Andorra and San Marino EU Association Agreement: What It Means for Residents and Investors

Andorra and San Marino Sign EU Association Deal Granting Citizens Free Movement

Andorra and San Marino signed association agreements with the European Union on October 19, 2026. The agreements will give both microstates access to the EU single market without membership of the Union or the Schengen area. Once in force, they will allow Andorran and Sammarinese citizens to live, work, study, retire and establish businesses anywhere in the EU on the same terms as EU nationals. EU citizens, in turn, will gain the right to move to both countries, subject to annual quotas.

The agreements conclude a process that began in 2015 and has outlasted the withdrawal of a third microstate, Monaco, which suspended its own negotiations in 2023. They are not yet in force. The European Parliament must consent, and because the agreements are “mixed,” they must also be ratified by EU member states. Andorra additionally requires the consent of its two co-princes and a consultative referendum, which may be held as early as January.

For businesses and investors, the agreements matter in two ways. They extend single-market rules to two small but financially significant economies. And they change the value of Andorran and Sammarinese citizenship, though not the ease of obtaining it.

Andorra and San Marino EU Association Agreement: What It Covers

The agreements bring both countries into an extended internal market, governed by the same rules and competition conditions that apply within the EU. In return, Andorra and San Marino will adopt the relevant body of EU law. The agreements also set a framework for cooperation in research, education, social policy, the environment, consumer protection and culture.

Financial services are treated more cautiously. Access to the single market in this sector will be phased in and is conditional on a successful assessment of each country’s regulatory and supervisory frameworks, with Europe’s supervisory authorities involved. This is significant for Andorra in particular, whose banking sector has spent the past decade rebuilding its reputation after the 2015 Banca Privada d’Andorra affair and Andorra’s adoption of international tax-transparency standards. Updated monetary agreements, which govern both countries’ use of the euro, were signed alongside the association agreements.

“Our answer is not isolation, but partnership,” said Maroš Šefčovič, the European Commissioner for Trade and Economic Security.

Taxation is excluded. In a declaration annexed to its agreement, Andorra stated that “taxation does not fall within the scope of this Agreement.” Its low-tax regime, which has attracted wealthy residents from Spain and France, is therefore preserved. Both countries have, however, committed to agree on mutual assistance in recovering tax claims within four years.

Free Movement, With Quotas

For citizens of Andorra and San Marino, the main gain is legal certainty. Andorrans currently rely on bilateral arrangements with Spain, France and Portugal. The agreement replaces these with full free-movement rights across the EU.

Movement in the other direction will be limited. Drawing on the model Liechtenstein uses under the European Economic Area Agreement, both microstates may cap the number of EU nationals who settle each year. Andorra will apply quotas in three categories: economically active residents, passive residents and seasonal workers. The quotas begin two years after the agreement enters into force. The government has said they will be “very conservative, below the number of permits granted in recent years.” San Marino will allow enough permits for its working EU-national population to grow by about 3 percent a year, roughly 100 permits, with a far smaller allocation for non-working residents. Both countries may also restrict property purchases by non-residents.

The asymmetry reflects scale. Andorra has a population of about 85,000 and San Marino about 34,000. Unrestricted free movement from a union of 450 million people could transform their housing markets and public services within years. That concern helped end Monaco’s participation in the talks.

What Changes for Residence and Citizenship by Investment

The agreements do not cover immigration policy for non-EU nationals, so the residence-by-investment routes offered by both countries remain under national law.

Andorra’s passive residence route requires an investment of €1 million in Andorran assets and a non-refundable €50,000 payment to the state. San Marino’s elective residence requires a €500,000 property purchase or €600,000 in government bonds.

These residence permits will not carry EU free-movement rights. Non-EU nationals living in Andorra or San Marino will remain subject to Schengen and national rules when travelling to or settling in the EU. The agreements make a residence in either country more attractive as a base within the single market, but they do not turn it into an EU residence.

Citizenship is a different matter. Once the agreements are in force, an Andorran or Sammarinese passport will carry rights broadly comparable to those of an EU passport for living and working across the Union. That makes the citizenship considerably more valuable. Both countries, however, require 20 years of residence before naturalisation, among the longest periods in Europe. Andorra does not permit dual nationality, so naturalising there means giving up an existing citizenship.

In effect, the agreements create a valuable citizenship that remains almost impossible to acquire quickly. Investors expecting either country to open a faster route are likely to be disappointed. Both governments have strong reasons to protect the value of their nationality, and the EU would be likely to object to anything resembling a citizenship-by-investment programme granting EU-equivalent mobility.

Ratification Risks

The agreements still face several hurdles. Ratification by all EU member states can take years, although the Council has authorised provisional application once Andorra and San Marino complete their own procedures. Bulgaria delayed Council approval earlier this year over a dispute between San Marino and the Bulgarian company Starcom, which is pursuing treaty arbitration over frozen funds. Andorra’s referendum is consultative, but an unfavourable result would put political pressure on the government. Opponents have raised concerns about loss of sovereignty and the effect of free movement on housing.

Why This Matters for Business Leaders

For financial institutions and professional services firms, the agreements eventually offer access to two small markets on single-market terms. They also impose EU regulatory standards on local competitors. For companies headquartered in Andorra or San Marino, the agreements reduce barriers to selling goods and services into the EU. For wealthy individuals, Andorra’s low-tax regime survives, but the quotas on EU nationals and possible restrictions on property purchases may limit future access for Spanish, French and other EU residents who have relocated there.

Executive Takeaways

• What changed: Andorra and San Marino have signed association agreements that, once ratified, give their citizens EU free-movement rights and bring their economies into the single market.
• Why it matters: The agreements raise the value of Andorran and Sammarinese citizenship while leaving residence-by-investment routes, taxation and naturalisation rules unchanged.
• What leaders should do next: Investors should treat the agreements as a positive for business and banking in both countries, not as a new route to EU mobility. EU nationals planning to relocate should expect quotas to tighten access.

The agreements offer a model for how the EU can integrate small neighbouring states without full membership, and they could inform future arrangements with other partners. Over the next 12 to 24 months, the indicators to watch are the European Parliament’s consent, the progress of national ratifications, the outcome of Andorra’s referendum, the size of the first quotas, and the European supervisory assessment of both countries’ financial sectors. For individuals, the central lesson is that single-market access benefits nationals, not residents. In both countries, nationality remains the hardest asset to acquire.

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