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.
What are the ways to moving to andorra?
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.
Active residence in Andorra
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:
- Birth certificate or passport copy.
- Criminal record certificate from the country of residence.
- Rental contract. It does not have to be apostilled.
- Marriage certificate. In this case, it only has to be apostilled for family reunification.
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.
Through an employment contract
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.
Passive residence in Andorra
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:
- Criminal background check. This is one of the most requested documents in the bureaucracy, so do not worry. It is a standard process and the background check must be clean and issued by your country of origin.
- Proof of income and health insurance. You must provide proof of a steady source of income along with some form of private health insurance. Moreover, your income cannot be less than 300% of the average minimum wage of an Andorran resident. This rule applies in the same way in case you want to move to Andorra as a family. It will apply to each member individually, but in these cases, the rate is 100%.
- Government bond deposit. You will have to make a mandatory investment of €47,500 as a government bond.
- Age Requirement. You must be over 18 years of age to apply for passive residency.
- Proof of housing. You must have proof of housing. It works with a rental property or a house you have purchased.
- Language. Your application must be in Catalan.
Residence without lucrative activity
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.
- At least 90 full days per year must be spent in the country to obtain tax resident status.
- It is required to earn at least 300% of the minimum wage in Andorra.
- There is a period of 7 months to demonstrate the investment and comply with the requirements.
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.
International Trade Professionals
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:
- Spend 90 days a year in the country.
- Conduct 85% of business outside of it.
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.
Achievement-based residency: Athletes, Scientists and Artists
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:
- Documents showing your success, notable achievements and overall qualifications in your field.
- A detailed report of your income.
- Awards and accreditations obtained in his field of practice.
- Recommendations from recognized colleagues.
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.