If you are still unsure how and in what to invest in Andorra, in this article, we tell you how to do it, whether it is profitable or not, and the best options to invest in the Principality in 2023.
Why invest in Andorra?
Andorra is a small Principality with a strategic location bordering Spain and France and is quite close to cities such as Barcelona and Toulouse. But investing in Andorra is a way to preserve capital and obtain good returns in the future.
Investing in Andorra can be as varied as opening a bank account in the Principality, buying a property, or incorporating a company. For example, opening a bank account in Andorra involves keeping capital under the jurisdiction of the Principality and is considered a form of investment. One reason for doing so is for security, as Andorran banks are among the safest in the world.
It is also possible to open a company or business, which means generating wealth for the country; another way to make a investing in Andorra is to buy shares in a company already incorporated in the Principality, and it is even possible to buy debt bonds of a company. If you do not want to buy a company’s bonds, buying bills and bonds of the State debt is possible.
Where to invest in Andorra?
Real estate sector
Buying a house or several properties is a quick and easy way to invest in Andorra. It can be purchasing a house for immediate residence and a future retirement. Buildings nowadays are quite low priced compared to previous years and are a good investment alternative. The problem is that buying an entire building is a large financial outlay. You will be surprised to know that many people live renting in the country, so having a property to rent is a great alternative to monetizing your investment.
Andorran passive residence
People who want to live in Andorra passively must invest in the Principality to obtain the residence. The amount to be invested is fixed by the Government and is set at 400,000 euros. In addition, it is necessary to make Andorra the main and effective residence for 90 days a year. After the application is made, six months is available to invest in Andorran assets. For these effects are considered Andorran assets:
- Real estate located in the Principality.
- Debt or financial instruments issued by the public administration or resident entities.
- Life insurance products.
- Non-interest-bearing deposits with the Andorran Financial Authority (AFA).
It should be noted that, in these cases, one of the requirements for foreign investors in Andorra seeking passive residence extends to their dependents. Whoever wants a passive residence permit must deposit 50,000 euros to the AFA; they will have to add 10,000 euros for each of their dependents.
Open a business in Andorra.
Another way to make an investing in Andorra is to open a business. The Principality has two types of companies: Public Limited Company and Limited Company. The first is designed for large companies, while the second is intended for businesses with a capital of 3,000 euros. The requirements for incorporating a company in the Principality vary depending on the type of business you want to open.
Returns of the Investing in Andorra
Still not sure if it is a good idea to invest in Andorra? We tell you why you should do it. We start with the political and economic stability for investors in Andorra. The Principality has a very stable political framework and economy, with an economic growth of approximately 3.2% since 2000. The Andorran economy is strong, stable, and secure; unemployment is 2%. Moreover, the country’s politics also stand out for their neutrality and solidity, which offers stability for investment.
The country enjoys excellent financial health, which translates into prosperity and diversity for investors. It has a GDP per capita at purchasing power parity of US$49,193. One of the sectors that is in constant growth is telecommunications and digitalization. But on the other hand, we want to tell you that the small Principality also attracts millions of tourists a year, especially for the snow sports that can be practiced. Andorra knows its potential, so it offers quality infrastructure for the practice of these activities.
Another reason to invest in Andorra is its low taxation. It is a country where the general VAT (IGI) is 4.5%, compared to the Spanish general VAT of 21%. Corporate taxes and income tax are also much lower compared to Spain. This makes many foreign investors decide to establish their business in Andorra.
Finally, we tell you that the Principality’s public financial system is competent and solid. The country has a public debt of less than 40% of GDP. The best thing? Year after year, the debt goes down. To give you an idea, Spain and France, Andorra’s neighbors, have a public debt of 100%, while Germany has more than 60%.