Do US Citizens Living in Andorra Have to File U.S. Taxes?

Moving to Andorra can genuinely change your local tax picture — Andorran residence has its own rules, rates and filing calendar. What many Americans are surprised to learn is that moving to the Pyrenees does not switch off the other side of the picture: U.S. federal tax obligations can continue to apply, along with a separate layer of international reporting rules.

This guide explains, at a general level, why U.S. filing obligations can continue while you live in Andorra, which forms most often come into play — Form 1040, the FBAR, Form 8938 and, in some situations, PFIC reporting — and how missed prior years are sometimes addressed. It is general educational information, not individualized tax advice.

Do US Citizens Living in Andorra Still Have to File U.S. Taxes?

Yes. U.S. citizens generally remain subject to U.S. federal income tax filing rules while living abroad, including in Andorra. The United States generally taxes its citizens on worldwide income, although the actual return, reporting obligations and amount of tax due depend on the individual's circumstances.

In practice, this often means a U.S. federal income tax return (Form 1040) each year, together with international information returns where applicable — for example, forms covering foreign bank accounts, foreign investments or foreign business interests. Whether a return is required in a given year depends on factors such as income level, filing status, age and the types of income involved, and U.S. relief provisions may reduce or, in some cases, eliminate U.S. tax. But the assessment itself is made under U.S. rules — the fact that you also pay tax in Andorra does not, by itself, end the analysis.

The IRS's general guidance for U.S. citizens and resident aliens abroad and its summary of filing requirements for U.S. citizens and residents abroad are the primary official starting points.

Why Does the U.S. Still Tax Citizens Living Abroad?

Most countries tax people based on where they live. The United States is different: it generally taxes U.S. citizens on the basis of citizenship, not residence. A U.S. citizen who lives — and is fully tax-resident — in Andorra can still be within the scope of U.S. federal income tax rules on their worldwide income, which includes Andorran employment income, business income, investments and rental income, as well as income from any other country.

This is why relocating to Andorra changes where your income arises and what your local obligations look like, but not the underlying U.S. framework. The same citizenship-based rules apply no matter the destination; for a parallel example, see our guide to U.S. citizens living in Canada.

Two points often cause confusion. First, filing a U.S. return and owing U.S. tax are separate questions — many Americans abroad file a return but owe little or no U.S. tax once applicable provisions are considered. Second, citizenship-based taxation generally continues until citizenship ends (for example, through renunciation), which is a significant decision with its own tax consequences and is beyond the scope of this article.

Can Americans in Andorra Reduce Double Taxation?

For Americans who both work and pay tax in Andorra, two U.S. provisions are most relevant, depending on the circumstances:

• The Foreign Earned Income Exclusion. Qualifying U.S. taxpayers with foreign earned income may be able to exclude a limited amount of that income from U.S. tax. Eligibility generally depends on meeting one of two tests relating to residence or physical presence abroad, along with other requirements. See the IRS's Foreign Earned Income Exclusion guidance.
• The Foreign Tax Credit. Taxpayers who pay or accrue qualifying foreign income tax may be able to claim a U.S. credit, subject to limitation rules. See the IRS's Foreign Tax Credit guidance.

Both provisions are fact-dependent, and neither replaces the U.S. return itself: claiming them generally requires filing a return and, in some cases, additional forms. How the two interact — and which produces the better outcome — depends on the type of income, the amount of foreign tax paid and the taxpayer's overall situation. This is individualized territory and should be reviewed on your own facts rather than through general rules of thumb.

Do Americans Living in Andorra Need to File an FBAR?

An FBAR (FinCEN Form 114) may be required when a U.S. person has a financial interest in, or signature authority over, one or more reportable foreign financial accounts whose aggregate value exceeds US $10,000 at any time during the calendar year. The threshold is assessed across all reportable accounts combined — not account by account — and it applies to the highest combined value at any point in the year, not the year-end balance.

Andorran bank and investment accounts can be foreign financial accounts for U.S. reporting purposes. Whether a particular account is reportable, and whether an FBAR is required, depends on the account type, the person's role and other circumstances. Not every American in Andorra needs to file an FBAR — and an FBAR is separate from the Form 1040: it is filed electronically with FinCEN, on its own schedule, and it is not attached to the tax return. See the official FinCEN FBAR guidance.

For background on how FBAR works in a cross-border context, see our article on who must file an FBAR, or our overview of U.S. tax services for Americans living in Andorra. For a dedicated Andorra-focused walkthrough, see our guide to FBAR for Americans living in Andorra.

What About Form 8938?

Form 8938 (Statement of Specified Foreign Financial Assets) is a separate, FATCA-related reporting form that is filed with the federal income tax return — unlike the FBAR, which goes to FinCEN. It covers a broader set of foreign financial assets than the FBAR in some respects, and the two forms have different thresholds and different filing channels. Filing one does not replace the other, and some taxpayers may need both, one, or neither, depending on their circumstances.

