Thousands of people are attracted by the idea of moving to Andorra because it is one of the most famous countries in Europe with a low taxation providing an immense economic freedom and policies in full development. The truth is that Andorrans enjoy a much lower VAT rate than other countries, approaching 0 € in taxes on capital gains.
In the same way, both companies and freelancers are eager to be part of the Andorran taxation because the taxes in Andorra on personal income are minimal, and the corporate tax rate is quite kind. If you want to know the options for moving to Andorra, below, we tell you all the details.
Moving to Andorra may seem like a complicated process; however, you have nothing to worry about because we will explain everything in detail. There are two ways to reside in Andorra: active or passive. Here is how to obtain each of them.
If you wish to live in Andorra long-term, the most recommended option is to obtain an active residency, which is equivalent to moving to Andorra for a long time. To be eligible for this possibility, you must spend most of the year in this country, paying for the social security program and the health system. Of course, you will be eligible for all these social and health benefits as a permanent resident.
When processing the application, it is necessary to present the following apostilled or legalized and authenticated documents according to the country of issuance:
These documents are valid for three months, so they are usually prepared and sent as late as possible within the established deadline. Once this is clear, you have two ways to qualify for active residency in Andorra. Each of them has its own requirements, benefits, and conditions.
If you have a company in Andorra or are self-employed, you can choose the option of active residence through a titled / liberal profession known locally as residència i treball per compte propi or compte propi for short.
This possibility is reserved only for entrepreneurs or business owners who want full-time residency when moving to Andorra. The requirements are a minimum investment and a low tax rate of 10 % for all annual incomes exceeding 40.000 €. In addition, there is the option to apply for tax exemption if the company is considered a digital company, which may be beneficial. This exemption option and the digital nomad residency program will be available soon.
In addition to the minimum investment requirements and tax benefits, there are other important aspects to consider. For example, a deposit of €50,000 in Andorran government bonds is required. This sum can be considered as an investment in the country.
It is also necessary to rent or buy a property in Andorra with a minimum size of 20 square meters. This requirement demonstrates the commitment to establish a full-time residence in the country.
Another relevant aspect is company registration, which involves following the legal procedures to establish and operate a company in Andorra. In addition, a full medical examination and an interview must be completed. This ensures that the applicant meets the health standards and is willing to contribute to the Andorran health system, the CASS.
To be eligible for active residency with this option, an Andorran company must provide you with a job offer with a contract. The government gives priority to its citizens, as well as those from Spain, France or Portugal, when issuing work permits.
On the other hand, you need to have certain basic documents at hand such as proof of accommodation in Andorra and a criminal record certificate from your country of residence. These documents are usually processed and sent as late as possible (just before the deadline) because they are valid for only three months. As a final step, you will have to undergo a basic medical examination and sign a series of forms.
In case you arrive in Andorra without a job, the main thing is to contact local business owners so that you can apply for a contract as soon as possible. However, if you wish to be an active resident, we do not advise you to come to Andorra without an insured contract.
The passive residency system has been specifically designed for all those people who want to benefit from Andorra’s taxes. It is an ideal way to maintain a comfortable lifestyle with less economic pressure and one of the most frequent doubts is how to obtain citizenship with this residency model. Once you have a passive residency permit, you will be able to access citizenship, but not immediately. These permits are issued and renewed every two years, and then every three years until they are renewed every 10 years. As soon as you reach 20 years of residence, you can apply for citizenship.
To obtain passive residency, you must meet a series of requirements:
This passive residence, also known as “Type 1” residence, requires a total investment of €600,000, which includes the government bond deposit of €50,000.
Investment options include property, stocks, real estate investments and government bonds. The government does not care how you invest, as long as you meet the requirements for non-profit residency.
Passive Residence “Type II”, is intended for people doing business abroad. To obtain it, a company must be established in Andorra and comply with specific requirements, such as:
The company will be subject to a corporate tax rate of 10%. It is required to submit a 3-year business plan and demonstrate experience in the type of business it plans to establish.
In addition to the résumé, it is useful to have references related to the business. Once the business plan and business is approved, there are seven months to establish the business. It is important to be prepared within this time frame.
Residence ¨Type III” is aimed at people with outstanding achievements in fields such as sports, science or art. It is important to note that 85% of their work must be taken outside Andorran borders. No additional investment is required in addition to the €47,500 government bond.
However, it is essential to submit adequate documentation supporting your achievements in order for your application to be approved. The following must be provided to the government:
It is true that the process of applying for residency in Andorra is not particularly complicated, but it is always advisable to have the help of professionals to make the process as smooth and stress-free as possible. At MCA Assessors we offer consulting, management and accounting services to guide you in a personalized way in your move to Andorra.