra in 2022. The country’s tax system has passed several rounds of reform and today meets international “white list” standards.
A Practical Assessment: What Andorra Offers – and What It Does Not
Among the arguments in favour of Andorra, political neutrality and security come first. By international rankings, the country has one of the lowest crime rates in Europe. Its mountain terrain and remoteness provide physical insulation from migrant transit flows and political upheavals affecting neighbouring countries. At the same time, Andorra is two and a half to three hours by road from Barcelona and three hours from Toulouse, providing access to international air connectivity. Beyond state schools, where instruction is conducted in Catalan, Andorra has several private schools whose graduates can obtain English (IB) and French-standard diplomas.
The limitations are equally apparent. Andorra is not an EU member, and residency there does not automatically confer the right to work or conduct business in European Union countries. The path to citizenship takes 20 years. The local financial market is small, and families with large structured asset portfolios will require banking services in larger jurisdictions – Luxembourg or Switzerland, for example – in addition to the services of Andorra’s three principal banks.
For families oriented towards a broader European lifestyle – close to Barcelona or Paris, with a moderate tax burden and a complete absence of military-political risks – Andorra represents one of the most coherent options in the current environment.
The events of early 2026 have accelerated a transition already underway: wealthy families are moving from the model of “one best jurisdiction” to a model of distributed international presence. From a tax and corporate planning perspective, this means rethinking established structures: residency, place of business, and the jurisdiction of asset custody no longer coincide in a single location.
Structuring residency through Andorra involves several interconnected steps: obtaining administrative status as a passive resident, followed where necessary by a transition to tax resident status (183 days), selecting the form of investment to confirm residency, and – where operating companies exist – determining the optimal balance between Andorran and foreign corporate structures. Each of these steps requires prior tax analysis taking into account the applicable double tax treaties, the residency rules of the client’s country of prior residence, and other circumstances.
Dubai retains systemic advantages as an operational base for international business. Andorra addresses the demand for European residency with a transparent legal framework, a moderate tax burden, and genuine geopolitical distance from zones of instability. In a multi-layered structure of international presence, these two jurisdictions do not compete – they complement each other.
*Nordic Star’s team has practical experience structuring relocations and assisting clients in obtaining residency in Andorra. For consultations, please contact the author of this article, Nordic Star Senior Partner Andrei Gusev at andrei.gusev@nordicstar.law.