For a decade, Portugal was THE destination for Europe's tax-conscious expats, thanks to the Non-Habitual Resident (NHR) regime. But since 2024, that regime has been closed to new arrivals. The result: in 2026, the comparison with Andorra looks radically different.
Portugal: the end of the NHR golden era
The NHR offered up to ten years of very light taxation on foreign-source income and pensions. It has been abolished for new residents and replaced by a far narrower scheme (IFICI), reserved for a handful of qualified professionals in research and innovation. For most expats and retirees, the standard progressive rate now applies — up to 48 %. The climate, the coastline and the cost of living remain genuine assets — but the decisive tax advantage is gone.
Andorra: a simple, permanent framework
Against a Portuguese regime that has closed in on itself, Andorra offers a compelling counterpoint: stability. There is no ten-year window that expires. The 10 % maximum income tax, the exemption on Andorran-source dividends, the absence of wealth tax and inheritance tax are permanent features of the law — not a time-limited privilege. What you see is what you keep.
The comparison, figure by figure
| Criterion | Andorra | Portugal |
|---|---|---|
| Income tax (max rate) | 10 % | Up to 48 % |
| Expat regime | Permanent framework (statute law) | NHR closed since 2024 |
| Retirement pensions | 10 % max | Taxed at standard rates |
| Dividends | Exempt (Andorran source) | ~28 % |
| Wealth & inheritance | None | AIMI property tax · stamp duty 10 % |
| Proximity to France | 3 h from Barcelona | ~2 h by air |
| Indicative rates 2026. Portuguese inheritance (stamp duty 10 %) exempts spouses and direct descendants. | ||
The verdict: who should choose what?
Since the end of the NHR, Andorra wins decisively for anyone seeking low, lasting taxation: where Portugal can now levy up to 48 %, Andorra caps at 10 %. Portugal still holds its appeal for those who prize the coast, the climate and life in a larger country — provided they accept a tax burden that has returned to ordinary levels. For pure tax optimisation, the match today clearly favours the principality.
Key takeaways
- Portugal's NHR regime has been closed to new residents since 2024
- Portugal: progressive rates up to 48 %, pensions and dividends now fully taxed
- Andorra: 10 % maximum, dividends exempt, no wealth or inheritance tax — and it's permanent
- For tax purposes, Andorra has reclaimed its position as the strongest choice
Still weighing your options? We analyse your personal figures net of tax and cost of living, so you can decide with confidence. Build your Andorran tax residency on solid ground — and explore all the tax advantages Andorra offers.