The thresholds for Form 8938 differ depending on filing status and on whether the taxpayer lives in the United States or abroad, with generally higher thresholds for taxpayers living outside the United States. Rather than reciting threshold tables that may not fit your situation, we suggest starting with the IRS's own Form 8938 guidance, together with our article on Form 8938 and foreign asset reporting. For a dedicated Andorra-focused walkthrough, see our guide to Form 8938 and FATCA for Americans living in Andorra.

Can European Investments Create PFIC Reporting Issues?

Certain non-U.S. pooled investment products can potentially fall within the U.S. PFIC (passive foreign investment company) rules. Depending on the product, this can include some European investment funds and certain insurance-based investment wrappers. PFIC treatment can carry unfavorable U.S. tax consequences and, where applicable, Form 8621 reporting that many taxpayers find complex.

Importantly, not every European investment is a PFIC — whether a holding is a PFIC depends on its structure and income characteristics, and the analysis is specific to each product. Americans in Andorra who hold European investment funds, portfolio bonds or similar structures may want to review their holdings for potential PFIC issues. For a plain-language explanation, see our article on how PFIC rules work for U.S. citizens holding foreign funds. For an Andorra-focused overview, see our guide to PFIC for Americans living in Andorra.

What If You Have Not Filed U.S. Taxes Since Moving to Andorra?

Some Americans discover — sometimes years after a move — that they were expected to keep filing U.S. returns or international information forms. Depending on the facts, taxpayers in this situation may be able to use the IRS Streamlined Filing Compliance Procedures to catch up on prior years, subject to applicable requirements (including, for many taxpayers, a certification of non-willful conduct). For an Andorra-focused guide, see our article on Streamlined Filing for Americans living in Andorra.

Eligibility is not automatic and depends on the taxpayer's circumstances, the years involved and the nature of the non-compliance. Other paths — such as the delinquent international information return submission procedures — may apply in different situations. A careful review of the facts comes first; we do not recommend self-selecting a compliance route.See our guide on prior-year U.S. tax compliance for Americans living in Andorra for a broader overview of the compliance path. For an overview, see our article on Streamlined Filing Compliance Procedures.

Does the United States Have an Income Tax Treaty With Andorra?

No. Andorra is currently treated by the IRS as a country without a U.S. income tax treaty; it does not appear in the IRS's list of U.S. income tax treaties (see the IRS's treaty table).

The absence of a treaty does not automatically mean every American in Andorra pays tax twice on the same income. U.S. domestic provisions — such as the foreign tax credit discussed above — may still provide relief depending on the circumstances. What a non-treaty position does mean in practice is that there is no treaty-based tie-breaker, reduced withholding rate or other treaty mechanics to rely on, which makes the fact-specific review of income types and foreign taxes paid more important, not less.

How Does FATCA Affect Americans Living in Andorra?

There is currently no U.S.–Andorra FATCA Intergovernmental Agreement (IGA). Even so, Andorran financial institutions may still have FATCA-related obligations — Andorran Banking's FATCA resource describes how the framework applies to institutions there.

It is worth separating two things that are easy to conflate:

• The bank's obligations. Andorran financial institutions may identify and report information about U.S.-related accounts under FATCA-related requirements.
• Your obligations. A U.S. taxpayer's own reporting — for example Form 8938, where applicable, or an FBAR — exists independently of what the bank reports, and is not satisfied by the bank's compliance.

In practical terms, Andorran accounts can be visible to the U.S. compliance system while your own reporting obligations are assessed separately, on your own facts.

U.S. Tax Checklist for Americans Living in Andorra

Use this checklist as a starting point for organizing your U.S. tax position — not as individualized advice. For planning ahead of financial decisions, see our U.S. tax planning guide for Americans living in Andorra:

• Determine whether a U.S. federal tax return is required for each year.
• Review worldwide income, including Andorran and other foreign sources.
• Review Andorran and other foreign financial accounts.
• Check FBAR requirements, based on combined account values.
• Check Form 8938 requirements, based on the applicable thresholds.
• Review non-U.S. investments for potential PFIC issues.
• Review foreign companies and business interests for information-return obligations, such as Form 5471.
• Check whether prior-year U.S. filings are missing.
• Keep records of foreign taxes paid.
• Seek professional advice where the situation is complex.

---

U.S. Tax Professional in Andorra
Aleksandr Isakov, CPA, Principal of US CAN Tax Group, is based in Andorra and has 25+ years of experience in U.S. tax and cross-border tax matters.

For how the firm works with clients there, see U.S. tax services for Americans living in Andorra.

The information in this article is general educational information and does not constitute individualized tax, legal, immigration, or financial advice. U.S. filing and reporting requirements depend on each person's circumstances and applicable law.