How Does Andorran Residency Work?

Andorra is known for its attractive tax system, designed to encourage both individuals and businesses to establish themselves in the country. The tax regime is simple, with low rates and a focus on economic transparency. Key taxes include a corporate tax rate of 10%, personal income tax rates ranging from 0% to 10%, and no wealth tax or inheritance tax. The country also offers special tax benefits for businesses engaged in international activities, making it an appealing destination for entrepreneurs and investors.

What Are the Tax Benefits of Living in Andorra?

Living in Andorra offers several tax advantages. For individuals, the personal income tax rate is notably lower than in most European countries, with a top rate of just 10%. There is also no inheritance tax or wealth tax, which makes it especially attractive for those looking to protect their assets. Additionally, VAT in Andorra is considerably lower compared to many other countries, with a standard rate of just 4.5%. For businesses, the low corporate tax rates and lack of capital gains tax make it a highly competitive location for international investment and operations.

Requirements for Tax Residency in Andorra

To qualify for tax residency in Andorra, you must meet several criteria:

Minimum Stay: you need to spend at least 183 days per year in the country.
Accommodation: you must either hold a property in Andorra or have a lease agreement for a minimum of one year.
No Other Tax Residency: you must not be a tax resident in any other country.

Once these conditions are met, you can apply for tax residency, which entitles you to benefit from the country’s favorable tax regime.

How to Obtain Physical Residency in Andorra: Step by Step

Determine Eligibility:
- Income Requirement: you must have sufficient financial means to support yourself and any dependents. This is typically around €40,000–€50,000 per year for an individual.
- No Criminal Record: applicants must have a clean criminal record in both Andorra and their home country.
- Health Insurance: you need to prove that you have health insurance coverage in Andorra, either through the Andorran healthcare system (CASS) or a private provider.
- No Other Residency: you must not maintain tax residency in another country.
Establish a Residency Plan:
- Active Residency: for those planning to work or run a business in Andorra.
- Passive Residency: for retirees or individuals with sufficient passive income, such as investments, pensions, or savings.
Gather Required Documentation:
- Valid Passport or ID.
- Proof of Financial Means: bank statements, proof of investments, or pension income.
- Health Insurance: proof of coverage through the CASS system or a private provider.
- Criminal Background Check: from both your home country and Andorra.
- Proof of Address: a rental agreement or proof of homeownership in Andorra.
- Photos: passport-sized photos for your residency card.
Submit Your Application:
- Submit your residency application to the Andorran Immigration Department along with the required documents and fees.
- The process can take several months depending on the complexity of your case.
Establish Residency in Andorra:
- Move to Andorra and establish your primary residence, spending at least 90 days in a calendar year.
- Register with local authorities and obtain your residency card.
Maintain Residency:
- Stay in Andorra for at least 90 days per year.
- Continue meeting income requirements and renew your residency card as required.

Obtaining Andorran Residency and Citizenship by Investment

Andorra offers a unique opportunity for individuals seeking residency through investment. Known for its attractive tax regime and high quality of life, Andorra’s residency-by-investment program allows foreigners to obtain residency by making substantial investments in the country. Options include:

Investment in Real Estate: minimum property purchase of €600,000.
Business Investment: investment in a business or starting a company in Andorra, often requiring job creation.

After meeting the investment and residency requirements, initial residency can be renewed and lead to permanent residency or citizenship after 20 years.

How Axior Global Can Help

Residency Application Assistance: Guidance through the residency application process, including document preparation and submission.
Tax Strategy and Planning: Optimizing your tax situation to benefit from Andorra’s favorable tax regime.
Business Setup Support: Assistance with company registration and compliance for active residents.
Social Security and Health Coverage: Ensuring compliance with local healthcare and pension requirements.

Conclusion

Andorra’s residency options provide significant advantages for individuals and businesses seeking a low-tax environment and high quality of life. Whether through active or passive residency, Andorra offers a streamlined process for establishing residency while maximizing financial and lifestyle benefits. At Axior Global, we provide tailored advice and support to help you navigate the residency process with ease. Contact us today to explore your options and start your journey to living in Andorra.

BOOK WITH US

Book a Virtual Consultation

Easily book a 30-minute video consultation online today to receive a comprehensive analysis of your case and a concrete plan of action for your business.